Temporary Contract Mortgages

Temporary Contract Mortgages

Temporary contract mortgages while working can seem daunting, but it’s more achievable than many people think. Individuals on temporary contracts often referred to as a temporary worker may face unique challenges when seeking a mortgage.

Many lenders have adapted their criteria to suit non-traditional income sources as the job market evolves and more workers operate as contractors, agency workers, or freelancers.

This article covers everything you need to know about applying for a temporary contract mortgage, including eligibility criteria, differences between employment types, borrowing potential, and which lenders are most flexible.

Introduction to Mortgages

Getting a mortgage can feel overwhelming, especially if you’re working on a fixed term contract or in temporary employment. Many people assume that only those in permanent roles can secure a mortgage, but that’s no longer the case. The mortgage market has evolved, and there are now more options than ever for temporary workers, agency workers, and self-employed individuals.

Understanding the different types of contracts and the eligibility criteria for each is key to a successful mortgage application. In this guide, we’ll provide valuable guidance on how to navigate the process, what lenders look for, and how you can improve your chances of getting a mortgage no matter your employment status.

Whether you’re on a fixed term contract, working through an agency, or managing your own business, you’ll find the information you need to make informed decisions about mortgages and your future home.

Can You Get a Mortgage on a Temporary Contract?

Yes, you can get a mortgage while on a temporary contract but you’ll face stricter scrutiny compared to someone in full-time permanent employment. Lenders will still class you as employed. However, how lenders treat and view applicants on temporary or fixed-term contracts can vary.

Lenders often assess your employment history, focusing on continuous work in your current line of work, and may evaluate your application differently based on job stability and profession type.

Lenders typically want:

• At least 12 months of continuous work in the same role or industry

• A current contract with at least 3–6 months remaining

• Or, evidence of renewed contracts or long-term work history

• Regular, traceable income (via payslips, remittance slips, or bank statements)

• The contract’s end date to be far enough in the future to demonstrate income stability and align with the mortgage term

Demonstrating long term employment, a history of regular employment, and a sustainable income can significantly improve your chances of mortgage approval. Lenders are more likely to approve applicants who show ongoing, reliable work and financial stability, even if they are not in permanent roles.

What Is a Fixed-Term Contract Mortgage?

A fixed-term contract mortgage (also known as a fixed contract mortgage) is a home loan designed for individuals employed for a set period (e.g., 6–12 months). Common in education, IT, healthcare, and construction, lenders assess:

• Length of your current contract

• Likelihood of renewal

• Time in your profession

• Track record of similar contracts

Fixed term contract mortgages have different eligibility criteria compared to those available to applicants with a permanent contract, as lenders often view permanent employment as more stable.

Some lenders are happy with just 6 months on your current contract, especially if you’ve been contracting in the same field for several years. However, applicants on short term contracts may face additional scrutiny from lenders compared to those with longer fixed contracts or permanent roles.

Agency Workers vs Contractors – What’s the Difference?

Agency workers and contractors may also be on temporary employment contracts or zero hours contracts. These types of temporary work arrangements can impact mortgage eligibility, as lenders may require additional documentation to demonstrate financial stability.

 Challenges of Getting a Mortgage on a Temporary Contract

While it’s possible, be prepared for additional checks:

• Short contract duration may make lenders nervous

• Gaps in employment history reduce your chances

• Higher deposit requirements in some cases (especially for agency workers)

• Bad credit combined with a temporary contract limits your lender options

• Outstanding debts should be reduced as much as possible to improve your eligibility

• Mortgage providers will closely assess your ability to make regular mortgage repayments and mortgage payments, especially if your income is variable

Other factors, such as your credit score, expenses, and overall financial profile, also play a significant role in mortgage approval.

How Much Can You Borrow on a Temporary Contract?

Typically, you can borrow 4.5x your annual income, although some mortgage lenders may go higher (up to 5x or 5.5x) for strong applications. Working with a broker can help you find lenders or other lenders who are more flexible with temporary or fixed-term contracts. Whole market mortgage brokers can give you access to a wider range of mortgage lenders and mortgage providers, increasing your borrowing options.

For contractors or agency workers:

• Some mortgage lenders use a daily rate calculation (e.g., £300/day x 5 days x 46 weeks)

• Other lenders will use your average annual income based on 1–3 years of accounts

Documents You’ll Likely Need

To apply for a temporary contract mortgage, you’ll need:

• Current employment contract (and previous if available)

• Proof of renewal or reference from employer

• 3–6 months’ payslips (or remittance slips for agency workers)

• Bank statements

• ID and proof of address

• SA302s and Tax Year Overviews (for self-employed contractors)

Mortgage Application Process

The mortgage application process involves several important steps, and for those on fixed term contracts or in temporary employment, it’s essential to be well-prepared. Lenders tend to view applicants with non-permanent contracts as higher risk, which can impact both your eligibility and the rates you’re offered.

However, many lenders including some who specialise in this area are open to considering your application if you can demonstrate income stability and a solid employment history.

To strengthen your mortgage application, you’ll need to provide comprehensive documentation. This typically includes recent bank statements, tax returns, and copies of your employment contracts. Lenders will closely examine your employment history to assess how consistent your income has been, and they’ll also review your credit history to ensure you’re a responsible borrower.

Working with a mortgage broker can be invaluable, they can help you find the right lender for your situation, guide you through the paperwork, and increase your chances of getting a mortgage that suits your needs. By being proactive and organised, you can navigate the mortgage process with confidence, even if you’re on a fixed term or temporary contract.

Which Lenders Offer Mortgages to Temporary or Contract Workers?

High Street Lenders (More Strict):

Specialist Lenders (More Flexible):

 Benefits of Getting a Mortgage as a Contract Worker

• Access to a wide range of lenders (including specialist options)

• Increasing acceptance of non-traditional income

• Potential to borrow based on daily or projected income

• Competitive rates with the right lender

 Challenges to Consider

• May need a larger deposit

• Some lenders won’t accept agency work or short contracts

• Income verification may be more complex

• Fewer options if you have bad credit or gaps in employment (some lenders may consider even a single week gap as significant when assessing your application)

Tips for Getting a Mortgage

If you’re looking to get a mortgage on a fixed term contract, there are several steps you can take to improve your chances of approval. First, focus on demonstrating income stability and a strong employment history.

Lenders are more likely to approve your mortgage application if you can show consistent employment in the same field and a reliable track record of regular income. It’s also important to maintain a good credit history, as this reassures lenders of your ability to manage monthly repayments.

Having a larger deposit can make a significant difference, as some lenders may require a bigger deposit from applicants on fixed term contracts. Additionally, providing written confirmation of contract renewal or evidence of ongoing work can help satisfy eligibility criteria and give lenders confidence in your future income.

By understanding what lenders are looking for and preparing all necessary documentation, you can increase your chances of getting your mortgage application approved and accessing a wider range of mortgage options. Remember, every lender is different, so it’s worth noting that working with a mortgage adviser can help you find the best fit for your circumstances.

Conclusion

Securing a mortgage while on a temporary or fixed term contract may come with extra challenges, but it’s far from impossible. With more lenders recognising the realities of today’s job market, there are increasing opportunities for contract workers, agency staff, and those in temporary employment to get a mortgage.

By understanding the eligibility criteria, preparing thorough documentation, and seeking expert advice, you can put yourself in the best position to achieve your homeownership goals. Whether you’re just starting your mortgage journey or looking for specialist support, remember that the right guidance can make all the difference.

Get help from an experienced mortgage broker.

You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders. Call us on 01332 470400 or complete the form with your details for us to give you a call back.

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