Chad Moore Calgary Mortgage Broker

Employer probationary periods are like a new couple going on a long date to a resort in Mexico.

I had a friend reconnect with an old fling. You might have experienced this reconnection before? Sometimes memories, old feelings, and or the good-old-days are better left in the past. Sometimes.

Anyway, these two re-connect and decide to meet in Calgary and fly as a new couple down to Mexico. For a week! I can imagine how this might accelerate the “get to know you” period of dating. #longdate

I think on day two of seven the stars-in-their-eyes begin to fade and the grim realization of five more days of close quarter contact together starts to set in.

My friend asks me to pick them up at the airport. He specifically asks me NOT to ask how the trip went – I gathered things were not going well. What’s the first thing I do when I pick up these two love-birds at the airport? Ask how the trip went! I had to, haha!

In many circumstances, employers hire employees on a probationary period. In general, I think employers are evaluating new hires working on tasks, interacting with colleagues, displaying social behaviour and eliciting personal values. Similar to dating, when people get to know each other.

Mortgage Lenders Do Not Like Dating. They Like Marriage.

When dating someone new, a break up is relatively less complicated. The new couple had less time to establish their lives together, so splitting them a part would be simpler.

A similar connection can be made with a new employee on probation. Probation is like dating. The employer and employee do not have a lot of time together and the relationship can end much easier.

I’m not a labour relations expert. I do understand that employers can end employment relations with new hires while on probation much easier, compared with employees not on probation.

When Mortgage lenders are considering loaning hundreds of thousands of dollars, they are looking for as much certainty in the applicant’s ability to repay the Mortgage debt based on their current income. Mortgage applicants on probation do not provide this certainty. This is why Mortgage lenders want to see Mortgage applicants incomes be non-probationary.

Is this a set-in-stone Mortgage underwriting guideline?

No.

Here’s a story …

I had a client who was on a six month probationary period. I think that’s a relativley long time to be on probation. A typical probationary period is three months.

This particular client has 15+ years of industry experience in his particular field of work. He was also 3+ months into his new employment role. He was relativley established at his new employer, and had a great deal of industry experience. This particular lender, for this particular situation, waived the requirement of requiring the applicant to be a non-probationary employee.

Mortgage lenders have underwriting policy guidelines. These are guidelines, and within these guidelines is reasonable lateral movement in underwriting. One example, is my clients story just above.

Another Probationary Story …

I’ve had Mortgage applicants apply for their Mortgage as probationary employees. Technically, during the underwriting phase of their Mortgage approval, verifying the applicant is a non-probationary employee cannot be satisfed.

What did these clients do?

The timing of dates worked out so that before possession of my clients home their employment probationary period lapsed. Before possession, to ensure their Mortgage would fund on time, we sent the Mortgage lender a new employment letter confirming the applicant was a non-probationary employee. There is some risk to this maneuver. I do not recommend this approach for all my clients. However, in this example the timing worked out.

Walking Hand n’ Hand (conclusion).

I think a lot of similarities between dating, ending relationships and marriage can be drawn between probationary and non-probationary employees.

When Mortgage lenders consider approving hundreds-of-thousands of dollars of debt, that needs to be re-paid based on the applicants current income, they like more certainty than “dating”. Mortgage lenders like employment marriage (non-probationary employment).

Not all Mortgage applications are approved based on non-probationary employment. I’ve discovered there are exceptions to this guide line.

If you’re a new employee on a probtionary period, think of this like a long-date to Mexico. This could be a path to a long term working relationship, or not.

If you have a question about planning your Mortgage approval, be sure to reach out so we can plan together.

chad@canadamortgagedirect.com OR 403-809-5447

Talk soon,
Chad Moore