When do lenders check your employment?

Tylewcha

Regarding a mortgage on a new build property - I need to know if lenders double check your employment when you sign the contract (so before it’s built) or when you actually get the keys (so after it’s built).

From what I’ve read, lenders check your income and employment when they agree to fund you, but then again about a week after you sign before they will release the funds. I’m in a very tricky and complex situation, and I can 100% afford the mortgage so I’m not going to default or anything, but I need to know at which points the lenders check your employment on new builds.

Slithery

Whenever they want to. If you're not going to be in the same employment from before applying for the mortgage until after you complete then you're doing something wrong.

Thrugelmir

Nothing complex from the lenders viewpoint. In signing the declaration on the mortgage application you agree to notify them of any material changes in circumstances. Not to do so is considered fraud. 

goodwithsaving

Slithery said:

Whenever they want to. If you're not going to be in the same employment from before applying for the mortgage until after you complete then you're doing something wrong.

Not strictly true regarding 'doing something wrong'. Some lenders will permit this so long as you have a signed formal contract from a new employer, detailing the salary. (Otherwise moving to relocate for work would be a nightmare).

Slithery

goodwithsaving said:

Slithery said:

Whenever they want to. If you're not going to be in the same employment from before applying for the mortgage until after you complete then you're doing something wrong.

Not strictly true regarding 'doing something wrong'. Some lenders will permit this so long as you have a signed formal contract from a new employer, detailing the salary. (Otherwise moving to relocate for work would be a nightmare).

Point taken. But the wording of the OP's post suggests that this isn't the case.

lookstraightahead

Yes op you really need to be able to afford it on paper as well as in real life.

I find it all a bit silly really as people change jobs within a 25 year mortgage without telling the mortgage company, but yea you do need to inform them. 

Angela_D_3

Its a bit of a nightmare actually,  i was relocating 200 miles to the midlands from NW ... already working from home my employer was in Glasgow.  Bank turned me down,  didn’t believe me basically. 

AdrianC

Tylewcha said:

I’m in a very tricky and complex situation, and I can 100% afford the mortgage so I’m not going to default or anything

Unfortunately "I can afford it, honest" is not enough for lenders - that's what used to be called a "self-certified" mortgage, and was one of the big contributors to the 2008 crash.

Have you got an AiP from a lender yet?

eddddy

Are you asking a hypothetical question along these lines...


"I've exchanged contracts on a newbuild, I've lost my job (or suffered a big drop in income) - should I tell my mortgage lender? " because...

• 1) If I tell the lender, they're likely to withdraw my mortgage offer. I won't be able to complete. I'll lose at least my 10% deposit - and I might lose much more if there's a chain below me, etc.

• 2) If I don't tell the lender, they might not find out. So I can complete. I have enough savings to pay the mortgage for maybe 6 months - which may be enough time to find another job, or alternatively to put the house back on the market and sell it. So my losses will be much less.

Your mortgage offer t&cs would say you have to tell your lender, and if your solicitor finds out they will tell your lender. (But in reality, I guess some people might decide it's better not to tell anyone.)


As far as I understand it, during the application process, the mortgage lender will ask for payslips, bank statements (to see your wages going into your account) and maybe ask for a reference from your employer. They also do a credit reference check.

I believe the lender might do a a further credit reference check before completion - but that won't show your employment status. I haven't heard of lenders asking for further bank statements or asking employers again - but I don't know much about that kind of stuff.

(But if your lender also happens to be the bank with your current account, they'll see that your wages are no longer coming in.)

K_S

@Tylewcha Lenders will usually verify employment and income at underwriting before they issue a mortgage offer. The verification might simply involve reviewing payslip/s and agreeing to bank statement or include things like getting an employer reference.

New-build mortgages often have a long time between offer and completion, so some lenders may 'refresh' the information in between or close to completion by asking for fresh payslips and sometimes bank statements. This may also be required if you need to modify the offer for any reason (plot number to actual address for example) or to extend it (common with new builds).

During the period between offer and completion, the broker/applicant is expected to inform the lender of any material change in the applicant's circumstances relevant to the mortgage.

Once you have completed on the purchase, then you can pretty much do what you want with regard to your employment.

2bFrank

they will usually review your employment status before you get the agreement, at that point you will send in payslips and they want to see the wage go into your bank account.

You will sign something that 'You will tell them of any chance in circumstances' and if I remember correctly I got asked again before we exchanged or completed (I am a contractor though so its slightly different) although they did ask for my wife's recent payslip for some reason, but I don't think it was to check up on her employment status though, more to do with the overtime/ bonus.

You will also be asked about your employment contract (i.e when you started, how long is your probation etc). Ill be honest if you have the paperwork then its unlikely you will be found out, but there is a tiny chance, and its fraud, they will put in a fraud change, and if it looks like you were more then dishonest (forging or tampering with paperwork) then it will more than likely affect you for a long time.

Best bet will be a broker, a good one is worth the weight in gold and will be able to help you in your circumstances.