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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 good deal on your 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, as the above stats clearly show. 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 a good deal.

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 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 - and should - be the key to improving your skills and getting a salary boost. 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’.

Would you like to discuss your mortgage options? Click here to contact us.

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