Probation period and LMI

[DEVIL]

Hi, I want to share my story and ask for your experience and advice.

I moved to new company ( same industry, same job) and decided to buy PPOR here. all calculations say i can afford it but i underestimated one thing:
risk ratings for LMI !

My mortgage broker said unless my company waives probation period (3 months to go out of 6) no one will lend me $$$

That sucks big time when you have great credit history, assets, 10% deposit, my and wifes income and everything is ruined by probation period.

P.S I have 2 IP and dont want to use them as security for this deal or use same bank again.

 

[Peter_Tersteeg]

6 month probationary periods are a bit stupid if you ask me. A few years ago the laws changed to allow them to become up to 6 months, so that's what many employers now do by default. If an employer thinks there's a problem with an employee, they should be savvy enough to figure it out within the first 3 months; they just like having the option to sack without penalty or due process.

* rant over *

There's a few lenders that don't care too much about probation, depending on your industry experience and a few other parameters of the deal. Whilst there can be a few factors which could be a problem, it's usually not as bigger problem as most people think.

Demonstrating long term (say 2 years) of employment in the same field via employment letters helps a lot. An LVR above 90% can make it a bit more tricky though.

Most lenders will be fine if there is no LMI involved.

Another alterntaive is to look for a longer settlement, get the loan approved subject to confirmation of employment after the probation period.

 

[Brady]

Hi, I want to share my story and ask for your experience and advice.

I moved to new company ( same industry, same job) and decided to buy PPOR here. all calculations say i can afford it but i underestimated one thing:
risk ratings for LMI !

My mortgage broker said unless my company waives probation period (3 months to go out of 6) no one will lend me $$$

That sucks big time when you have great credit history, assets, 10% deposit, my and wifes income and everything is ruined by probation period.

P.S I have 2 IP and dont want to use them as security for this deal or use same bank again.

Speak to a different broker...

What were you doing prior to the new position?

Shouldn't have big issues, especially if similar industry or new to workforce.

I know CBA could help, brokers on here will be able to advise others.

Go with a bank that has DUA and should be fine.

 

[DEVIL]

and yes before anyone jumps on topic "change your broker, etc" - don't.

it is about stupid rules that we need to satisfy to get LMI aproved...

 

[HotRod]

That gets up my nose too.

I have been continuously employed (either self or salaried) in the same industry for almost 25 years.

In that time I have had 5 different employers and worked for myself twice, so about 3.5 years on average with the shortest being 4 months (now "working" for myself) and the longest being 9.5 years (my first job out of Uni).

If that's not proof enough that I'm not a risk not paying then I don't know what is.

I think it was the argument used I had used in the past once or twice, between jobs. But back then banks would throw money at you if you only had a pulse.

 

[Aaron_C]

and yes before anyone jumps on topic "change your broker, etc" - don't.

it is about stupid rules that we need to satisfy to get LMI aproved...

As Brady and PT_Bear pointed out, your broker is wrong. CBA and ANZ will do this under their LMI DUA, as will NAB/Homeside.

 

[DEVIL]

totally agree PT Bear. 6 months is stupid term.

it could be few other bits and pieces that affect my story but I pretty sure that probation period is major one.

i was employed for 5.5 years with previous mob.

story is not over, my manager and state manager happy with waiving ig for me but didnt get answer from HR, if it is a policy - no chance for me.

 

[tobe]

What they said, not all lenders have the same rules in relation to probation. Some assume a 6 month period if not told otherwise, others dont, especially if the deal is presented correctly.

If the deal is over 90% Id submit to a lender either with their own DUA or who doesnt credit score (or both) who doesnt have a specific policy for probabtion.

For instance many lenders have an employment policy such as '1 year in current role, or demostrated history in the same industry for the previous 2 years'. No mention of probation. Now if you presented the deal highlighting the 2 years experience, and verify the current role with a payslip or employment letter (rather than the employment contract), this would sail through.

I cant speak for your current broker but perhaps they dont like submitting pre-approvals, arent accredited with the lenders that have DUA/dont credit score, or just dont have enough experience in this area.

NB, where the previous industry experience relates to overseas employment LMI tends to be conservative, so be careful if this is the case.

 

[DEVIL]

ok I see where it goes... I dont want to call any names but broker is well known on all forums and all of you gave him references at some stage.

As I said it could be other financial bits and pieces which affect that deal, I don't know... probation period is major concern.

anyone who wants to prove himself right and get me aproval with any lender for PPOR please dont hesitate to contact me by private msg

 

[tobe]

ok I see where it goes... I dont want to call any names but broker is well known on all forums and all of you gave him references at some stage.

As I said it could be other financial bits and pieces which affect that deal, I don't know... probation period is major concern.

anyone who wants to prove himself right and get me aproval with any lender for PPOR please dont hesitate to contact me by private msg

Id suggest then your broker has more information than we have here, and there is another mitigating reason over and above probation why its not possible to submit an application until probation is finalised/waived.

Its pretty easy to have this sort of miscommunication, I get it all the time. XYZ bank or broker cant do my loan, I get some brief details, all looks good, yet when we delve further there is a major issue that precludes an application.

 

[Peter_Tersteeg]

I have been continuously employed (either self or salaried) in the same industry for almost 25 years.

In that time I have had 5 different employers and worked for myself twice, so about 3.5 years on average with the shortest being 4 months (now "working" for myself) and the longest being 9.5 years (my first job out of Uni).

Long industry experience is great and helps a lot.

I would suggest however, that even in the same industry, being self employed is often very different to being an employee. Running a business is a whole different set of skills to what many people would consider to be a part of a regular job; just consider the sales and marketing component which often has little to do with many peoples technical skills.

You just need to read the E-Myth to have it explained that someone might be technically brilliant, but when they translate that into their own business they get into trouble. Hence why lenders want several years of trading history as opposed to a few payslips.


As a general recommendation to anyone who changes jobs frequently, always get an employment letter when you leave. It doesn't say if you were good or bad, it just says what you did and for how long. Employees are entitled to these by law and they come in very handy for finance applications and even future employment (as anyone who's ever applied for an Australian security clearance will be able to verify).

 

[Aaron_C]

ok I see where it goes... I dont want to call any names but broker is well known on all forums and all of you gave him references at some stage.

Perhaps he has run the numbers and thinks that there are other mitigating factors which could negatively impact the credit score. If so, then perhaps nothing can be done.

As I said it could be other financial bits and pieces which affect that deal, I don't know... probation period is major concern.

There might be. If you already have LMI loans in there etc or have a default on file this means that the DUA can be nullified and Genworth will assess it directly which is never a nice thing to have.

 

[DEVIL]

i never complained about broker.

what i am saying that probation period is stipid excuse not to lend me money, because nothing will change after it. plus i more than half way there.

 

[Aaron_C]

i never complained about broker.

what i am saying that probation period is stipid excuse not to lend me money, because nothing will change after it. plus i more than half way there.

I agree with you that it's stupid. Policy is policy for some reason. Though if you believe CBA's roadshows they can do loans for first home buyers on a 95% LVR + LMI who are in the first job on probation on a rural property in a category 4 area

 

[Shahin_Afarin]

Who is the current lender? Is it Citibank?

Regards

Shahin

 

[Rolf Latham]

I agree with you that it's stupid. Policy is policy for some reason. Though if you believe CBA's roadshows they can do loans for first home buyers on a 95% LVR + LMI who are in the first job on probation on a rural property in a category 4 area

and a small default : )

ta
rolf

 

[Peter_Tersteeg]

story is not over, my manager and state manager happy with waiving ig for me but didnt get answer from HR, if it is a policy - no chance for me.

Just a follow up, can you get your manager to write the letter instead of HR? No doubt HR would burst a blood vessel but it would solve the problem with the bank.

 

[DEVIL]

curent lender is NAB.

mortgage broker said only waiving of prob.period will help. letter is not good as we discuss this option straight away.

i wouldnt worry to much about it, i can wait 3 months. but house that i like is on the market and i am sure it will be sold before i get approval

 

[Mick C]

if your current lender is NAB and the broker or NAB wasn't able to help you with probation at 90% ...then i would say the "issue" is beyond the probationary period situation...

NAB is normally pretty good with probationary loans - up to 90% with their DUA

 

[Shahin_Afarin]

NAB is excellent with probation and it can be done if the application is strong. Are you sure that the only reason was the probation part?

Regards

Shahin