I'm in a situation where I'm building my business around a regular job. As it stands the max I can borrow is about £46,000 (damn UK, I earn half of that/year!), based on my current salary. I would like to quit my job in the near future to focus on my startup. Would there be any implications to worry about with regards to my mortgage if I was approved then quit shortly afterwards, provided I was still making the repayments with ease?

  • You can only borrow twice your salary now? Even back in my day it used to be 3 times. In the boom days it was four times for a while. – DJClayworth Apr 17 '12 at 12:59
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    Serious question... without income, how are you planning on paying your mortgage? – ChrisInEdmonton Apr 17 '12 at 15:12
  • @DJClayworth - Without my monthly commitment of £300 it would have been £75k... Still not great, but there we go! – Anonymous Apr 17 '12 at 16:15
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    Then your regular job earnings would be what the mortgage company relied on when approving your mortgage, and you run a significant risk of the mortgage company canceling the loan approval and refusing to proceed if it finds out before or at the closing that you no longer have that job. Should this happen, an application for a loan to another mortgage company would be fruitless since they won't consider your side income, and you will technically be unemployed. So be careful. – Dilip Sarwate Apr 17 '12 at 17:14
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    The wording of your question is poor because you are calling certain times by names that mean the other time to most people. 1. Mortgage approval is when the lending company has approved your application, and agreed to loan you money to buy a house or condominum flat. 2. The closing (anywhere from 5 to 21 days after approval) is when the money is actually paid to the seller and you start paying interest. Usually you don't get to move in to the new place until after closing. If you quit your job between approval and closing, the lender will most likely cancel the approval and the closing. – Dilip Sarwate Apr 17 '12 at 19:47

You mention that you would quit right after getting approved. But in the United States there would be one last check as a part of closing. Therefore it would be best to wait until after closing to quit your job.

Waiting until after closing would also protect you from some hiccup that causes a delay in closing, thus requiring the need to reapply for the loan.

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    >there would be one last check as a part of closing. In fact, I seem to remember signing statements at closings averring that there had been no material change in the facts that the lender had relied on in approving the mortgage, and not having a job anymore is certainly a material change, regardless of the whether the ability (to start making and) to continue making payments on the mortgage exists or not. I suspect that all lenders would back out at the closing and refuse to make the loan if you have quit your job in the interim between loan approval and closing. – Dilip Sarwate Apr 17 '12 at 15:19
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    +1 To add in the UK terminology for the OP: closing = completion. – AndyT Feb 3 '16 at 13:35

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