Change of jobs - impact on lenders?

brizza

Hello all,

Looking for some advice from the great and the good...

My partner and I are looking for our first home, however she was (sort of) made redundant before Christmas...

She works for the UK arm of a US company, and as part of a restructure it was necessary to liquidate the UK company. The restructure is complete and a UK company will be reincorporated shortly.

Whilst this has gone on, she has continued to work for the company and has been paid as a consultant through the US. Once the UK company is back, she will move back to being paid on a normal PAYE basis through the UK company.

To cover her back, she has been looking at other jobs and may find herself in a totally new role elsewhere in the coming weeks.

How will the lenders look at this? It's clear that the optimum position will be to be in a settled job by the time we make an application, but it may be that we see somewhere in the coming weeks that we want to make a move on.

Numbers:

Me - £65k salary, annual bonus of £4k.
Her - £55k salary (same under consultancy), would rise to maybe £65k+ bonus if she moves jobs.

We've got savings of roughly £50k and are looking at houses worth between £330k and £410k on the outskirts of Wimbledon.

Thanks in advance!

kingstreet

brizza wrote: »

she has continued to work for the company and has been paid as a consultant through the US

You're going to have to explain exactly what you mean by this.

Is she self-employed?
Paid in sterling?
PAYE?
Does she have a contract? If so, how long for?

brizza

kingstreet wrote: »

You're going to have to explain exactly what you mean by this.

Is she self-employed?
Paid in sterling?
PAYE?
Does she have a contract? If so, how long for?

Sorry - she has signed a formal consultancy contract which has a one month notice period for either party, so yes, self employed. This started in December and is likely to continue to the end of March (unless she changes jobs, obviously).

She is invoicing their US company in sterling and is being paid in sterling. The payments are gross and will therefore have to settle her PAYE/NI on next year's tax return.

kingstreet

It's not an area in which I would profess to a great degree of experience, but I suspect her income won't be taken into account in the current circumstances.

One or two of the others may have a different, more positive view, so see what other comments come up...

brizza

Thanks, that's a shame, but I'd rather start from the worst case scenario!

If they were to ignore her salary, we would still be able to get a mortgage on my salary of £65k - lending an absolute max of, say, £325k?

kingstreet

5x income, assuming no ongoing credit commitments, no dependents, no maintenance or anything else in the "mandatory expenditure" column?

Possibly.

The usual suspects for 5x income are Abbey/Santander, Halifax, NatWest and Woolwich/Barclays. Might be trying your details in their online affordability calculators to see what you get...

Let_Us_See

brizza wrote: »

Sorry - she has signed a formal consultancy contract which has a one month notice period for either party, so yes, self employed. This started in December and is likely to continue to the end of March (unless she changes jobs, obviously).

She is invoicing their US company in sterling and is being paid in sterling. The payments are gross and will therefore have to settle her PAYE/NI on next year's tax return.

Lenders will not like the one month notice period. Basically, if she is now classified as a self-employed contractor you will have to wait until she has at least one full year accounts. Even then it maybe difficult due to the single point of income and one month notice period.

brizza

Thanks both - looks like the question is quickly becoming: "How long into a new job would her income be taken into account for a mortgage application?"

Presumably once the probation period is over?

kingstreet

There are lenders who will lend in a probationary period, or with only a written job offer.

Overall case will determine if it's a goer, admittedly. If she can get out of probation and past six months, there will be more doors open to you.

brizza

Thank you, that's useful to know.