Part-Time Jobs and Mortgages
Published 27th June 2018
Can you get a mortgage with a part time job?
For a lot of borrowers, the short answer is yes! One of the key things lenders will be looking at when you apply for a mortgage is your income, and affordability on a mortgage if you’re working part time may be less flexible – we’ll discuss in this article to give you a better idea of what options may be available if you’re looking for a part time job mortgage.
The key considerations are:
- Contract type
- How long you’ve been in the role
- Maximum borrowing / affordability
- Other income you receive (second jobs / benefit income)
- Deposit / equity levels
- Credit history
- Buy to let mortgages with part time income
Contract type and part time mortgages
If you’re on a permanent contract in a stable position, you are of course considered less risk by a lender, than someone on a temporary or short term contract. This is even more relevant when employed part-time, as your income is likely to be lower.
Length of employment and part time mortgages
I recently started a part time position, can I still get a mortgage?
Yes! There are still options available to you.
If you are applying for a mortgage with a new job, there are certainly lenders available to consider your application (more on new job mortgage here). If this a part-time role, the policy is much the same, however affordability may be closer to the limit if you are looking to borrow to a higher loan to income.
The length of employment required will vary from lender to lender, many want a minimum of 6 months’ employment history, some 12, but some are happy to lend from day 1. In fact, there are some that will consider a future contract within 3 month of the start date.
What if there’s a probationary period?
If there’s any probationary period with your new part time employment then there are lenders who have no issue with this, and others that require you to have completed this before accepting your application.
This is something the specialists we work with deal with daily, so don’t hesitate to get in touch and we will refer you on to one of the part time mortgage specialists.
How much can I afford on a mortgage with part time income?
Every lender is different in how they calculate affordability, some use their own affordability model to determine your maximum mortgage amount, others still have a more traditional income multiple model. Income multiples can still give a semi-accurate maximum borrowing level for most lenders, the average being around 4.5x your gross income for the year, and maximum (at the time of writing) up to 6x your income. To get an idea of your affordability you can use on of our multiple calculators here.
Is there a minimum acceptable income?
If you are just using a part time income, it’s important to point out that some lenders have minimum income thresholds, whereby they will reject any applicant who has an income under a certain amount, for instance £20,000.
Will my current borrowing impact affordability decision?
With almost all lender affordability models your outgoings will be taken into consideration, so if you have a lot of outgoings each month this may impact how much you can borrow. The exception to this is if you are repaying your current debts before the mortgage goes through, in which case some lenders are happy to consider your application as if you have zero debts.
Using other income sources for the application
As well as a part time income, some lenders may also take into consideration any benefits you receive such as child tax credits, working tax credits and child benefit. Bear in mind that some cap the amount accepted to the sum of your annual income – so if you earn £10,000 and receive £15,000 in benefit income, then some lenders will consider your annual income as £20,000 rather than £25,000. This can vary from lender to lender so it’s best to speak to one of the specialists in part time mortgages, to get a better idea of where you stand in the current market.
“Can I use a second part-time job for a mortgage application?”
If you’re in full time employment and also have a separate part time job on the side, lenders may well take this income into consideration. Again, every lender has a different policy - some will ignore second jobs, others are happy to consider them, and certain lenders will even accept income for third or fourth jobs so long as the income is reliable and sustainable.
How much deposit will I need if I work part time?
This depends on the value of the property and the maximum you are deemed to afford by each lender. If, for instance, the property is £200,000 and you have a part time income of £20,000 (thus a max loan of say, £100,000), then you’ll need £100,000 deposit.
The minimum deposit you’ll need will typically be 5%, however there are some lenders considering 100% of shared ownership mortgages, and perhaps even allowing you to use an unsecured loan to fund your deposit if affordable.
Another major factor in deposit requirement is your credit history, read below…
Can I apply for a mortgage on part time income, if I have bad credit?
This can be a little trickier, but that doesn’t mean there’s no hope!
This depends on exactly what your credit history looks like, in terms of when any credit issues were registered, what the issue type is (i.e. late payments, defaults, CCJs, Debt Management plans, Bankruptcy, IVA, Repossession), how much the issue was registered for, has it been repaid etc.
In order to establish your current situation it’s a great idea to access to your credit reports, and if you've not signed up before you can get the free trials here
Make an enquiry and we can have one of the specialists review this for you – they’ll know what each lender across the market does and doesn’t consider, and will establish which deals are available to you.
Can I apply for a buy to let mortgage with a part time job?
Buy to let mortgages can be more difficult to obtain for many borrowers on a part time income, as a lot of the lenders have minimum income thresholds that many part-time works may struggle to exceed. This rule can depend on your experience as a landlord however, as first-time landlords are often required to have a minimum income (of say £18,000 for example) to help the borrower cover the risk of any rental voids. That said there are some lenders with no minimum income threshold that may be more appropriate, and furthermore, if you’re an experienced landlord there are lenders that don’t require you to have any personal income. To read more about buy to lets with no minimum income see our article here.
If you’re working part time and looking for a mortgage, please enquire below today and one of the part time mortgage specialists will be in contact ASAP!
If you require immediate assistance please give us a call.