Are employment probationary periods deal killers?

Mortgagenomics Canada

When it comes to income verification for a mortgage a recent paystub and an employment letter will typically do the trick, even if you're a new hire and just have one full pay cycle under your belt. However, things could get a little dicey if you are currently in a period of probation with your new employer.

The most common workaround for an applicant who is in the midst of a probationary period is to coordinate the completion date of your purchase with the expiry date of the probationary period. A lender will proceed with the approval and condition for an updated employment letter and/or recent paystub to verify that the probationary period is no longer in effect.

Lender guidelines generally dictate that probationary periods must pass (in their entirety) prior to the completion of the mortgage. But in many instances a lender will overlook a probationary period provided that a good case can be made. Here are some real life exceptions I've been granted on several files over the years:

• PROBATIONARY PERIOD WAIVED when applicant has left one employer for another, but maintained the same job type. For example, say you worked with Company X for a couple of years as a Software Engineer, then left for Company Y in the same role (Software Engineer). Most lenders will overlook the probationary period in cases like this.
• PROBATIONARY PERIOD WAIVED when a previously self employed applicant switches over to become a full time employee. As long as the applicant switched over to an employer that is directly related to the work they were doing when they were self employed, lenders will generally overlook the probationary period. For example, an engineer that independently contracted their services out to a firm (self employed), but then transformed over to them (or another industry related firm) into a full time employee.
• PROBATIONARY PERIOD WAIVED if you are a teacher that transfers from one education board/jurisdiction to another. Registered Nurses would also fall into this category.

Probationary Periods are not the end of the world

I wish I could say this about all other mortgage qualification guidelines, but lenders are generally flexible when it comes to probationary periods. So, as long as your new employment is supported with reasonable tenure from a prior and related employment stint, you should (at the very least) be eligible for strong consideration to have a lender overlook or waive the probationary period condition of your income verification.

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