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Getting a Mortgage While on a Fixed-Term Contract

See how expert advice could help secure a mortgage whilst on a fixed-term contract

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 28, 2022

If you’re on a temporary contract, you’re probably used to hearing how difficult it is to get a mortgage. Sure, an unconventional income can impact your choice of lenders and rates but does that mean that getting a mortgage on a fixed term is impossible?

No! In fact, a growing number of people in the UK with non-standard income are finding that, with the right advice, getting a mortgage on a fixed-term contract is easier than they thought.

In our guide to getting a mortgage with a fixed-term work contract, you’ll learn what criteria lenders look for when assessing applicants in this form of employment, top tips to boost your chances of mortgage approval and more. Plus in our FAQ section, we field the questions we hear most often from customers who are employed in this capacity.

Can you get a mortgage on a fixed-term work contract?

Yes. Getting a mortgage with a fixed-term contract can come with its difficulties and often this can put some prospective homeowners off. But worries about whether a fixed-term contract will affect your mortgage application shouldn’t stop you from pursuing a purchase.

Speaking to a mortgage broker can help to answer any concerns regarding your deposit size, Loan to value ratio and choice of lenders.

Lots of freelance or temporary workers also share worries about their credit history and the impact that it could have on an already temperamental application.

Whilst it’s true that multiple ‘issues’ on an application can reduce your overall choice of lenders, it may be possible for a trained mortgage broker to find you a provider who is happy to lend to you, subject to you passing their eligibility criteria.

If you’re currently working on a fixed-term contract and would like an idea of how much you may be able to borrow for a mortgage, take a look at our calculator below:

calculator icon

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.

The amount of money you earn each month. If it varies, put the average
The amount of money you earn each month. If it varies, put the average
£
The amount of money you earn each day. If it varies, put the average
£
If you don't work the same days a week, put the average

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.

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Top tips before you apply

Applying for a mortgage is a huge decision that could affect your future finances, so always ask a professional for their opinion before you proceed.

Follow our top tips below if you’re considering applying for a mortgage when on a fixed-term contract….

Do your research

Navigating your way through hundreds of lenders is time-consuming but it is necessary if you want to find the best deal based on your circumstances. Every lender offers varying terms, conditions and rates and each of these factors could significantly affect your ability to get approval for a fixed-term contract mortgage.

A lot of people simply don’t have the time or the lender knowledge to source and compare numerous lenders but there is an easier way.

In fact, a mortgage broker can do this all for you. The brokers we choose to work with have access to a database with rate tables as well as all of the other relevant lender information. Using this as well as their experience of mortgages, they can quickly determine which lenders are worth your time and which ones it may be best to avoid.

Avoid applying to multiple lenders

If you are looking for a mortgage with a fixed-term employment contract, you might find it a little more difficult to gain approval and so it can be tempting to apply again to another bank or lender. But that would be a mistake, especially if you were to apply again within a short period of time.

When lenders assess your eligibility for a mortgage, they will look at factors such as your affordability and credit history to determine what kind of borrower you are. If you have a history of mismanaging money or applying for multiple sources of credit, this can make you a less appealing borrower.

In the event that you are rejected for a mortgage, don’t make a rash decision to apply to another lender – too many hard searches on your credit file could jeopardise future credit applications. A mortgage broker can assess your situation and advise you on the best steps to take and introduce you to the right lender for the first time.

Getting a mortgage on a fixed-term employment contract

Some lenders can be cautious when it comes to providing mortgages to borrowers with fixed-term employment contracts as this type of employment is less predictable. The nature of this employment can leave some lenders with concerns about how a borrower will pay their mortgage in the event that their contract ends and they can’t find additional work.

That being said, there are some things that you could do to limit the risk of a mortgage rejection if you are applying with a fixed-term employment contract…

  • Provide the lender with a history of relevant employment contracts. This will evidence that you have been able to source work consistently.
  • Ensure your accounts are up to date and correct. Errors with your accounts can cause serious delays and could affect the likelihood that you’ll be approved.
  • Present the lender with a copy of the employment contract. Some lenders prefer contacts with minimum employment of six months although this can vary. Lenders tend to require a minimum fixed term contract history, or at least evidence of being employed in the same/similar sector, along with a minimum time remaining on the current contract. All lenders have different rules around this, however. An employment contract can show that your work is stable until the near future and can also provide further evidence of your income.

Mortgage lenders who might accept fixed-term employment contracts

The appetite to lend to borrowers with fixed-term employment contracts can vary between lenders but working with a broker can help to identify which ones are more likely to approve your mortgage.

The brokers we work with have successfully arranged mortgages for fixed-term contract workers with the following lenders…

  • Halifax
  • Nationwide
  • Barclays
  • HSBC
  • Santander
  • Natwest
  • Coventry
  • First Direct
  • Virgin
  • Lloyds
  • Leeds Building Society
  • Yorkshire Building Society
  • RBS
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Speak to a mortgage expert

Mortgages can be a lot to take in and can often leave borrowers with lots of questions. There are so many factors that could affect your chances of getting a mortgage while on a fixed-term contract so for the right advice, speak to an expert with specialist knowledge and experience in this matter.

We offer a free broker-matching service that can pair you with an advisor based on your needs and circumstances. If, for example, you’re on a fixed-term work contract, our service will introduce you to a broker who helps people who are employed in this capacity every day.

Call 0808 189 2301 or make an online enquiry and one of the specialists we work with can talk you through the process of getting a mortgage with a fixed-term employment contract.

FAQs

Can you remortgage on a fixed-term contract?

Your current lender should usually be your first port of call when you are considering remortgaging although working with a broker can help to compare the various other deals that may be available.

This can be especially helpful if your employment status has changed and you are now on a fixed-term work contract.

A change in income can significantly affect your choice of remortgage lenders as some may determine that your type of employment is too risky or that your average income is now lower, low-income mortgages are available but it’s best to speak to a broker who will be able to approach the best lender for your circumstances and affordability.

If you want to remortgage whilst on a fixed-term contract it can be helpful to know that there may be a number of options available based on your circumstances. Before applying to any lender, speak to a broker, be aware of any associated costs and then take the time to carefully consider the pros and cons of each choice.

Can a guarantor help me get a mortgage on a fixed-term work contract?

In some cases, it may be beneficial to have a guarantor on your mortgage application, especially if you are finding it difficult to find a lender who will accept your employment status.

That being said, some lenders require the guarantor to afford the whole of the loan, with a select few just requiring the guarantor to afford the shortfall and because of this, many lenders also require that your guarantor is a relative.

Are the rules around fixed-term contracts and mortgages any different in Ireland?

It depends on which part of Ireland you’re based in. Your location, as well as the location of your property, can affect your ability to find a lender who is willing to accept applicants on fixed-term contracts. In some rural areas where there may be a refined choice of lenders, it can be more tasking to find one that specialises in such a niche area.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

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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!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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