How Your Employment Type Affects Your Mortgage Prospects

When you apply for a mortgage, lenders will take a keen interest in your type of employment to assess how much and how regularly you’re paid.

If you’re in what’s deemed ‘non-standard’ employment – for example, you’re self-employed, you work part-time, or you’re a contractor – it could be trickier to get your application approved, but it’s far from impossible.

In this guide, you’ll learn everything you need to know about how your employment type could affect your odds of getting a mortgage, what you can do to improve your chances, and how a broker can help you.

Read on for more information or jump to the section that’s relevant to you via the links below…

Does employment type matter to a mortgage lender?

The short answer is yes. Before giving a mortgage application the green light, lenders go to great lengths to ensure an applicant can afford their monthly repayments.

After all, they’re lending out large sums and want to ensure they’ll get their money back at the end of the term.

To do this, they ask all applicants for proof of income.

This is usually pretty straightforward if you’re in a full-time, employed role.

You can provide recent payslips and bank statements to show a fixed amount of money regularly entering your account.

Things start to get a bit trickier, however, if you’re in non-standard employment – that’s anything other than a full-time, employed job.

That’s not to say you can’t get a mortgage if your employment type is considered ‘non-standard’.

You most likely can. It just means you may need to provide the lender with more detailed information about your experience and your financials, and you’ll probably require the services of an experienced broker.

Lender appetite for different employment types

Your type of employment will affect the number of lenders and the quality of deals available to you.

If you’re in a full-time, employed job and meet all other eligibility criteria, you should have access to a wide range of products from various providers.

If you’re in non-standard employment, the choice will be more limited.

How limited will depend on your employment status.

People in the following capacities are advised to seek professional advice before applying for a mortgage…

• Self-employed with less than two years’ income proof
• Sole traders
• Limited company directors
• Contractors
• Temp and part-time workers
• Anyone who’s just started a new job

For example, if you’re self-employed, but can prove that you bring in a regular income, you should still have plenty of options from several lenders.

However, if you’re a part-time worker in your probationary period, your choices will be more limited.

A broker who specialises in your specific employment type can tell you which lenders to approach and which are likely to turn you down.

Eligibility criteria

If your job falls into the category of ‘non-standard’ employment, you should still be able to get a mortgage.

Lenders will, however, ask you for more detailed information about your employment history and how and when you get paid.

Each lender will have its own criteria, but in general, this is what they’ll be looking for:

Sole traders

To be considered for a mortgage, you’ll typically need to have been trading for a minimum of 12 months.

However, lenders will examine your entire financial history to assess whether you can afford the loan, so the more income you can declare, the better.

Lenders will ask to see your latest tax returns, usually an SA302, as evidence of earnings. You can obtain this online or by phone from HMRC.

You can read more about sole trader mortgages on our sister website, Online Mortgage Advisor.

Limited company directors

Many lenders will require you to have been trading for at least two or three years, but there are a handful of specialists who’ll lend to you if you’ve been in business for just 12 months.

You’ll need to provide evidence of your earnings via an SA302 tax return, which you can obtain from HMRC.

You may also be asked to supply your last three months’ business and personal bank statements.

Some specialist lenders will consider lending to you based on your overall financial situation, including the profit you’ve retained in the business, rather than just your salary.

Contractors

The definition of contractor is broad and can vary from lender to lender, but it generally refers to anyone who temporarily works for a business for a set period of time.

They can be either employed by the company for the duration of the contract or be self-employed.

If you’re employed, you’ll need to supply payslips and bank statements as proof of income when applying for a contractor mortgage.

If you’re self-employed, you’ll be asked to provide an SA302 tax return as evidence of earnings.

You can try our contractor mortgage calculator below to get an idea of the maximum amount you could borrow.

Professionals

These are a special category of mortgage offered by some lenders to people who work in specific professions such as doctors, teachers, accountants, solicitors, surveyors and investment bankers.

Borrowers who fall into this category are deemed less risky, so some lenders offer them exclusive deals.

As people in these professions can see their pay significantly increase as they progress through their careers, some lenders will consider future earnings when considering their mortgage applications.

Read more about mortgages for professionals on our sister website, Online Mortgage Advisor.

Temporary workers

Several lenders will consider offering you a mortgage if you have a temporary job or you’re an agency worker, but they’ll probably ask you to produce evidence of consistent income earned within your field.

The type of job you do will also be an important factor in their decision-making process.

For example, a higher-skilled temporary worker, such as a locum doctor or teacher, may have more options.

Lenders will also consider the length of your contract. You’ll typically find it easier to get approved if you’re on a longer-term contract.

Some lenders may reject your application outright if your contract is less than 12 months, while others will still consider you. An experienced advisor can guide you on this.

Part-time workers

If you’re in a permanent, part-time job and can make your monthly repayments, you shouldn’t have much of an issue getting a mortgage.

The only caveats are some lenders will reject you straight out if you earn under a certain amount a year – £20,000, for example.

The amount you can borrow may be limited, particularly if you have large monthly outgoings.

If you have more than one part-time job, some lenders will consider your second income, too, while others will ignore it. Each lender will have its own policy.

Zero-hour contract workers

It can be tricky to get a mortgage, but not impossible.

Most lenders require evidence of a stable, guaranteed income before accepting an application, but if you approach the right provider, there’s a chance you’ll be approved if you’re on a zero-hours contract. If you fall into this category, seeking advice from a specialist broker is a non-negotiable.

Lenders will typically demand that you’ve been in your current role for at least 12 months, and they’ll also ask for evidence of prior experience working in your current field.

You’ll probably be deemed lower risk if you work in a certain sector. For example, you’re a doctor or a barrister.

Read more about getting a mortgage on a zero-hour contract in our guide.

Those who recently started a new job

Most lenders will require you to be in your job for at least three or six months.

However, there are some lenders who’ll consider your application with no minimum time in employment.

They may require evidence that your new role is permanent, and it will help if you can prove you were in continuous employment before starting your new job.

If you’re in your probationary period, some lenders will reject you straightaway.

Some, however, will consider your application, especially if you can show you have a track record of employment in your current sector.

Fixed-income mortgages

Many people are on fixed incomes, including those on pensions and disability benefits, and many lenders consider these incomes acceptable.

Other fixed income sources could come from –

How a broker can help people with your employment type

Whatever type of employment you’re in, a broker can save you time and money and guide you through the mortgage application process.

However, a broker can be even more valuable if you work in a non-standard employment type.

They can assess your situation and match you to the best lender for your circumstances, saving you the stress and expense of wasted applications.

We have brokers in our network who specialise in all employment types.

If, for example, you’re on a zero-hours contract, our experienced brokers can tell you which lenders will consider your application and which will reject it.

A broker will also be able to negotiate bespoke rates on your behalf and can get access to exclusive deals.

They can give you tailored advice and be on hand throughout your journey to ensure any issues are dealt with quickly.

Does your employment type affect the deposit requirements?

Working in non-standard employment doesn’t automatically mean you’ll need a large deposit.

Your lender’s deposit requirement will depend on various risk factors, including your credit history and the type of property you’re buying.

Most self-employed mortgages require similar deposits to other residential agreements, so you’ll typically be expected to put down at least 10%.

However, as with all mortgages, if you’re deemed a higher risk borrower, you may be required to put down a bigger lump sum.

Can you get a mortgage with no income?

A small handful of lenders will consider your application if you have no income at all.

However, you’ll have to prove you have an income stream or a large amount of savings you’ll be able to use to make your repayments.

There are also mortgage options for borrowers who are cash poor but asset-rich, such as an asset-backed mortgage. Still, these are usually offered exclusively to high-net-worth individuals via specialist mortgage lenders.

Get matched with a specialist broker today

Whether you’re buying your first property or you’re an experienced homebuyer, if your employment type is considered ‘non standard’, you should always talk to a mortgage broker before making any decisions.

A broker can assess your situation and offer bespoke advice that will ultimately save you time, money and stress.

We have a network of specialist brokers who help people in non-standard employment get mortgages approved every day.

Give us a call on 0330 822 0505 or make an enquiry and get matched with a broker who specialises in your employment type today for free.

We hand-pick all the advisors in our network and rigorously vet them so you know you’re getting the best possible advice.