Getting a mortgage when you’re employed on a temporary contract can be slightly more complicated than if you're a full-time employee. That’s because most mortgage lenders want to easily understand your income so they can work out your mortgage affordability.
If you have an income that fluctuates because you’re self-employed, or work on temporary contracts, mortgage lenders can find it more difficult to understand compared to a full-time salaried employee.
In this Guide, you’ll find how different types of temporary contracts can affect your mortgage application, and what you need to do to prove your income.
A temporary contract, or a fixed term contract, is any kind of employment contract that has a set end date. A full-time employment contract doesn’t specify an end date. Instead, you’re contractually employed by a company until either you decide not to work there anymore.
With a temporary contract, you and the company both know it’s just a temporary situation. For example, you might sign a contract for three months of work. Even if that contract has the possibility of being extended, you’re still employed on a temporary basis.
Temporary contracts mean you can get lots of experience across different industries. They mean you have flexibility and can regularly add to your CV. You can earn a good stable salary if you’re on a temporary contract. Often, taking contract work means you can have a set day rate, so your income can stay stable as you move from contract to contract.
Having a reliable and consistent income as a temporary worker will make it easier for you when you go through the mortgage application process.
Agency workers have their contracts agreed and managed by a recruitment consultancy or employment agency. Agency workers tend to work on a temporary basis and their contract length depends on the employer’s needs. Agency workers are sometimes called ‘temps’ and common types of agency work include temporary office staff and care workers.
Yes, you can get a mortgage as an agency worker. Sometimes, it can be more complicated than it is for a full-time employee of a company who can easily prove their salary with three months of payslips.
There are nearly 1.5 million temporary agency workers in the U.K. Temporary agency work is flexible and allows people to work when it suits them and their families. The main challenge for temporary agency workers when it comes to getting a mortgage is that their income tends to fluctuate. Having an income that varies makes a mortgage application more complicated because many mortgage lenders prefer a stable and consistent income.
When you apply for a mortgage, mortgage lenders will want as much information as they can get about your income so they can work out how much they’re willing to lend to you. If you’re an agency worker, they’ll want to see your income history from the last twelve months and that you have a regular income.
If you’re an agency worker, and you have gaps in your employment history, this can be an issue for some mortgage lenders. But as long as you have built up a long-term stable income over time, there’s plenty of lenders who’ll consider your application.
When you’re looking for a mortgage as a temporary worker, it’s better to work with a specialist mortgage broker. Specialist mortgage brokers will understand the nature of temporary work and that it doesn’t mean your income is unreliable. Our platform connects temporary agency workers with specialist brokers who can help them get a mortgage. Get in touch with us to find the perfect specialist broker for your unique situation.
And for more info, read our Mortgages for Agency Workers page.
If you’re wondering how much you might be able to borrow on a mortgage if you’re self-employed or on temporary agency work, use our Self-Employed Mortgage Calculator, to figure out how much you could borrow.
A key part of the mortgage application process is providing evidence of your income. You’ll need to provide evidence of a regular income, usually over the last twelve months if you’re an agency worker. Mortgage lenders have their own lending criteria that they use to decide if they’re willing to offer you a mortgage or not. They’ll have their own set of requirements that will include what kinds of proof they’ll accept for proving your income.
Generally, as an agency worker, you’ll be asked to prove your income by:
Showing evidence of pay and income, this might be bank statements or payslips from the company you’re temping for, or your agency.
Showing P60s or tax returns for self-assessment.
You might also be asked for a reference from the agency you work for, so the mortgage lender can confirm you’ve been employed by them for those twelve months.
Mortgage lenders sometimes favour certain jobs more favourably than others when it comes to agency work. They tend to prefer jobs that they’re certain will always have work, and the demand for those jobs won’t decrease.
For some lenders, a teacher on an agency contract can seem less risky than a warehouse worker for example. Work history will always be more important than a job title though. A teacher with lots of employment gaps won’t be as appealing to a mortgage lender as a construction worker who has really stable income for the last three years.
Mortgage lenders will look at the type of contract you’re on. A recently renewed contract will give the impression that it'll be renewed in the future. They’ll also look at the length of your contract – a longer contract will be viewed more positively as you will be working or a longer time.
An independent contractor is someone who is self-employed and takes contract after contract as their way of working, rather than someone who has a long-term contract with a company. Unlike a full-time employee, a contractor completes work as needed. They either find contracts to work on themselves, or they’re signed up to an agency who finds contracts for them.
Yes, you can. A contractor can get a mortgage, but different lenders will have different criteria for contractors making a mortgage application. There are nearly two million contractors in the U.K and this type of work offers people flexibility and freedom.
Getting a mortgage as a contractor can be more difficult than a full-time employee, if you’re new to contracting or you’ve had lots of gaps in employment as a contractor. If you’ve been in constant work, have a good credit rating and can prove your income easily, you shouldn’t struggle to get accepted for a mortgage.
If you have had gaps in your contracting work, have struggled with credit in the past or have only just started contracting, it can be more difficult to get a mortgage lender to consider your mortgage application. We can connect with you to specialist lenders who are experts in contractor-friendly mortgages. Get in touch with us, so we can help you find a specialist lender and a great mortgage deal.
For more info, read our Contractor Mortgages page to understand your options as a contractor.
A contractor can be self-employed as a limited company, or just a self-employed person who files their taxes each year. Here’s a few different types of contractor workers:
Short or fixed-term contractors: where their contracts end on a specific date.
Zero-hours contractors: they have no guarantee of work and are usually in casual employment.
Agency contractors: contractors employed through an agency. This is when a company acts as an employer for contractors working on fixed-term contracts.
Mortgage lenders all have their own unique lending criteria. But all of them want you to prove your income is reliable and stable. Here’s generally what most lenders will accept as proof of income in their lending criteria
Contractors on short and fixed term contracts will usually need to show previous contracts
People on zero-hours contracts will usually need to show at least six month’s work history
Umbrella company contractors will tend to have to show at least 12 months of accounts
Self-employed contractors can get approved for a mortgage from the beginning of starting a contract. They will need to show a current contract that is at least six months long.
Contractors who are employed on a short or fix-term contract will need to show previous contracts
Certain professions will be perceived more favourably by lenders if they’re well-paid and there won’t be a decrease in demand. Lenders might prefer applications from contractors in professions such as doctors and solicitors for those reasons.
However, whatever your profession, if you have a long history of regular and renewed contracts, most lenders will be willing to offer you a mortgage.
As with any mortgage application, you’ll be able to get a better deal the larger your deposit. With a bigger deposit, you will have more options, and more lenders willing to lend to you. The more you’re willing to invest, the better for a mortgage lender.
Most lenders usually offer a mortgage on a an-to-value basis of around 85%, so you will need a deposit of around 15%. If you’ve got a very reliable income and a good credit rating, it’s possible to be offered a higher loan-to-value of around 90% and then you can put down a deposit of 10%. If you have a low credit score, then you might be offered a loan-to-value of 80% and you’ll have to put down a 20% deposit.
To get the best possible mortgage deal as a temporary worker, it’s always good to have a consistent employment history. If you have few employment gaps and a very lengthy contract then you can get a mortgage deal the same as a full-time employed person. Mortgage lenders just want to know you’re reliable, in regular employment and can afford your mortgage repayments.
It can be hard to get a mortgage when you’re on a probation period, whether you’re employed as a full-time employee or on a probation period on a temporary contract. Most lenders will want you to have a full job offer, or be able to show your income is going to stay stable for a considerable amount of time.
If you’re a full-time employee on your probationary period, you can face the same challenges as a contract worker when it comes to getting a mortgage. When you’re still new to your job, lenders know your contract could end, so they think that’s risky.
As a contract worker or an agency worker, lenders will pay extra attention to your stability. If you have long gaps in your employment, go from agency to agency and have contracts which aren’t renewed, mortgage lenders can be wary of that. So before you apply for a mortgage, try to stay in a consistent contract position and have as little gaps in employment as you can.
All mortgage lenders like a good credit rating and a credit history that shows you’re reliable when it comes to paying back credit. If you do have a low credit rating, it doesn’t mean you can’t get a mortgage. We’re experts at helping people with credit issues get mortgages so contact us to discuss your options.
As a temporary or contract worker, lenders want to see more than just bank statements. They might ask to see your tax returns or P60 forms which will clearly show your average annual salary. It’s important you’re able to prove your income as your annual income determines the size of the mortgage you’ll get. Most lenders are willing to offer 4x your income and also up to 5x or 6x depending on other factors. Being able to prove you have a consistent income will show your reliability.
Your affordability is how much money you can afford to borrow on a mortgage and it's based on your income, outgoings and credit history. Affordability is very important to mortgage lenders as they need to know if you can really afford to make monthly repayments for your mortgage. You could have a high income but also have very high outgoings, so they make sure they understand the balance.
Over 50% of mortgages for people who are self-employed or have bad credit aren’t available directly to you. They’re only available through specialist brokers. Using our platform guarantees you’ll be matched with a broker who has a proven track record of making mortgages possible for people like you. Less processing, more understanding.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.