Can I Refinance Home Loan While on Probationary Employment?

Under the Philippine Labor Code, probationary employment is a trial period that allows an employer to evaluate whether a new employee meets the company's performance standards before granting regular or permanent status. The probationary period can last a maximum of six (6) months from the date of engagement, unless a longer period is specifically required by an apprenticeship agreement or other applicable laws.

During this period, the employee is not yet considered a regular employee, which means job security is not guaranteed. Banks and lenders view this as income uncertainty — your salary may stop if your employer decides not to regularize you. This is the primary reason most lenders are cautious about approving refinancing applications from borrowers still on probation. From a bank's perspective, they are being asked to restructure a long-term secured loan for someone whose income source has not yet been confirmed as stable.

Yes, it is technically possible, but it is significantly more difficult than applying as a regularized employee. There is no blanket law prohibiting banks from approving refinancing applications from probationary employees — the decision is entirely at the bank's discretion based on their internal credit policies.

In practice, most major Philippine commercial banks prefer applicants who have been employed for at least one to two years with their current employer, and who hold regular or permanent status. Some lenders will outright decline an application if the applicant is still within the probationary period. Others may consider your application if you can demonstrate compensating factors such as:

• A strong credit history with no missed payments on your existing home loan
• A low loan-to-value (LTV) ratio — meaning you have significant equity in your home
• A co-borrower with stable, regularized income
• Substantial savings or other liquid assets
• Employment at a well-known, large corporation or multinational company
• A high salary that is well above the bank's minimum income requirement

If you are in this situation, your best approach is to work with a mortgage broker like Nook, who can match you with lenders that are more accommodating of your current employment status, rather than applying to banks one by one and risking multiple credit inquiries.

Bank policies are not always published publicly and can change depending on their current lending appetite. However, based on general market knowledge, here is a rough guide to how major Philippine lenders typically approach probationary applicants:

• BDO and BPI — Generally require regular employment status. They may consider probationary applicants on a case-by-case basis if the applicant has a long existing relationship with the bank and a strong repayment track record.
• Security Bank and RCBC — Known to be somewhat more flexible in their credit assessments and may evaluate other compensating factors more generously.
• Metrobank and UnionBank — Typically prefer regularized employees but may look at the overall credit profile holistically.
• EastWest Bank and Chinabank — Worth exploring as they sometimes cater to borrowers who don't fit the standard profile of larger banks.
• PSBank — Generally conservative; regular employment is strongly preferred.
• Pag-IBIG (HDMF) — Has specific membership and contribution requirements that may be more accessible to some probationary employees (see the Pag-IBIG question below).

Because policies differ and are subject to change, we recommend letting Nook compare lenders on your behalf. We know which banks are currently open to non-standard employment situations and can guide your application to the most suitable lender.

If you are on probationary employment, banks will typically require the standard refinancing documents plus additional proof of income stability. Here is what you should prepare:

Standard refinancing documents:

• Duly accomplished loan application form
• Valid government-issued IDs (at least two)
• Certificate of Title (TCT or CCT) of the property
• Latest Real Property Tax (RPT) receipt
• Photocopy of Transfer Certificate of Title
• Statement of account or latest billing from your existing lender

Employment and income documents (probationary applicant):

• Certificate of Employment (COE) — must clearly state your position, monthly salary, start date, and employment status (probationary)
• Employment contract or offer letter showing your salary and probationary period terms
• Latest one to three months' payslips
• Latest ITR (Income Tax Return) — if available from your previous employer
• Bank statements for the last three to six months showing salary credits

Compensating documents that can strengthen your application:

• Passbook or savings account statements showing significant savings
• Proof of other income sources (rental, investment dividends, etc.)
• If co-borrower is involved: their complete income documents

Be transparent with the bank. Attempting to conceal your probationary status is considered misrepresentation and can lead to immediate rejection or loan recall.

Possibly, yes. Interest rates offered during refinancing are based on a combination of factors including prevailing market rates, the lender's cost of funds, the loan amount, the loan term, the property's appraised value, and — critically — the borrower's risk profile. Probationary employment increases your perceived risk profile.

If a bank agrees to refinance your loan while you are on probation, they may:

• Offer a slightly higher interest rate than they would to a regularized employee with an identical financial profile
• Require a lower loan-to-value ratio (meaning you need more equity in your property)
• Impose stricter conditions, such as requiring proof of regularization before loan drawdown
• Request post-dated checks or automatic debit arrangements as an added security measure

Through Nook, the best refinance rate currently available is 5.99% per annum. Even if you receive a rate slightly above this due to your employment status, refinancing can still result in substantial savings if your current rate is 7% or higher. For example, on a 3,000,000 loan balance at 20 years remaining, moving from 8.5% to 6.5% would reduce your monthly payment by approximately 3,900 pesos and save you over 930,000 pesos in total interest — a significant outcome even if you don't get the absolute lowest rate.

In many cases, waiting until you are a regular employee is the smarter financial strategy — even if it means delaying your refinancing by a few months. Here's how to think about this decision:

Arguments for waiting:

• You will qualify for more lenders, giving you stronger negotiating power
• You are more likely to be offered the best available rates
• Your application process will be smoother and faster
• You avoid the risk of a rejected application, which can slightly affect your credit score

Arguments for applying now:

• If your current home loan rate is significantly high (say 9% or 10%), every month you delay costs you money in unnecessary interest
• If your probationary period ends soon (e.g., within 1-2 months), the timing difference may be negligible
• Some lenders will conditionally approve your application and hold the processing until you submit proof of regularization

Practical tip: If your probationary period ends in less than three months, consider starting the refinancing process now. Loan processing in the Philippines typically takes four to eight weeks, which means by the time the bank requires final verification, you may already be regularized. Discuss this timing strategy with a Nook mortgage advisor who can help you plan accordingly.

Yes — adding a co-borrower is one of the most effective strategies to strengthen a refinancing application when your own employment status is uncertain. A co-borrower's income, assets, and credit history are evaluated alongside yours, and a strong co-borrower profile can significantly offset the risk associated with your probationary status.

The most common co-borrowers in Philippine home loan applications are:

• Spouse — If your spouse is a regularized employee or self-employed with a stable business, their income can anchor your joint application
• Parent or sibling — Some lenders accept immediate family members as co-borrowers
• Business partner — Less common but accepted by some lenders in specific situations

For a co-borrower arrangement to work effectively, the co-borrower should ideally have: at least two years of stable employment or business operation, a clean credit record, and sufficient income to service the loan on their own if needed. Banks typically evaluate whether the co-borrower alone would qualify for the loan — if yes, your application has a much higher chance of approval even as a probationary employee.

Keep in mind that the co-borrower shares legal responsibility for the loan. Make sure both parties understand this commitment before proceeding.

This is an important question with a nuanced answer. Pag-IBIG (HDMF) refinancing has different eligibility rules compared to commercial banks, and in some respects may be more accessible to probationary employees — but there are specific conditions.

To refinance through Pag-IBIG, the primary requirements are membership-based rather than purely employment-based. You need to:

• Be an active Pag-IBIG member with at least 24 monthly contributions
• Have not been in default on your existing Pag-IBIG loan
• Meet the income requirements relevant to your desired loan amount

If you are a probationary employee but have been making regular Pag-IBIG contributions (through payroll deduction at your new employer or voluntarily), you may still qualify — especially if you have a long contribution history from previous employment. However, Pag-IBIG will still look at your income documents and ability to repay.

Alternatively, if your goal is to move from a Pag-IBIG loan to a private bank for a lower rate, it is worth knowing that refinancing a Pag-IBIG home loan to a private bank is possible and can result in meaningful savings — though your employment status will then be subject to the private bank's own eligibility criteria.

Transitioning from salaried employment to self-employment (e.g., you started your own business, became a freelancer, or are now a sole proprietor) is treated differently from probationary employment, but presents its own challenges for refinancing.

Most Philippine banks require self-employed borrowers to have been operating their business for at least two years, supported by audited financial statements, ITRs, and bank statements showing consistent business income. If your business is brand new, you may face similar or greater difficulty than a probationary employee.

However, some options exist:

• If your new business is a continuation of your previous profession (e.g., a doctor who previously worked at a hospital now running their own clinic), some banks apply more flexible standards
• If you have a co-borrower who is salaried and regularized, this can compensate for your non-traditional income
• If you have substantial assets or savings, these can serve as additional collateral or compensating factors

If credit history is also a concern for you — perhaps due to gaps in income during the transition — you may find our guide on how to refinance with bad credit in the Philippines helpful for understanding how lenders evaluate non-standard borrower profiles.

Nook is the Philippines' first digital mortgage broker, and our service is completely free for borrowers. We work with a panel of Philippine banks and lenders and have visibility into their current credit appetites — including which lenders are more open to evaluating probationary employees on a case-by-case basis.

Here's how Nook can specifically help you in this situation:

• Lender matching: We identify which lenders are most likely to consider your application given your current employment status, so you avoid wasting time on banks that will automatically decline you
• Rate comparison: We compare available rates across multiple lenders simultaneously, so you can see the full picture rather than receiving one offer at a time
• Application strategy: Our advisors can recommend whether to apply now, wait until regularization, or use a co-borrower — based on your specific numbers and timeline
• Document preparation: We guide you on exactly which documents to prepare to give your application the strongest possible case
• No cost to you: Nook earns a referral fee from the bank upon successful loan release — you never pay us anything

The best refinance rate currently available through Nook is 5.99% per annum. Even if your situation means you qualify for a slightly higher rate today, our advisors can help you plan a refinancing strategy that gets you to the best possible rate — whether that's now or after regularization. Start with a free assessment at nook.com.ph.