There’s a reason why banks and lenders insist on getting to know an applicant’s financial status and earning potential early into the mortgage process – and that’s because they want to make sure that they will stand the greatest chance of getting their money back well into the future. These institutes aren’t foolish and they fully understand that even with a consistent income and contractual work; there’s no definitive way to predict the future.
Some people might lose their jobs, others might be made redundant and fewer still might decide to switch careers at some point during their repayments
The last thing that a bank will expect you to do is to put your life on hold, especially if you’re keen to pursue a new career, or a different role within an organisation. But how should you handle these events where your mortgage is concerned? There are two main reasons why you should always aim to keep your lender in the loop, or your mortgage broker, at the very least.
The last thing that you’ll want to do if you’ve taken a pay cut, or won’t be receiving income for a short while in between jobs, is to avoid informing your lender. The reality is that as harsh and faceless as these institutes might seem, they can actually be very accommodating. If you don’t tell them about your new financial situation, they will still be expecting you to meet your repayments.
This can lead to a host of difficulties down the line, so be open and honest from the offset; the chances are that you’ll be presented with options to recalculate what you owe, or you may be able to come to a whole new agreement.
If your situation falls on the other side of the coin and you actually take on a new career that brings more money in each month – then you could actually stand to benefit from your new venture. If you earn more cash, then you could opt to pay a little extra each month – minimising the duration of your loan, as well as the amount of time that you are expected to pay interest.
Or you could continue to pay your regular costs as usual and enjoy a little extra cash in the bank each month.
The main thing is to let your lender know of your situation, whether it will negatively or positively impact your financial status.