Securing a mortgage while you’re on probation at a new job can add a layer of complexity to an already daunting process. Understanding how lenders view your employment status during this time can help you prepare and increase your chances of approval. This guide will explain how a probationary period affects mortgage applications and provide tips to navigate the process successfully.
Understanding Probationary Periods
When you start a new job, you are typically subject to a probationary period. This is a trial phase during which your employer evaluates your performance to determine if you are a good fit for the role. Probation periods can vary but usually last between three to six months.
Impact on Mortgage Applications
Lenders are cautious about approving mortgages for applicants who are in a probationary period because it represents a time of employment uncertainty. Here are the key ways it can affect your mortgage application:
1. Employment Stability: Lenders look for job stability when assessing your ability to make regular mortgage payments. Being on probation means your employment is not yet secure, which can be seen as a risk.
2. Closing Date Requirements: Lenders often require your closing date to be after your probation period ends. They want to ensure that you are still employed before finalizing the mortgage.
3. Employer Verification: Before closing, lenders typically call your employer to confirm that you have completed your probation period and are still employed.
Probationary Period and Mortgage Approval
Can you get a mortgage while in this probation period? Yes. However, the lender will want your closing date to be two days after the probation period ends. They will generally call your employer before closing to ensure you are still working there. This would allow you to make an offer and get approved for financing, but the closing date must fall after the period.
Example Scenario
Imagine today is January 1st. You make an offer on a home, and it is accepted. The offer includes a condition of financing date of January 10th and a closing date of March 30th. Your probation period at work ends on March 28th. You can satisfy the financing condition by January 10th, but the lender will call your employer on March 28th to confirm your employment before closing. Nerve-wracking, right? It’s one of the most important jobs you’ve ever had!
Exceptions
There are exceptions to this rule. If you have been in the industry for a sustained period (3+ years) and are just switching to a new employer, an exception might be granted. However, if you are on probation for your first job in a new industry, the lender will want to see strong assets and income to offset the risk, even after the probation period ends.
Strategies for Getting a Mortgage During Probation
While being on probation can complicate the mortgage process, there are strategies to improve your chances of approval:
1. Plan Your Closing Date
Ensure that your closing date is set for after your probation period ends. This reduces the risk for lenders and increases your chances of getting approved.
2. Provide Detailed Employment History
If you have a long history in your industry, provide detailed information about your previous employment. This can help reassure lenders about your job stability.
3. Save a Larger Down Payment
A larger down payment reduces the amount you need to borrow, making you a less risky candidate in the eyes of lenders. This can help offset concerns about your probationary status.
4. Consider a Co-Signer
If possible, consider having a co-signer with a stable income. This can strengthen your application and improve your chances of approval.
5. Work with a Mortgage Broker
A mortgage broker can provide valuable assistance in navigating the mortgage process while on probation. Brokers have access to multiple lenders and can help find options that best suit your situation. They can also negotiate on your behalf to secure favourable terms and rates.
Frequently Asked Questions
1. Can I get a mortgage while on probation at a new job?
Yes, you can get a mortgage while on probation. However, lenders may require your closing date to be after your probation period ends and will likely verify your employment before closing.
2. Will my probationary status affect my mortgage application?
Being on probation can impact your mortgage application as lenders see it as a period of employment uncertainty. Providing detailed employment history and planning your closing date accordingly can help mitigate this.
3. Should I wait until my probation period ends to apply for a mortgage?
If possible, planning your mortgage application so that the closing date falls after your probation period ends can be beneficial. However, if you’re already in the process, providing a larger down payment, adding a co-signer, and working with a mortgage broker can improve your chances of approval.
Conclusion
While being on probation can add challenges to the mortgage application process, understanding its impact and employing strategic approaches can help you navigate these hurdles. By planning your closing date, providing detailed employment information, and considering options like a co-signer or larger down payment, you can enhance your chances of securing a mortgage.
For personalized advice and to explore the best mortgage options for you, reach out to me, Alex Lavender, a trusted mortgage broker dedicated to helping you navigate the complexities of mortgage financing.