Our Guide to No Payslips Job Offer Mortgages
It can be something of a Catch 22 situation – you are looking for a mortgage, the lender asks to see your payslips (as proof of income), you have job offer, but no payslips yet, of course, so your mortgage application is rejected.
So, if you are a recent graduate, or otherwise about to embark on your chosen career, does that mean you are in for a long wait whilst you collect a mountain of payslips before you qualify for a mortgage and are able to own your own home? Some lenders might insist that you have been working for at least three years, for example.
But, don’t give up hope. Here at Needing Advice, we work with with specialist lenders of mortgages where you have a job offer, but haven’t yet started work.
Next steps – No Payslips Job Offer Mortgages
I have a job offer but no payslips, why is it difficult to get a mortgage?
Any lender has one overriding concern – the borrower’s repayment of the funds advanced.
When assessing the risk of any borrower defaulting on those repayments, the lender naturally looks to the income earned and for proof of that income by way of the payslips received.
In the case of a mortgage, that borrowing is likely to be spread over many years. The Money Advice Service reports that the average repayment period – or mortgage term is 25 years. But the number of first-time buyers entering into 31 to 35-year mortgages has doubled in the past ten years.
Clearly, therefore, lenders consider not only current earnings, but the borrower’s ability to continue repaying the mortgage loan over very many years – so potential income throughout that period also needs to be taken into account.
Without the proof of income offered by payslips, borrowers are considered a higher risk than other applicants and may be rejected by the lender of charged a higher rate of interest – but the actual success of your application is likely to vary from one lender to another.
The affordability criteria used by mortgage lenders are subject to quarterly reporting of Mortgage Lenders & Administrators Returns (MLAR) to the Bank of England’s Prudential Regulation Authority (PRU).
Mortgages for graduates and others who have received a job offer but have not yet started receiving their payslips present further difficulties for mortgage lenders, who need to assess the following additional risks:
- any probationary period in your new job being unsuccessful, so that – until your role has been confirmed as permanent – your contract may be terminated without notice;
- if you have been studying for three years or more, you are also likely to have a large student debt which also needs to be paid off;
- since the mortgage application may be the first time you have ever sought to borrow, you may have little in the way of any existing credit history; and
- in the event of your prospective employer needing to make redundancies, those most recently appointed are most likely to be the first to lose their jobs.
What do I need to qualify for a no payslips job offer mortgage?
In the absence of the payslips typically required by any lender, therefore, borrowers about to embark on their first career – and with good prospects for continued employment in that field – may instead offer:
- an open-ended employment contract from your prospective employer; or
- a letter of appointment from an appointment confirming the basic income to be paid, together with confirmation that any probationary period is preliminary to a permanent position within the employer’s organisation.
A mortgage with an employment letter typically requires the applicant to start the new job within three months and lenders are also likely to ask for copies of the last three months of your bank statements, together with proof of the deposit you have to put down on the purchase of your new home.
How much deposit will I need for a no payslip job offer mortgage?
The size of the deposit required is likely to vary from lender to lender and is of course influenced by a host of other factors affecting your current and future financial prospects.
The very minimum is likely to be 10% of the purchase price of your new home, but the bigger your deposit, the less you need to borrow, the wider your choice of potential mortgage products, and the greater your chances of success in making the application.
Is there anything else that will help my application?
Although the size of the deposit is likely to be a critical factor, other measures that are going to be taken into account include:
- your credit record – if you have one – needs to be as “clean” and as favourable as possible;
- if you are applying for a joint mortgage, your partner’s income may also be taken into account; and
- if you already have a bank account with a bank or building society that offers no payslips job offer mortgages, this may also help in supporting your application.
There remain a number of factors which may still make your application for a mortgage with employment letter unsuccessful – because of your personal circumstances, the size of the deposit you have to offer, or the affordability of your proposed borrowing, for example.
In those circumstances, we may be able to help you secure a guarantor mortgage or a gifted deposit mortgage with the committed support of family members or relatives.
In the case of the former, the guarantor may assume full liability – where they become fully accountable in the event of your default on repayments – or limited liability, which limits their accountability to any shortfall, i.e. the difference between any amount the lender calculates that you the borrower can afford to repay and the actual repayment required (typically, this requires a commitment of up to 30% of the required repayments from the guarantor).
Next steps – No Payslips Job Offer Mortgages
If you have recently graduated, completed your vocational training or otherwise about to start a career with prospects for the future, you are likely to have a letter from a prospective employer confirming your appointment, but don’t yet have the payslips typically required in support of any mortgage application.
At Needing Advice, we may help you find those lenders with the expertise and experience of advancing job offer, no payslips mortgages to individuals in just your situation. Why not contact us today to see how we can help?