Changing Jobs While Buying a House: What Lenders Check

Changing jobs during a home loan application will not automatically stop you getting the loan, but it can slow things down or change the outcome. Lenders have to be satisfied your income is reliable, so a new employer, a probation period or a different pay structure can mean extra checks before settlement.

This is general information only, not financial, legal or tax advice.

Why your job matters to the lender

Lenders in Australia are required to check that a loan is suitable for you. Under ASIC’s Regulatory Guide 209 on responsible lending, a lender needs to know the amount, frequency and source of your income, and any reasonably foreseeable changes to it. The guide says a single pay period is not enough, and the lender needs to understand whether your income is consistent and likely to continue. Moneysmart lists income that is too low for the loan amount as one reason a loan may be knocked back.

That is the logic behind every employment question you will be asked. Your approval was built on a particular job, a particular salary and, often, a particular length of service. Change one of those, and the assessment may need to be redone.

Probation periods

The same ASIC guide includes a worked example of a borrower on probation and notes that confirmation from the employer gives the most certainty about whether the income will continue. How a lender treats probation is not standardised. Some will want the probation period completed, some will accept an employment contract or an employer letter, and some treat certain industries or roles differently. Policies differ between lenders; check with yours.

Timing: where applications get caught

In my experience, the awkward moment is a change that happens between approval and settlement. Moneysmart notes that pre-approval lasts for 3 to 6 months and shows you are eligible to apply for a loan up to a certain amount. It is not a guarantee. A lender can still check your circumstances again before it releases funds, and a new job is the sort of change you are expected to disclose. Many lenders re-verify employment close to settlement, though how and when they do it varies.

The ASIC guide also says lenders must take reasonable steps to verify your financial situation within a set window before assessing the loan: 120 days for a home loan. If your application takes a long time and your circumstances change in the meantime, expect to be asked for updated documents.

Different kinds of job change

• Same employer, new role or pay: usually the simplest, but still tell your lender if pay or hours change.
• New employer, similar role and industry: often manageable, though the lender may want a contract, recent payslips or a letter from the employer.
• Moving from salary to contracting, casual work or self-employment: usually the hardest. The ASIC guide notes that casual or seasonal income requires information about expected variation, and self-employed income is generally verified with documents such as tax assessments.
• A gap between jobs: can delay things, because there is no current income to verify.

Common questions

Do I have to tell the lender? Yes. Disclosure is part of dealing honestly with a lender, and a material change after approval can affect your loan. If you are unsure whether something counts, ask your lender or broker.

Is a higher salary always good news? Not necessarily on its own. A raise helps, but the lender still needs it verified. A pay rise tied to a probation period may be given less weight until the probation ends, depending on the lender.

Can I delay the new job? Sometimes. Where you have a choice, negotiating a start date after settlement keeps the application on the path that was approved. That is a personal decision, and it is worth weighing against the value of the new role.

What to do next

• Tell your broker or lender about a possible job change before you accept it, not afterwards.
• Ask what evidence they would need for the new role: a contract, a letter from the employer, payslips.
• Ask whether probation affects their policy for your type of job.
• If you can, compare the new start date with your settlement date.
• Keep your pre-approval paperwork current and avoid new credit during the application.

Related Reading

• Riverina Property: Why Regional Serviceability Rules Catch Buyers Out
• Home Lending & Property Glossary
• How to Buy a House in Australia: A First-Timer’s Step-by-Step Guide

Written by Michael Wignall, who’s spent 30+ years in banking and home lending across the ACT, Illawarra, and Riverina regions of NSW.

More on this topic is collected in the Finance Strategies for Australians hub.

Related reading:

• Home Loan After Redundancy or on Probation: Can You?
• Bridging Loans: Buying Before You Sell Without Getting Burned

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Written by Michael Wignall, Lending Area Manager with 30+ years in banking and home lending across the ACT, Illawarra, and Riverina. Got a question or an idea for a post? Get in touch.