Can I Get a Mortgage on a Fixed-Term Contract?

Fixed-term contracts used to be considered to be an unconventional form of income, however, they tend to be pretty commonly found these days. Generally speaking, the only difference between this type of employment and regular employment, is how your contract is structured.

Regular employment generally will have you sign a contract at the start of your employment, which will stay present until you hand in your notice or have your contract terminated.

Being employed with a fixed-term contract means that you’re only contracted for a particular length of time, though you will still be classed as PAYE, similar to the type of contract a teacher might have on a year-to-year basis.

Is it possible to get a mortgage on a fixed-term contract?

Yes, it is definitely possible. It can prove to be quite challenging for those looking to obtain a first time buyer mortgage. Luckily though, there are still plenty of lenders that we have on the panel who are willing to accept this type of contract for a mortgage.

Current Contract Length

The length of your current contract can impact your ability to obtain a mortgage. It may be more difficult if you have a short-term contract, due to the fact that you’ll be taking out such a large loan, with no long-term guaranteed employment.

Generally speaking, a lender will want to see consistent, longer term contracts back-to-back. Doing so will show them that you are likely to keep receiving work and thus will be able to maintain your mortgage payments.

Additionally, having written confirmation from your employer that you will have a contract renewal once your current one ends, will also increase the likelihood of your mortgage application being accepted by the mortgage lender.

Breaks in Employment

If you are having breaks in employment, this can be quite problematic for mortgage lenders, as they will be unsure of your ability to maintain regular monthly mortgage payments.

Depending on if you have had any significant employment gaps within the last 12 months, you may be unable to obtain a mortgage. This depends on the mortgage lender and their lending criteria. Some may be more lenient if you have a sustainable income.

Lenders also vary on what is deemed a gap in employment. Some lenders may consider a single week as such, whereas others may be less strict and deem 4 or 5 months as a gap. A trusted mortgage broker will be able to review lender criteria and find you the most appropriate one to take out a mortgage with.

What documentation do I need to get a mortgage on a fixed-term contract?

In order for a mortgage lender to be able to consider accepting your mortgage application, they will need to see various pieces of documentation from you.

The types of documentation you will be required to submit, include; either a passport or driving license for proof of ID, a proof of address (if you used any of the latter for ID, it cannot be used for address as well), your most recent CV, the most recent employment contract you have (as well as potential proof of previous employment), and the last 3 months bank statements and payslips.

A trusted mortgage advisor will be able to review your documents beforehand to ensure everything is suitable to present to the mortgage lender. If they require anything else from you, they will inform you of this, so that you can be better prepared for your mortgage.

How much can I borrow on a fixed-term contract?

Chances are, so long as you have a good history of consistent employment, minimal or no gaps, and a contract that is still currently running and has quite some time left on it, you should be able to find yourself with access to at least a 95% mortgage, putting down only a 5% deposit.

Unfortunately, because of the risk involved, if you do have any gaps in employment or a shorter contract, mortgage lenders may require you to put down a much larger deposit.

Can you get a remortgage on a fixed-term contract?

If you are already a homeowner who is still on or now on a fixed-term contract and reaching the end of your initial fixed period, you may be wondering what your remortgage options may be. It’s at this point that you will likely benefit greatly from taking expert remortgage advice.

The reason for this is that as well as navigating various new deals that you may be able to access, you may have also had a change in income. Perhaps you aren’t finding work as frequently as you once were? Perhaps you now have a lower average income?

These things can really make a difference to your ability to take out a remortgage. Your options may potentially be quite limited and could possibly come with additional costs, so it is always recommended to take remortgage advice ahead of attempting to remortgage.

Book Your Free Mortgage Appointment

If you are currently wondering if you can get a mortgage on a fixed-term contract, the simple answer is yes, this may be possible for you.

In order to better your chances of obtaining a mortgage, book a free mortgage appointment with one of our dedicated mortgage advisors today. We’ll take a look at your case and see how we are able to help.

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

7th February 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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