Can You Get a Mortgage on a Fixed Term Contract?

Most of the information you can find online about mortgages is based on having a permanent position and a salary. If you have an employment situation that is even slightly out of the ordinary, a lot of this information and advice can become irrelevant. If that’s you, it’s a bit annoying, right?

Fixed term contracts are also becoming more common. Companies are looking to stay consistently leaner in their approach, only having the number of staff on board that they need at any given time. Given that it can be difficult (rightly so) to get rid of permanent employees that are no longer needed, temporary and fixed term contracts are becoming more popular.

But this can create problems for the people on these contracts. You’ve obviously started to consider this yourself, which is what’s led you to this article. The good news is that you should be able to get a mortgage on a fixed term contract. Now there are some conditions and caveats to be made on that, but generally speaking if you have a consistent job history, you will be able to find a mortgage. In this article we’ll explain some of the key issues to be aware of, and how to put yourself in the best position to get a mortgage on a fixed term contract.

How to Get a Mortgage on a Fixed Term Contract

The main benefit that a permanent salary has when it comes to getting a new mortgage is consistency. From the bank’s perspective, they know that the person they are going to be lending the money to is going to receive the same amount into their bank account every month. They also know that generally speaking, most people are going to be able to keep their jobs for as long as they want to, and will usually only move on when they have a better offer somewhere else, probably paying more money.

This consistency isn’t something that someone on a fixed term contract has. If you have a contract that is due to last for 12 months for example, the bank will be concerned about what is going to happen after that. Are you likely to get a new contract or job? Will it pay as much as your current contract? Will there be a gap between finishing your old contract and starting a new one?

With this in mind, the first priority if you’re in this situation is to think about how you can demonstrate consistency to the banks. If you’ve left a permanent job and received your first fixed term contract a month ago, the bank is probably going to be nervous about how this is going to work out. What you need to be able to do is show that you have a track record of contracts over a reasonable period of time, with minimal gaps in between.

Can Agency Workers Get a Mortgage?

One way to show this consistency is to find your contract work through an agency. Whilst you won’t have the guarantee of a permanent position, working via an agency gives the bank some additional security that you are likely to receive a new contract after your current one expires. 

The reason for this is because it’s not just on you to find that new contract. The agency business model relies on them finding you work, so on top of your own efforts there will also be an entire company trying to find new contracts for the staff on their books when their current contracts expire. A bank is all about reducing risk, and this arrangement reduces the risk for contract and temporary workers. 

As with any other employment situation, you will still need to show some consistency and track record before a bank will consider you for a mortgage. In most cases, you will need to have been with the agency for a least 12 months in order to be eligible for a mortgage. 

Should Temporary or Contractors Use a Mortgage Broker?

Yes. If you’re a temporary worker or on a fixed term contract, you will be reducing the pool of potential banks and lenders that would consider offering you a mortgage. This is an area where a mortgage broker or mortgage advisor can be a huge help. They’ll be able to narrow down the market to the banks who are most likely to approve you for a mortgage, and they’ll be able to give you specific information on what you should do to maximise your chances. 

Mortgage brokers usually get paid via commission on the mortgage when you get approved, so it doesn’t cost you anything directly to use a mortgage broker. It also makes sense to get advice really early on in the process, because there may be advice they can give you which you can start to arrange now, even if you’re not planning on actually purchasing a property for some time.

Summary

Yes, you can get a mortgage if you’re on a fixed term contract or if you’re a temporary worker. It will be more difficult and the conditions aren’t likely to be as favourable as they would be for a normal wage earner, but it is definitely possible. Make sure you speak to a mortgage advisor that you trust, because they’ll be able to steer you in the right direction when it comes to what you need to do to maximise your chances of getting a mortgage.