Mortgage on a Temporary Contract

Mortgage on a Temporary Contract

Carly explains how getting a mortgage on a temporary contract works.

Can I get a mortgage on a temporary contract?

It’s definitely possible, although it could be quite challenging to obtain a mortgage on a temporary contract, as it does not provide the guaranteed income that lenders prefer.

The eligibility criteria for a mortgage may be stricter to offset the extra risk. So it’s always better to speak to a mortgage broker who will know which lenders to use. There are a number of specialists, and in some cases, mainstream lenders that we could approach.

How do temporary contracts work? What if your contract only runs for 12 months?

Temporary contracts offer a position that’s not usually expected to become permanent. They usually have an end date and could be subject to change.

If your contract only lasts for 12 months, it is still possible to obtain a mortgage. Some lenders will consider a mortgage with a minimum three months remaining on the contract.

If you haven’t got three months left, lenders will consider offering a mortgage if your employer will confirm that your contract is due to be renewed.

What eligibility criteria do I need to meet?

Most lenders will require 12 months history in a similar line of employment. There should be no gaps exceeding six weeks.

As we mentioned before, you’ll need three months remaining on the contract, or confirmation from your employer that they will renew for a further three months.

How will lenders assess my income as a temporary contract worker? What documents do I need to provide as someone on a temporary contract?

If you’re on a day rate, lenders will use guaranteed pay five days per week over 46 weeks per year. Otherwise lenders will assess your pay over the last three months and use your P60 to verify this.

In terms of documents, they’d need to see a copy of your most recent contract, your latest three months pay slips and bank statements to show receipt of your salary income. You may also need your most recent P60.

How much can I borrow for a mortgage on a temporary contract and what deposit do I need?

If you have a good employment history with no gaps, and a contract that still has a long term to go, there’s a very good chance that you could secure a 95% mortgage for up to five times your income.

How does remortgaging work when you are on a temporary contract?

There’s no difference. It’s exactly the same as a new purchase. Your income is assessed in exactly the same way.

We would go to the lenders that are right for your circumstances and your fixed term contract. A remortgage is no different to a purchase in terms of how we do it.

Can I get a Buy to Let mortgage on a temporary contract?

Absolutely. Buy to Let mortgages are assessed on the rental income. The temporary contract wouldn’t necessarily be an issue.

Can I apply for a mortgage on a temporary contract if I have bad credit?

Yes, certainly if you’ve got bad credit, there are lenders that we could go for the mortgage. There may be a requirement for a larger deposit.

How can I improve my chances of securing a mortgage as an agency or temporary contract worker?
An important thing is the stability of employment. If you could prove to the lender that you’ve been in the same line of work for over 12 months, this will greatly boost your chances of being accepted, as will a good credit score.

You could improve your credit score in a number of ways, such as reducing or paying off the balances of any credit cards, making bill and loan payments on time, and not applying for any credit or mortgages without talking to a mortgage advisor first.

How do you apply for a mortgage on a temporary contract?

Make sure all your paperwork is in all order and your contract is up to date. Then, speak to a broker, who will know which lenders will look more favourably on these types of contracts.

What else do we need to know about getting a mortgage on a temporary contract?

I would definitely advise speaking to a mortgage broker as we know the market and which lenders to use to find the right deal for your individual circumstances.

Finding these deals without a broker could be time consuming and would involve repeating your details many times to different lenders. So please speak to a mortgage broker – we could smooth out the process for you.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

SOME BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.