Obtaining a mortgage during a probationary period at a new job can be challenging due to the perceived higher risk associated with your employment status. However, with careful planning and consideration, it is possible to secure a mortgage while on probation.
Key Facts
- Difficulty in getting a good deal: Lenders may view your position as less stable during the probationary period, as your income is not guaranteed. This can make it more difficult to secure a mortgage or get a favorable interest rate.
- Higher interest rates: Some lenders may compensate for the higher risk by offering a mortgage with a higher interest rate. This is because they need to make it worth their time and cover the potential risk of missed mortgage payments.
- Limited options: Many mainstream lenders may require you to complete your probationary period or have been in the role for at least six months before considering your mortgage application. However, there are lenders who have relaxed their lending criteria to accommodate workers on probation, creating a market for probation period mortgages.
- Strong application and financial position: If you have a strong financial position, such as additional sources of income, a strong asset portfolio, few liabilities, a good credit score, and high genuine savings, you may have a higher chance of getting approved for a mortgage while on probation.
- Employment history and industry: Lenders may be more willing to make exceptions for individuals with a stable employment history or experience gained over many years in a particular field. Industries with ongoing demand for workers may also be viewed more favorably.
Challenges of Getting a Mortgage on Probation
1. Uncertainty of Income:
During a probationary period, your income is not guaranteed. Lenders may view this as a risk factor, as they prioritize the stability of your employment.
2. Higher Interest Rates:
To compensate for the increased risk, some lenders may offer mortgages with higher interest rates. This can result in higher monthly payments and overall borrowing costs.
3. Limited Options:
Many mainstream lenders may refuse to consider mortgage applications from individuals on probation. However, there are specialized lenders who cater to this specific market.
Improving Your Chances of Approval
1. Strong Financial Position:
Demonstrating a strong financial position can increase your chances of approval. This includes having additional sources of income, a robust asset portfolio, minimal liabilities, a high credit score, and substantial genuine savings.
2. Stable Employment History and Industry:
Lenders may be more lenient towards individuals with a history of stable employment or extensive experience in a particular field. Industries with high demand for workers are generally viewed more favorably.
3. Probationary Period Length:
The length of your probationary period can influence your chances of approval. Shorter probationary periods may be less of a concern for lenders.
4. Probationary Period Completion:
If possible, consider waiting until you have completed your probationary period before applying for a mortgage. This will provide lenders with more confidence in your employment stability.
Conclusion
Getting a mortgage during your probationary period requires careful planning and consideration. By understanding the challenges, improving your financial position, and exploring specialized lenders, you can increase your chances of securing a mortgage while on probation. Remember to consult with a mortgage advisor to discuss your specific circumstances and explore your options.
References:
- Getting a mortgage during your probationary period | Habito
- Mortgage For New Job Probationary Period | CLS Money
- Can I get a home loan while on probation at work? | UNO Home Loans
FAQs
Can I get a mortgage while on probation?
Yes, it is possible to get a mortgage while on probation, but it may be more challenging than if you were permanently employed.
Why is it harder to get a mortgage on probation?
Lenders view probationary periods as a higher risk because your income is not guaranteed. This can make them hesitant to approve a mortgage or offer favorable terms.
What are the challenges of getting a mortgage on probation?
- Limited options: Many mainstream lenders may not consider mortgage applications from individuals on probation.
- Higher interest rates: Some lenders may offer mortgages with higher interest rates to compensate for the increased risk.
- Uncertainty of income: Lenders prioritize the stability of your employment, which can be a concern during a probationary period.
How can I improve my chances of getting a mortgage on probation?
- Strong financial position: Demonstrate a strong financial position with additional income sources, a robust asset portfolio, minimal liabilities, a high credit score, and substantial genuine savings.
- Stable employment history and industry: Lenders may be more lenient towards individuals with a history of stable employment or extensive experience in a particular field.
- Probationary period length: A shorter probationary period may be less of a concern for lenders.
- Probationary period completion: If possible, consider waiting until you have completed your probationary period before applying for a mortgage.
Are there any specialized lenders for probationary period mortgages?
Yes, there are specialized lenders who cater to individuals on probationary periods. These lenders may have more flexible lending criteria and be more willing to consider your application.
What are the interest rates like for probationary period mortgages?
Interest rates for probationary period mortgages can vary depending on the lender and your financial situation. However, they may be higher than interest rates for mortgages offered to permanently employed individuals.
What are the other terms and conditions of probationary period mortgages?
The terms and conditions of probationary period mortgages can vary depending on the lender. Be sure to carefully review and understand all terms before signing any agreements.
Should I use a mortgage broker to get a mortgage on probation?
Using a mortgage broker can be beneficial, as they have access to a wider range of lenders and can help you find the best mortgage for your situation.