Can you get a mortgage without a permanent contract in the UK?

If you are working on a temporary or fixed-term contract, you may ask the question 'Can you get a mortgage without a permanent contract?' The answer is: possibly, even if your income varies due to the nature of your contract. Many specialist, or even mainstream, lenders are willing to consider people on temporary contracts for a mortgage. If you have been in your current line of work for more than 12 months, with no prolonged periods of unemployment, there is a good chance you could be considered.

Read on to learn how.

How can you get a mortgage without a permanent contract?

Being a temporary worker can certainly make it more complex to apply for a mortgage than it would be in a permanent role. A lender will need to see extensive proof that you can keep up with your monthly repayments throughout the mortgage term.

It will be up to you to demonstrate that you have a regular income. This can be challenging when you have a temporary contract, as your earnings may fluctuate or even stall in between jobs. This makes your risk level higher than you would be if you had a guaranteed salary. However, some temporary contracts are viewed more favourably than others.

In-demand professions like doctors or supply teachers on zero-hour contracts are often considered for mortgages, especially if they have been in the job for a long time. Seasonal workers, on the other hand, are less likely to be considered, since their contracts are short-term. An experienced mortgage advisor can give you valuable insight into where you stand and connect you with the lenders that are most likely to consider your application.

The key is finding the lender whose criteria you fit.

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Eligibility for fixed-term contract mortgages

Without the guaranteed income of a permanent contract, a temporary worker will be subject to stricter criteria by mortgage lenders to offset risk. Here are some things that lenders are likely to consider for a temporary contract mortgage:

How long you have been in your current role

Though the specific number will vary between lenders, most will have a minimum requirement for how long you have been in your current role. Many will stipulate a minimum of 1 year, but some will require less. The same will usually apply if you are an agency worker.

Gaps in your employment

Gaps in employment can be problematic for lenders - they need to see a consistent, reliable income to keep up with mortgage repayments. Some mortgage providers will not consider you if there has been an employment break in the last year, while others may have less stringent requirements as long as your income is sustainable.

You may be surprised to learn that the definition of a 'gap in employment' may vary between lenders. Some may see just 1 week out of work to be a gap, while others may define it as at least 4 weeks between contracts (provided there is a good explanation). It may still be possible to get a mortgage with gaps in your employment, but you would need the expertise of a whole-of-market mortgage advisor.

How can I improve my chances of getting a mortgage without a permanent contract?

There are various things you can do as a temporary worker to improve your chances of mortgage approval. You could try:

• Saving a big deposit - this can significantly reduce your risk in the eyes of lenders. In most cases, the bigger the deposit, the lower the risk.
• Improve your credit rating - there are many strategies for building your credit score, such as paying your bills promptly or paying off the balance on your credit cards early. Speak to a financial advisor to get some personal tips.
• Demonstrate your income - provide all your payslips for the last year, along with your two most recent P60 documents or tax returns.
• Provide bank statements - these will show both your income and outgoings, helping to determine if your disposable income is sufficient for a mortgage.
• Show stability - if you have been in the same line of temporary work for a year or more, lenders will look upon this favourably.

How much could I borrow as a temporary worker?

If your employment history is free of gaps and your current contract still has plenty of remaining time, you could still borrow a good amount. You may be able to secure a 95% mortgage in this circumstance, and as much as 5x your annual income.

However, if there are gaps in your employment for any reason, lenders may be more hesitant. You may need to have a larger deposit to secure a mortgage in this case, so be prepared for a somewhat more complex application process.

Whether you are on a temporary contract or in a probationary period at work, it may be possible to find lenders that will consider offering you a mortgage. Temporary workers can meet the affordability criteria in many cases - you just need to show that you are consistent and that your income is sufficient to keep up with repayments.

How should I proceed?

So can you get a mortgage without a permanent contract in the UK? As we have discussed, fixed-contract workers may be able to obtain a mortgage, but the tighter eligibility criteria make it important to apply with the most suitable lender in the most appropriate way. This is particularly true if you have gaps in your employment history and no guaranteed work for the future. The Mortgage Mentor app and website are full of useful tips and guides on securing a mortgage, so take the time to educate yourself a little before you proceed.

You could go about submitting your application alone, but it is strongly advised that you seek the help of an experienced mortgage broker. These people can offer expert advice and provide access to the entire mortgage market. They will help you zero in on the most suitable lender and use their expertise to establish how closely you meet their criteria.

Remember, as a mortgage is secured against your home/property it may be repossessed if you do not keep up with the mortgage repayments.

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