Mortgage in probation period: What you need to know (UK)

Getting a mortgage in probation period is always been challenging for people who are interested in starting their journey onto the property ladder. Some lenders won’t consider a probationary periodA period of time during which a borrower's employment is pro... for mortgages, while others may do it selectively.

It is essential to realise that the mortgage conditions are more stringent, and lenders usually require a large deposit to qualify for the loan. The reason is in case of any default in repayment; the lender has some financial security. Moreover, interest rates are usually higher than those offered to people who have already completed their probation period.

In this article, we will provide the best advice to get a home loan in the probation period of your new job. In some cases, it is possible to get the probation period mortgage when the contract is a permanent position but for the temporary contract, it’s always been difficult to get a mortgage approved from a lender. As expert specialist mortgage brokers, we can help you to get a mortgage with a new job. 

Post Topics

What is a Probation Period?

Understanding Probationary Employment: What It Means for Your Mortgage

Can I get a mortgage during a probationary period?

Types of Mortgages Available During Probation

Factors Lenders Consider

How to get a Mortgage during the probationary period?

What are the other things to consider for Mortgage during the Probationary Period?

Which are some probationary period-friendly mortgage lenders?

Do different types of jobs have other conditions for borrowing?

How does my probation period length affect my mortgage options?

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What is a Probation Period?

The probation period is when an employee works before they receive full-time employment and become eligible for a regular salary. During this time, the employer has the right to terminate the contract without any notice or reason. This means that if the employee does not perform well during the probation period, then he/she may be dismissed immediately. However, there are many ways to get a mortgage during the probation period. 

Understanding Probationary Employment: What It Means for Your Mortgage

When you start working on your first job, it’s completely natural to think about your future living arrangements and look for your first property to buy or make changes to your current property; however, the problem comes up with your probation period, which is mostly considered 3-6 months of the period in your employment contract. The good news is that many lenders offer mortgages to employees within a few months of starting a new job.

As enquiries about a mortgage on probation period continue to increase, “NeedingAdvice.co.uk Ltd” is keen to provide the best financial advice possible so that you won’t lose out on buying a property. We have also created a comprehensive guide to help individuals get the answers to every key question on the topic below.

Can I get a mortgage during a probationary period?

The answer is yes, you can. Some of the mainstream lenders will take you away, and some will take a flexible approach to giving loans to recently employed individuals. Mortgage lenders will look for your contract type and confirm the length of your contract along with the job offer as a part of evaluating the loan application.

The condition also applies when you have just started a new job and will be a key part of your entire loan application. Some additional details about “mortgage with new job” are discussed in our blog. It is also worth noting that underwriters will choose a conservative approach while determining the income of the probationary employee; for example, the overtime incomeIncome received by borrowers for overtime worked., bonusIncome received as a bonus, which may affect a borrower's ab... or commission income is not considered unless and until there are two years of income history available in the documentation.

Types of Mortgages Available During Probation

Fixed-Rate Mortgages

A fixed-rate mortgage offers a constant interest rate for a set period, usually between 2 to 5 years. This type of mortgage provides certainty in your monthly repayments.

Variable-Rate Mortgages

Variable-rate mortgages have an interest rate that can change based on the lender’s standard variable rateThe interest rate charged by the lender that can vary over t... (SVR). These are more flexible but come with the risk of fluctuating repayments.

Tracker Mortgages

Tracker mortgages are a type of variable-rate mortgage that follows an external interest rate, usually the Bank of England base rateThe interest rate set by the Bank of England, affects the in.... They offer more transparency than standard variable-rate mortgages.

Factors Lenders Consider

• Length of Probation: Shorter probation periods are generally viewed more favourably.
• Employment HistoryA record of a borrower's employment history, which may be us...: A stable employment history can offset the risk associated with probationary employment.
• Salary: A higher salary can make you a less risky borrower in the eyes of lenders.
• Debt-to-Income Ratio: A lower ratio is preferable as it indicates better financial management.

How to get a Mortgage during the probationary period?

Getting a mortgage during the probationary period can be possible, but it might not be as easy as getting one when you are already an established employee. Here are some tips to consider when looking for a mortgage while still on probation:

1. Check your Credit Score: Before applying for a mortgage, make sure to check your credit score and fix any discrepancies if needed. A good credit score will improve your chances of getting a mortgage.

2. Get Pre-Approved: It’s essential to get pre-approved for a loan before you start searching for a property – this will give you an idea of how much you can afford.

3. Shop Around: Different lenders have different policies regarding lending to probationary employees, so it pays to shop around and find the best deal.

4. Talk to a Mortgage Broker: A mortgage broker can be an invaluable resource for finding the right loan for you. They will have access to a broader range of lenders and can help guide you through the process.

What are the other things to consider for Mortgage during the Probationary Period?

The common fear of every mortgage lender is the candidate’s failure to complete the employment probation period. As the newly hired won’t provide satisfactory evidence of a stable income level, most lenders ask for payslips for basic salary as proof of income stability over a period of time. However, it can be difficult to figure out what options are available to the candidate without the right support, as employment requirements change frequently.

Which are some probationary period-friendly mortgage lenders?

If you are on probation and are looking for a mortgage, there are a number of lenders in the UK who may be able to help you. The following list is updated as of 30 October 2023:

• HSBC 
• Halifax
• Nationwide
• Santander
• Virgin Money
• Yorkshire Building Society
• Teachers Building Society
• Chelsea Building Society
• Nationwide Building Society
• Newcastle Building Society
• Together
• Precise Mortgages
• Pepper Money

It is important to note that each lender has their own specific criteria, so you should always check with the lender directly to see if you are eligible.

Please note that this is not an exhaustive list of all probationary period-friendly mortgage lenders in the UK. We would always suggest that you contact a mortgage broker to get the latest and updated list of mortgage lenders.

Please note that this information is general information and is not intended to be financial advice. We would suggest you always contact a mortgage broker to get the latest and updated information and to get advice specific to your individual circumstances.

Do different types of jobs have other conditions for borrowing?

Yes, the mortgage application made during the employment probation period differs with the type of job. The application process for jobs like teachers and doctors may have a better chance of mortgage approval. It’s always better to contact an expert broker who can help you to strengthen your application. You can create an enquiry with NeedingAdvice.co.uk Ltd for the step-by-step process. The key worker mortgages are available for people working in health, education and public safety roles as mentioned below:

1. Ambulance Service
2. Fire Brigade
3. HM Prisons
4. Local Authority Schools
5. NHS
6. Police Services
7. Public Transport

These mortgages are rare, and most government schemes are not working or have changed now. However, key worker mortgages are available via limited lenders. So, if you are interested in a mortgage in the probationary period and you are also working in the public sector, you could avail yourself of a big cost saving on your lending amount.

How does my probation period length affect my mortgage options?

It is not always the case, but a very short and long probation period may affect the application process.
For example, your loan might be approved, but it may be withheld until your trial period is over. According to the lender’s perspective, this would help you avoid the potentially uncertain outcome of having your probation lifted, but this could be a problem if your probation is longer than you’re willing to wait to purchase a house.

However, not all lenders follow this approach – and with the average employee having a six-month probationary period in a new role, some give loans regardless of the length or stage of your probation at the time of application. As discussed before, lenders’ stance on getting a loan during a probationary period varies, so it will be necessary to seek advice from expert brokers like NeedingAdvice.co.uk Ltd.

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In conclusion, it is possible to get the right type of mortgage for securing property and step onto the property ladder for your future, especially when you can. But it is to be well noted that every lender has different lending criteria that may or may not depend on credit rating, annual income, first deposit, permanent employment contract, employment history, temporary contract job offer letter, credit score, etc.

Don’t let so many buzzwords stop you from getting your first property while on a probation period. First-time buyers have to go through a lot of brainstorming in which an expert adviser could help and provide you with the most suitable mortgage advice.

FAQs

Q1: Can I secure a mortgage during my probationary period?
A1: Yes, you can secure a mortgage during your probationary period. However, some mainstream lenders may be hesitant, while others may adopt a more flexible approach. The type of contract you have and its length will be key factors in the loan application process.

Q2: What types of mortgages are available to someone in a probationary period?
A2: You have options such as fixed-rate mortgages, which offer a constant interest rate for a set period, and variable-rate mortgages, where the interest rate can change. Tracker mortgages are another option; they follow an external interest rate, usually the Bank of England base rate.

Q3: What factors do lenders consider when evaluating a mortgage application during a probationary period?
A3: Lenders look at the length of your probation, your employment history, your salary, and your debt-to-income ratio. These factors help them assess the risk associated with lending to someone in a probationary period.

Q4: Are there any tips for improving my chances of getting a mortgage during my probationary period?
A4: To improve your chances, check your credit score, get pre-approved for a loan, shop around for the best deal, and consider consulting a mortgage broker. These steps can help you find a mortgage that suits your situation.

Q5: Are there specific lenders who are more open to offering mortgages during a probationary period?
A5: Yes, some lenders in the UK are more amenable to offering mortgages to individuals on probation. These include HSBC, Halifax, Nationwide, and Santander, among others. However, each lender has its own specific criteria, so it’s advisable to consult a mortgage broker for the most current information.