Getting a Mortgage With a Gap in Your Employment History
Find out how you might be able to get a mortgage with a gap in employment history
How long is (or was) your recent gap in employment?
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A gap in your employment record, particularly if it’s quite recent, may raise concerns that it could lead to difficulties when applying for a mortgage. But that doesn’t always have to be the case.
Read on to find out whether it’s possible to get a mortgage with a gap in your employment history, how to explain non-continuous employment to a mortgage lender and how this could impact your mortgage application.
Can you get a mortgage with a gap in employment?
Yes, it’s possible. In general, when a mortgage lender reviews an application, what they’re trying to establish above everything else is your ability to make the monthly payments throughout the term of the loan.
Why could this be a potential issue?
Mortgage Lenders love to see consistency. They’ll likely view someone who has worked for the same employer for, say, ten years as a lower risk than someone who’s recently had a gap in their employment record. But that’s not to say employment gaps will automatically be viewed as a negative in each case – particularly if there’s been a valid reason for that gap, such as a long-term illness or study leave to gain higher qualifications for your current profession
Every lender has their own internal measures and guidelines they use to assess an application. If you do have one or more gaps in your employment and you’re turned down by one bank, it doesn’t mean that the same will happen elsewhere.
It can prove to be quite tricky trying to establish which banks will look more favourably than others if gaps in your record exist. This is exactly where having an experienced mortgage broker on your side can be quite crucial. They will already know which lenders in the market tend to be more positive towards such applications, saving you a lot of time, effort and potentially some money too.
What is considered a gap in employment?
A gap in employment is basically any length of time that you’re between jobs. They are usually only detrimental from a mortgage lender’s perspective if they’re frequent, lengthy or unexplained. See the table below for an overview of how severe mortgage lenders typically view employment gaps based on their length.
|Length of Employment Gap||Severity From a Lender’s Perspective|
|Less than one month||Not severe / usually overlooked|
|One-to-two months||Not severe / usually overlooked|
|Three-to-four months||Moderate severity if unexplained|
|Five-to-six months||Moderate severity if unexplained|
|Six months plus||Potentially severe if unexplained|
As you can see from the table, an employment gap of just a few weeks, or even one or two months, are not likely to be too detrimental to an application as long as the rest of the information and employment background is quite robust.
If your current employment record stretches back at least three years, with any gaps showing before this period, it’s possible many lenders won’t even consider these gaps because the consistency they’re looking for is more recent.
It’s completely normal for many of us to have the odd gap in our employment history for a whole host of legitimate reasons, such as:
- Maternity leave
- Time off due to an accident, injury or illness
- Caring for a sick relative
- Return to study / full-time education
- One-time opportunity to travel
All of the above are life events that are quite common. So, for example, in the case of returning to study, the qualifications you’ve gained could make you more sought after by employers and, therefore, give a lender confidence you’ll have a consistent employment record as a result.
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How a gap in employment could affect a mortgage application
Some lenders may see a gap in employment as too much of a red flag, depending on the circumstances, and decline the application. That’s the worst-case scenario.
In many other cases, such as the examples given above, a prospective lender will want to dig a little deeper to find out why that gap is there and how it compares with the rest of your employment history before reaching a decision.
When you speak with one of the mortgage advisors we work with, they will conduct a full review of your employment history to spot any gaps and find out the reasons why before any lenders do the same. This way you’ll have a stronger chance of getting the mortgage you want.
How do you explain a gap in employment for a mortgage?
The best way to explain any gaps in your employment history is by thoroughly documenting the circumstances of how they happened and including any supporting evidence. As the old scout motto goes, ‘be prepared’.
So, to use the example again of returning to full-time education, providing a copy of any qualifications and certificates you were given once the course was complete would obviously corroborate this. Or, if you were away from work due to injury, any hospital or doctor’s notes outlining what happened.
It would also help your application if you could provide evidence (bank statements etc.) of paying all of your financial commitments during this gap.
In the first instance, it would serve you much better if you sat down with a mortgage broker and explained any gaps in your employment with them, rather than going directly to a lender.
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A gap in employment due to COVID
As much as lenders like to see consistency, this has been impossible for countless people during the coronavirus crisis. If you’ve had a gap in employment recently due to the COVID pandemic it’s completely understandable to be worried about how this may affect your mortgage application.
If you’ve been furloughed by your employer, there should be no real change because you’re still classed as employed. Despite this, there may be some lenders who would be quite cautious when reviewing your mortgage application.
If you’re self-employed and your business has suffered as a consequence of the pandemic or if you were employed and have been made redundant, these are legitimate reasons why this gap in your record exists.
The broker we match you with will have a clear understanding of the best lenders to approach in the current climate and can help you document everything in your mortgage application to prove your ability to make the monthly mortgage payments.
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If you have any gaps in your employment record and are worried about how this may affect your mortgage application – don’t panic! There are lots of valid scenarios lenders look at each day and it doesn’t necessarily mean it will be rejected.
Our unique advisor-matching service is designed to select a professional who understands how to prepare your application and give you the best chance of gaining approval.
Call 0808 189 2301 or make an enquiry and we can arrange a free, no-obligation call with a mortgage specialist today.
If one of the applicants has gaps in their employment record whereas the other applicant’s employment history is stronger and more consistent, a joint application stands a better chance of getting approval.
Usually contractors are assessed by mortgage lenders as self-employed and their work history will be judged on that basis. Some lenders will look at applications with regular gaps if evidence of current and previous contracts can be provided.
Not necessarily, as long as you have evidence that you have received a regular income, paid your bills, have a healthy credit record and, perhaps most importantly in this case, can explain why these changes have occurred.
The smart move in this situation would be to speak with a broker first as they can help prepare your application, armed with all the necessary documentary evidence and then approach the right lender who can cater for applications of this nature.
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