Mortgages for Temporary Workers
Published 27th June 2018
Those on temporary contracts may think obtaining a mortgage is not possible, good news is there are many lenders who offer these.
Obtaining a mortgage with a fixed term contract is more possible than many people think, with several lenders offering those with temporary jobs and agency workers the ability to secure financing for a property. Having an unconventional income shouldn’t put you off seeking help to secure that mortgage which fits your circumstances
Note that this relates to employed contracts. If you are self-employed click here
The 4 Types of Temporary Contract
First off we’ll briefly identify the different types of “temporary work” and the criteria you’ll need to meet to get a mortgage on a fixed term contract.
Getting a Mortgage With a Fixed Term Contract
Fixed Term Contracts - As it sounds, these contracts have a specified start and end date agreed upon beginning the employment contract. In some instances, fixed term contracts do not specify a period but end upon completion of a specific task. Often, lenders will want to see a track record of previous work considered relevant.
Mortgages for Temp Agency Workers
Temp Agency / Temp Worker - Similar to a fixed term contracts, these are not expected to become permanent. These contracts tend not to have an end date usually and when they do they are subject to change.
The type of job role you have can impact which lenders will help you but don’t worry as we have our own team of professional advisors who can advise you.
Obtaining a Mortgage on a Short Term Contract
Short Term Contracts - Often defined by the length and the nature of a given project so they’re distinctly different from fixed term contracts. If you want to get a mortgage on a short term contract, like other forms of temporary work, a track record of experience within your role plays to your advantage.
Mortgages for Workers Within their Probation Period
Probation Periods - Common for employees when they begin new employment. These are usually for a period of 6 months, some only 3. However, some can be up to a maximum of 12. Often, they offer less favourable terms within that period, however, your full contractual rights begin on your first day of work. Whilst probationary periods can cause problems with many lenders, other lenders are willing to accept the risk (often depends on industry sector) and confirmation of employment beyond this date is not required.
If you’re looking for a mortgage and have a temporary job or are between jobs, you might find our article on obtaining a mortgage if you’ve just started a new job useful.
Can I Get a Mortgage on a Fixed Term Contract?
In short, yes. Whether you’re on a fixed term contract or an employee in your probation period, there are a number of options to obtain a mortgage in these circumstances.
Alternative employment contracts still prove a valid affordability status with many lenders as you are ‘in employment’ - some will require certain criteria like being in a contract for at least 6 months.
If you feel your situation does not fit into these categories, we help our customers based on their individual circumstances.
Next we’re focusing closely on the lending criteria for getting a mortgage for the different types of temporary jobs many people work in.
Lender Criteria for Temporary Contract Mortgages
To obtain a mortgage let’s see what lenders are looking for, as providers generally have different prerequisites.
Some Lenders Don’t Like Fixed Term or Temporary Contracts. How Come?
When applying for a mortgage, some lenders view these types of contracts as not providing guaranteed income for the applicant, which can present challenges relating to affordability. Ultimately, they’re assessing risk.
The specialists we work with will direct you to lenders who accommodate all workers, not just those who are in straightforward permanent employment. Luckily, all cases are treated individually and we do our best to ensure you receive the best advice to provide a solution to your mortgage enquiry.
Your Job Role
As with any lender, this will be one of the first questions they ask as this can affect your eligibility for getting a mortgage on a fixed term contract. Why would your role affect this, surely it’s about your income as this represents your ‘affordability’ for a mortgage? Some roles are seen as more ‘stable’ than others based on the skill level/qualifications of the individual.
As an example, lower-skilled, labour-intensive roles such as those in the construction industry or for picking & packing warehouse operatives, will find there are fewer options than those with a much higher skill level (i.e. professionals) such as solicitors, locum doctors or teachers. Higher skilled roles will benefit from more flexible finance options and the usual rules for temporary or short term contracts can often be less strict.
No matter what your job role, we’re happy to discuss all your options for getting a mortgage with a temporary job. We have specialist advice on our site specifically for contractors who are looking for a mortgage.
Length of Your Current Contract
Many on short term contractors will quite often struggle looking to secure a mortgage from the high street banks. When discussing your options for borrowing, lenders need to know further details about your employment contract.
As mentioned, most temp workers will be considered with a degree of flexibility when it comes to the length of your contract. If your contract is fixed or short term, lenders will usually require a minimum of 6 months remaining on the contract, some it will be 12.
Even with 3 months left on an employment contract, obtaining a mortgage with a temporary job is something many lenders will discuss, other specialists consider zero months remaining, so long as there were 6 months on it when the contract started.
If you’re in a casual role with no ‘fixed’ term or more defined employment, lenders may ask for evidence of working within the same role for other employers for at least two years, this way they’re able to make an informed decision based on your work history.
Has Your Contract Been Renewed?
If your contract has been renewed at least once with your employer, there are lenders who will be happy to lend for fewer months remaining on the contract. If there are zero months remaining on the contract, official confirmation of a renewal would be considered OK too.
Length of Time in Your Current Role
The ease of which obtaining a mortgage for fixed term contract employees also depends on how long you’ve been in your current role - again, this criteria will vary across lenders. Some lenders require time in your current role to be a minimum of 12 months, others 6, and others no minimum whatsoever, so long as your current role has been with the same company.
Length of Time With Your Current Employer or Agency
As a temporary worker, being employed with the same agency or company for less than 12 months can present challenges with some lenders and others may decline your application. However, don’t worry as many will be satisfied if you have been doing the same job role elsewhere for 12 months.
Gaps in Employment?
Have you been between roles and have gaps in your employment history within the last 12 months? For some lenders this will be a problem, others, however, will accept gaps within the last 6 or 3 months and some will have no restriction at all so long as the income is sustainable. In this situation, individual cases are based on certain merits.
You’ll find lenders define ‘gaps in employment’ differently, which as a result can reflect your borrowing eligibility. Some lenders will view a “gap” as no job for a period of 1 week, some 2 weeks, and others are OK up to 4 weeks, so long as there’s an explanation.
Getting a mortgage on fixed term contract even without a consistent run in regular employment is something many lenders will consider.
I’m on a Fixed Term Contract, How Much Could I Borrow?
As with all lenders, criteria such as their max LTV (up to 95%) and affordability (up to 5x your income) remain the same as these measure your eligibility and therefore how much you can borrow. More adverse lenders tend to be less flexible with temporary income and usually require 12 months minimum in your current role/employer, with as few gaps as possible.
Mortgage applications on a fixed term contract often have tighter criteria for both agency temp workers and those in fixed/short term employment contracts, thankfully this is something we are very happy to help you with at OMA, ensuring you understand your borrowing options.
Want Help to Get a Mortgage With a Temporary Contract?
Try and be prepared with some of these quick and easy tips:
- Build a credit history responsibly by using a credit card to make purchases then paid off each month with your earnings
- Have documents which provide a trail of your work history (if you’ve been with your temp agency/employer less than 6 months)
- Most lenders will advise you save for as large a deposit as you can afford to reduce your max LTV requirements. Don’t worry, you don’t need a huge deposit and this is something one of our specialist advisors can talk through with you.
Ready to Make an Enquiry?
If you’re looking for a mortgage as a worker on a short term employment contract, get in touch as we work with specialists in this field every day, so we can be confident to put you in touch with those who can help.