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Lenders’ flexible probationary criteria may be tested as career changes rise

  • 04/08/2021
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Lenders’ flexible probationary criteria may be tested as career changes rise
Lenders' criteria around probationary periods has become more flexible during the pandemic to accommodate a rising number of borrowers changing jobs due to economic upheaval.


But an expected rise in borrowers moving to new careers could put probation criteria back under the microscope.

Brokers say some lenders have become more flexible in the last six months with the majority willing to lend to a borrower who is still in their probationary period.

To assess risk, lenders are asking for employment contracts, job references or the latest payslip. Other checks include the length of time working in the industry, explanations for employment gaps and confirmation of their previous earnings.


Lender small print

Nationwide will consider borrowers on a probationary period while Natwest requires six months continuous employment although this does not have to be with the same employer.

For Lloyds, borrowers must have a permanent contract but there is no minimum time in employment stated.

Yorkshire Building Society and Accord Mortgages said probationary periods are accepted as long as borrowers meet their standard lending criteria, the borrower’s employment is permanent and neither require a minimum time in employment.

Virgin Money considers a borrower to be on their probationary period in their first six months of their new job. It will lend to borrowers if they have a two-year history in a similar line of work or if an employer confirms their employment is permanent.

Santander accepts one month’s payslip from borrowers in probation to prove they have started their new job.

Coventry Building Society said that it will consider a borrower in their probationary period if they have previously been employed in a similar position for at least six months and they are moving to a similar job. First-time buyers are excluded from the policy. Where borrowers are changing careers completely they are considered on a case-by-case basis.


Positive approach

John Phillips, national operations director for Just Mortgages and Spicerhaart, said: “If you’d asked me six months ago, I would say very few lenders were entertaining offering flexibility on probationary periods. However, now it is definitely starting to change.”

Greg Cunnington, director of lending relationships and new homes at Alexander Hall agreed.

“Lenders are notably taking a positive approach to clients who have changed jobs or started a new job in recent months,” he said. “Lots of clients have indeed changed jobs during the pandemic period, so this approach has been a real positive.”

However, Phillips said that if borrowers are changing careers completely then lenders could change their approach.

He said: “If you’ve lost your job in one sector and have found a new position within that same sector, lenders will show flexibility. If you’re changing careers it’s more difficult and this is where lenders may show reluctance to lend.

“If your client is in their probationary period, it’s important to do a full fact find and perhaps have a look outside of the usual lenders you might go to to see who will consider your client’s case.”

People changing careers has become more common in recent years, especially during the pandemic as certain sectors were more heavily impacted than others leading people to reconsider their career options.

Figures from the Office for National Statistics have showed that that there has been an increase in people changing careers amongst the UK population from 2018 onwards, with the largest changes occurring in the first two quarters of 2020. It added that this trend was only set to increase as Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme are wound up.

Research by Aviva earlier this year also showed that showed that three fifths of UK workers intend to change their career because of the pandemic.

L&C Mortgages associate director for communications David Hollingworth said that the pandemic had undoubtedly changed people’s way of working and forced some to consider a “rethink”, whether that is a new job or new home.

He added that on the whole lenders were offering some flexibility to those that could make a “solid case” and a probationary period should not close the door on an application for most borrowers.

He said: “It certainly shouldn’t  be as big a problem as recently going self-employed and the need to build a track record of income. However, if we do see more fluid movement in the months to come it’s an area that lenders may want to revisit to give some practical but measured assistance to borrowers in a new role.”

Matt Poole, director of Poole Family Financial, said: “I have found that lenders are generally very flexible when it comes to applicants within a probationary period. The key to probationary periods is that a permanent contract is on offer following completion of the period.

“There isn’t a one size fits all approach with probationary periods. When speaking to a broker it is important to disclose all the facts around employment history to give the best chance of a successful outcome when applying for a mortgage.”

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