Helping you succeed in life's financial journey
Job-hopping may affect your mortgage options
Are you a job-hopper or a long-termer? In the past, floating from job to job used to be a black mark on a resume, as employers often saw it as a sign of ‘disloyalty’.
Things have changed over the years, with Millennials job-hopping more frequently than previous generations.
But while it is common these days, keep in mind that switching jobs too often may impact your ability to achieve certain financial goals… Like getting a mortgage, for example. We’ll come to this in just a moment, but first, a little bit of context is necessary.
A ‘job-hopping’ country?
In 2011, Statistics NZ found that the most common amount of time New Zealanders spent in a job was one to three months, especially among 15 to 24 year-old workers. But young employees are not the only ones switching jobs at a rapid pace. According to a survey conducted in 2012 by online recruiter Seek, 51% of all Kiwis surveyed had started their role less than two years before, and 43% were planning to transfer to a new job within a year. If you’re a job-hopper you’re certainly not alone. Nonetheless, bear in mind that this might affect your mortgage application, and here’s how…
Your job history matters
When assessing your home loan application, your job history is one of the elements that lenders take into account, particularly the stability of your employment. Lenders view your steady income as a plus - proof that you’re able to keep up with payments - whereas frequent job changes may indicate that you’re a ‘riskier applicant’ and reduce your chances of getting over the line.
Job-hopping might also affect your credit score, but the extent of its impact depends on your situation. Sometimes, changing jobs is simply ‘unavoidable’ – for example, when the company you’re working for goes out of business, or if an unmissable opportunity presents itself. These circumstances shouldn’t hurt your credit score too much. However, as a general rule of thumb, keep in mind that the longer you commit to the same job, the more your credit score will improve.
The importance of having a good financial plan
In a nutshell, when making the decision to change careers frequently, it’s important to balance the pros and cons. Obviously, job-hopping can be the key to improving your skills and getting a salary boost, and there's nothing wrong with that. As long as you’re clear about your priorities and what you’re hoping to gain, the long-term benefits can be considerable. Having an appropriate level of planning will help you make sure you’re not getting caught in the ‘job-hopping cycle’. A financial plan can help you plot these key goals out, and ensure you're hitting the mark to meet them.
Like to find out your mortgage eligibility?
As mortgage advisers we are happy to learn about your situation and give you an indication as to whether you'll be able to get a mortgage. The banks do have different criteria which can chop and change, so using a mortgage adviser is a great way to have someone on your side who has contacts in the industry.
It's a service that comes at no cost to you*, and puts your interests first - learn more here.
You might also be interested in these articles:
- Why mortgage advisers are better positioned to maximise the bank's offerings
- Get your house sale-ready in 5 steps
* Our standard Mortgage Advisory service is provided free of charge as we are remunerated (paid) by the banks, but we also provide specialised services and advice for non-conforming, credit-impaired, business and complex cases. After our free initial no-obligation consultation, we will advise you if a fee may need to be charged before we undertake any work. In many cases we may find a simple solution for you.