I am still on probation and need a home loan.

Any general questions you might have in regards to loans and finance.
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Betty Boop
Posts: 45
Joined: Mon Jul 15, 2013 1:18 pm

I am still on probation and need a home loan.

Postby Betty Boop » Mon Aug 18, 2014 10:23 am

Hi Home Loan experts!

I am a software engineer and had been working for an IT company in Melbourne for the last seven years. I moved to Canberra to work as a Senior Developer two months back mainly because the pay is better.

I have $140,000 in savings and want to buy a home in Canberra. I have been looking at a house that fits my needs. The real estate agent says that it is worth $600,000. I will have to take out a home loan to buy the house.

But I am still on a probationary period with my new company. I have four months left on probation. I have heard that banks decline loan applications from people who are on probation. I would be glad if someone could shed some light on this.

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Otto Dargan
Mortgage Specialist
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Location: Sydney, Australia
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Re: I am still on probation and need a home loan.

Postby Otto Dargan » Mon Aug 18, 2014 12:42 pm

Hi Betty Boop,

Congratulations on your new job.

Lenders consider people who are on probation to be a higher risk than other applicants. This is because they fear that people on probationary period may lose their employment at any time and may be unable to make repayments on their loan. Therefore most lenders may not approve home loan applications from people on probation.

However, not all lenders have the same policies regarding your employment. Some lenders may outright reject home loan applications, but some may accept applications on a case by case basis. Before approving your loan, lenders assess the different factors related to your application such as:
  • How long you have been in your current job
  • How long you have been in the industry
  • The risk of default in your industry (e.g. medicine is low risk industry while building is a high risk one)
  • Your employment status (full time, contract, on probation)
  • Your income stability (overtime, bonuses, commission, etc.)
You have been working in the same industry for seven years, which is a positive aspect for your application. Some lenders offer home loans to people with new jobs. You switched your job because you were able to get a higher pay. Some lenders may also take this into account and are more likely to approve your home loan application.

The loan to value ratio (LVR) is slightly over 76% as you have saved $140,000 and are seeking to buy a house worth $600,000. This also works in your favour as lenders consider people who are borrowing less than 80% of the property value to be less risky. Another good thing for you is that you may not need to pay any Lenders Mortgage Insurance (LMI) due to the low LVR.

You can use our Probation Calculator to check whether you may be able to get a home loan while still on probation.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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Betty Boop
Posts: 45
Joined: Mon Jul 15, 2013 1:18 pm

Re: I am still on probation and need a home loan.

Postby Betty Boop » Mon Aug 18, 2014 1:06 pm

Hi Otto,

Thank you for replying to my post. As I said before, I have $140,000 in savings but I will not be able to put all of that for deposit! I will need to have around $40,000 for emergencies and can put only $100,000 for the deposit on my home loan. How will this affect my assessment?

Also, I could not find the ‘Probation Calculator’ that you were talking about.

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Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: I am still on probation and need a home loan.

Postby Otto Dargan » Mon Aug 18, 2014 2:27 pm

Hi Betty Boop,

You can find the Probation Calculator here.

If you are able to put $100,000 for the $600,000 house, the LVR will be 83.33%. If the deposit is from your genuine savings, then many lenders may approve your home loan. Although borrowers are required to pay LMI for LVR above 80%, you may have the requirement waived with some lenders if:
  • You have a perfect credit history.
  • The LVR is no more than 85%.
  • You are buying a property.
Since different lenders have different lending policies, it is better to know in advance which lenders are more likely to approve your loan. Mortgage brokers have a good knowledge on the requirements of different lenders. Therefore it will be in your best interest to contact an experienced broker in order to get a good deal on your home loan.

You can call us on 1300 889 743 or fill out our free assessment form if you need to discuss your home loan application in more detail.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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Betty Boop
Posts: 45
Joined: Mon Jul 15, 2013 1:18 pm

Re: I am still on probation and need a home loan.

Postby Betty Boop » Mon Aug 18, 2014 3:55 pm

Thanks for the information. I will share this information with my husband and contact you guys soon.

Cheers!

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: I am still on probation and need a home loan.

Postby moodyjack » Thu Nov 13, 2014 3:53 pm

Hi there!

I have a new job and am on probation for the next two months. Do banks limit the options available for people like us? I have heard that we have to pay a higher rate of interest and may not be offered the features offered to borrowers on permanent employment.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: I am still on probation and need a home loan.

Postby Otto Dargan » Thu Nov 13, 2014 5:43 pm

Hi moodyjack,

We work with lenders who offer all types of home loan to people on probation. Many lenders offer the same interest rate on your loan as offered to people who have completed their probationary period. You may be able to get all loan features such as interest only, fixed rate, offset account, line of credit, redraw and extra repayments.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: I am still on probation and need a home loan.

Postby moodyjack » Thu Nov 13, 2014 6:00 pm

Thanks mate! That is very good news for me. I will start looking for a house soon.


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