When deciding whether to grant a mortgage, the bank takes into account a number of factors. One of the most important is Creditworthiness – i.e. the ratio of your monthly income to current and future obligations. Income stability – i.e. the form of the contract and the period for which you are employed
Changing the place of employment and at the same time will apply for a mortgage can significantly complicate the implementation of our intentions.
Employment and mortgage
In the eyes of the bank, the best is an employment contract for the longest possible period, preferably indefinite – it provides the greatest security. The longer the work experience of the current employer, the higher the bank assesses our employment stability.
Do you have a different type of contract? You can still apply for a loan!
In this case, the duration of such a contract and how long you are an employee of a given company are also important. However, some banks do not consider civil law contracts (mandate or work contracts) concluded for a short period (less than 12 months). If you run a business and are self-employed, it is best for you to document your last 12 months of income in the form of a tax return for the full financial year.
Occupation and mortgage
Banks also look with different favor at the place of work and occupation.
- Banks consider state institutions as the most stable employer – administration, courts, state-owned companies, etc.
- Another – in terms of credibility – if the person employing you is a natural person conducting a business activity, the bank will look at how long the entity has been operating on the market and whether there is a risk that you could lose your job soon.
- On the other hand, if you are employed by a family member, especially recently, the bank may be afraid that your employment is fake to generate creditworthiness. Of course, this does not have to be the case, but it is worth remembering before we apply for a loan.
The profession we do may also matter. Some banks offer mortgage loans on preferential terms for selected professional groups, e.g. people working in free professions. This professional group includes:
- medical industry
- auditors and tax advisers.
Just saying to the bank that we work in an industry enjoying public trust does not mean anything. When applying for a mortgage for liberal professions, a document confirming the right to practice a liberal profession should be presented. In some cases, this gives you the chance for a simplified loan application procedure or more favorable financial terms.
Change of workplace and mortgage
We must remember that if we decided to change employment after submitting the loan application, it is necessary to inform the lender. Withholding this information may even result in a denial of credit.
Changing work during the term of the loan agreement is not as important to the bank as the fact that our installments are repaid on time.
In a situation where the borrower lost his employment, he repays the loan, he should immediately go to the bank and inform. The bank can then negotiate the current loan repayment terms – the debt can be “extended” over time, and the monthly installment may be reduced so that we can freely pay our debt.