Mortgage on a Temporary Contract
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Mortgage on a Temporary Contract
We explore how to get a mortgage on a temporary contract with Alex and Carley Ramsay.
Can I get a mortgage on a temporary contract?
Absolutely, although it does depend on your circumstances and history. But it’s definitely possible for lenders to consider people on temporary contracts.
How do temporary contracts work? What if your contract only runs for 12 months?
There are different types of temporary contracts. Some will be open-ended and some have a fixed end date, and lenders will treat each type differently.
Generally, they’re looking for your track records with these types of employment. With a temporary contract, normally lenders want to see a 12 month history of earnings.
How do temporary contracts work? What if your contract only runs for 12 months?
Lenders look for history when it comes to temporary contracts, because your earnings are variable. Typically, they want to see about 12 month’s history. As long as you’ve got that, lenders can start to consider using that income.
If you specifically have a 12 month contract, some lenders will lend straightway, especially if you’ve got a history of other work, because you have 12 months’ certainty. Other lenders would want you to have a history of doing that sort of work and having contracted before.
What eligibility criteria do I need to meet when it comes to temporary contracts?
It’s about having a history of your agency work or temporary contract work. As Alex said, it would be 12 months’ history to make sure that your income is realistic and sustainable going forwards.
How will lenders assess my income as a temporary contract worker? What documents do I need?
Lenders do vary, but generally we need 12 months’ history as a minimum. They may consider a shorter time if your temporary work is a secondary income – for example, if there’s another person on the mortgage with permanent employment, or if you have a main job and do temporary work on top of that.
In terms of documents, it’s generally pay slips. Some lenders want to see actual contracts if they are fixed term – three months, six months or 12 month contracts, for example. You may also need to provide bank statements.
How much can I borrow for a mortgage on a temporary contract? What deposit do I need?
It’s no different to a normal mortgage. We’ve still got normal high street lenders that will consider that. The minimum is a 5% deposit if you want to have a lot of options to choose from. One lender at the moment is doing a 100% mortgage subject to criteria [podcast recorded in February 2024].
How does remortgaging work when you are on a temporary contract?
It’s not necessarily any different to the normal remortgage process. It’s still about meeting the lender’s criteria. As long as you have history you will be treated in a very similar way.
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Can I get a Buy to Let mortgage on a temporary contract?
Absolutely, depending on the lender and their criteria, obviously. Buy to Let mortgages are assessed slightly differently. Some Buy to Let lenders don’t actually require a minimum income and the temporary contract wouldn’t necessarily be an issue.
If you do need to meet a minimum income threshold to potentially get a better deal or access more options, as long as you’ve got history, lenders will consider that, as well.
Can I apply for a mortgage on a temporary contract if I have bad credit?
It depends on how bad it is. There are mortgages specifically for people with bad credit, but perhaps your situation is not as bad as you think. You might fit with a mainstream lender.
The deciding factor on the appropriate lender is more about credit score than your temporary contract work – as long as you’ve got the history, it’s feasible.
As with any application, how much you can borrow is about your income and your credit rating. When you speak to a broker, we can whittle down the options and come up with a plan for you.
How can I improve my chances of securing a mortgage as an agency or temporary contract worker?
The main thing is just making sure you’ve got all of your information to hand. A broker will need those to give you accurate advice – so collate your pay slips and maybe jot down your work history.
Some lenders also may like to sort of see reassurance from the agency that the work is going to continue. That might potentially mean a letter from them to confirm the work is ongoing and they don’t perceive any problems going forwards.
It’s not always necessary, but it certainly won’t harm the case by putting it forward in that way.
How do you apply for a mortgage on a temporary contract?
We will make it as easy as we can for you. We will let you know exactly what you need to provide and when.
The normal process is to understand your situation and the ins and outs of your income, commitments and background situation to provide detailed advice. Once we’ve established what’s possible, we can take it forward and do an Agreement in Principle – a form of commitment from a lender that they can lend the money.
From there we would take care of the application process for you and keep you informed. It’s definitely very helpful to talk to a broker as early on in the process as possible.
We specialise in these more complex cases. It can be a bit of a minefield for a client to understand their options, so it’s worthwhile speaking to a qualified broker to get detailed advice.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
SOME BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
Approved by The Openwork Partnership on 19/02/2024.
Useful Links
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- What Income do Mortgage Companies look at Self-employed
- Self Employed Mortgage with One Years Accounts
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- Joint Mortgage Self-Employed
- Joint Mortgage – One Self-Employed Applicant
- Buy to Let Self-Employed Mortgage
- Contractor Mortgage
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