What is probation?

Probation is a common hiring practice that is becoming increasingly popular with companies who wish to try out several different employees before committing them to full-time employment. A probationary period is short-term and the exact duration is specified in the employee’s contract of employment.

Probationary periods usually apply if you have started a new job, changed careers or in some cases, departments. They are similar to a ‘cooling off’ or trial period and allow both employer and employee to decide whether the job is suitable before making a permanent decision.

A probationary period has implications on your job security. Employment can be terminated at any given time.

Outcomes of Probation

• Permanent employment.
• Extension of probation (if contract stipulates this).
• Promotion upon completion of probation (perhaps with its own probationary period).
• Termination of employment with the company.

Terminating the probation

Being on probation means there is an option available to both employee and employer to terminate the employment with little or no notice. Generally it is one week. The terms of the probation are listed in the relevant clause of the contract of employment. It is important to read the contract of employment carefully and be aware of the notice requirements for termination

How do the banks view probation?

• Not a stable form of employment with a supportable long term income.
• There is a risk that employment may be terminated at any time, resulting in no income and inability to afford mortgage repayments.
• Tendency to decline home loan applications based on these grounds.
• Generally only approve the loan once the probationary period is over.

Is it possible to borrow while on probation?

Mortgage brokers specialise in helping people on probation get their home loan approved. Did you know that some major lenders will still lend to people during their probationary period?

Enquire Online to find out how to get a home loan while on probation.