Getting a Mortgage on a Fixed-Term Work Contract
Worried that being on a fixed-term work contract might stop you from getting a mortgage? The brokers we work with can help you find the finance you need.
Firstly, are you currently working on a fixed-term contract?
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Author: Pete Mugleston - Mortgage Expert, MD
Updated: December 14, 2021
While you might think it’s impossible to find a lender who will agree to offer a mortgage based on fixed-term contract work, you’d be wrong.
Over 1.6 million people across the UK are temporary workers, many with a fixed-term contract, and scores of them manage to successfully get onto the property ladder each year.
Before you proceed, though, read on to find out a little more about securing a mortgage while working on a fixed-term contract….
The following topics are covered below...
What do lenders class as fixed-term employment?
Mortgage lenders typically class any work contract that has an end date and isn’t permanent as fixed-term employment.
The lack of a permanent, reliable salary means fixed-term contract workers are considered riskier mortgage customers than someone with a permanent job with a guaranteed wage.
Of course, in many situations, people working on a fixed-term contract have done so for years and are pretty secure in their role.
In fact, the longer you have been with your employer, even if it’s on a series of fixed-term contracts, the better chance you have of securing a mortgage with a lower interest rate.
The important part is that even if you are employed on a fixed-term contract basis, you’re able to prove your ability to pay your monthly mortgage every month for the term of the mortgage.
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Can you get a mortgage on a fixed-term contract?
Yes. Just because you don’t have a permanent job, doesn’t mean you can’t get a mortgage. even if you work on a temporary, fixed-term contract, you can still secure a mortgage to buy your own home.
People who have worked for a year or more on temporary or fixed-term contracts, with no gaps in employment are more likely to have the best mortgage options.
However, different lenders have different rules which means that while some lenders won’t be suitable for your situation and requirements, there are others that are.
If you want a mortgage but are on a fixed-term employment contract, you’ll stand a better chance of approval if you speak to a mortgage broker before you apply.
There are advisors who specialise in getting mortgages for people in temporary jobs, and they have deep working relationships with the lenders you’d need to approach.
Before you speak to a broker, a good starting point is to find out how much you could potentially borrow on your income.
Try our contractor mortgage calculator below to get a clearer idea of this…
Contractor Mortgage Affordability Calculator
Our contractor mortgage calculator will tell you how much you can borrow, whether you work in an employed or self-employed capacity. Select your trading style below, enter the relevant details about your income and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a mortgage broker for bespoke calculations if you have been contracting for less than 12 months, your contract is coming to an end, or there is uncertainty around your long-term employment.
This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a broker for bespoke calculations if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.
Some lenders would consider letting you borrow
This is based on 5 times your income, a calculation only some lenders are willing to offer. You may struggle to find a lender who will offer this income multiple to an employed contractor without the help of a broker, and you should seek advice from one regardless if there is any uncertainty around your employment situation.
This is based on 5 times your income, a calculation only some lenders offer. You might need a broker to access this salary multiple and should take advice from one regardless if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.
A minority of lenders would consider letting you borrow
Only a small number of options are available for employed contractors who want to borrow based on this salary multiple. Few UK mortgage lenders offer mortgages based on x6 income under any circumstances, and you’ll almost certainly need the help of a specialist mortgage broker who knows this corner of the market inside out to access them.
Only a small number of options are available for self-employed contractors who want to borrow based on this salary multiple, as few mortgage providers are willing to offer 6 times salary deals. You’ll almost certainly need the help of a mortgage broker to borrow this amount.
Get Started with an expert broker to find out exactly how much you could borrow.
How to get a mortgage on a fixed-term contract
If you’re employed on a temporary contract and would like a mortgage to buy your own home, there are a number of steps to take…
1. Preparing for your application
Ensure you have all your SA302 tax return forms for at least the past 12 months – but preferably longer – which show your earnings over that period.
You should also gather all of your employment details including your dates of employment, copies of the fixed-term contracts and all evidence of earnings or any pay rise.
Any evidence showing you will secure another fixed-term contract once your existing one ends would also be helpful, although not all lenders will consider it.
2. Get your deposit and proof of it together
Get your deposit together to show your potential lender how much you are able to pay down to buy a home. Additional savings you have should also be declared clearly as an additional security detail for any potential lender.
3. Speak with a broker who specialises in fixed-term contract mortgages
They will have access to specialist lenders not on the open market and can advise you as to which lender and product would best suit your situation.
We offer a free, broker matching service that will take your needs, circumstances and employment situation into account to pair you with the advisor who’s best positioned to help you.
Your broker will guide you through the next steps from here, offering bespoke advice about how much you could potentially borrow and introducing you to the lender who’s most likely to offer you a good deal based on your affordability.
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What is the lending criteria?
While there are a number of mortgage lenders who have products suitable for fixed-term contract workers, each lender has their own criteria you as a borrower, must fit.
Some lenders have a mortgage limit, others will use different ways to calculate affordability.
This could be based on a combination of your historic income from your fixed-term contract and your potential future earnings.
Due to the additional risk many lenders assign to fixed-term contract mortgage applicants, you may not be able to secure the lowest mortgage rates out there.
But, provided you can fulfil their eligibility requirements, show your SA302 tax return, evidence of continuous working for a period of 12 months or more and have a decent deposit, then you should be in a good position to secure that mortgage and buy a home.
It’s also worth knowing that some lenders will be more likely to offer a mortgage to people working on fixed-term contracts in certain, high-demand professions. Teachers and doctors typically fit that bill, while seasonal workers will have fewer options.
Moreover, keep in mind that the right mortgage broker can increase your chances of landing a good interest rate through their extensive lender contacts list.
Get matched with the right mortgage broker today
Each potential home buyer working on a fixed-term contract will be in a unique situation which means that if you really want to buy a home of your own, your chances will be better if you take advice from an experienced mortgage advisor.
An advisor who has helped other applicants secure a mortgage while working on a fixed-term contract will know which lenders can help, what you need to get that mortgage and have access to products you won’t find online or on the high street.
Give us a call on 0808 189 0463 or make an enquiry and we’ll help you find the right mortgage advisor who can assist you in getting a mortgage while on a fixed-term contract and buying a home of your own.
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Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!