Can you get a mortgage on a temporary work contract?

There’s no denying that many of us are working differently these days and contracting is becoming increasingly common.  That can suit the individual well and contract work can often become their standard employment type.  Of course the type of contract can vary dramatically, some in the form of long fixed term contracts whereas others could be zero hours contracts.

At the same time mortgage lending criteria has got tougher, so what impact will contract work have on your chances of getting a mortgage?

It’s all to do with proving the level of income adequately to meet the lender’s criteria.  The reason some lenders can have a problem with short term or zero hours contracts is because the applicant’s income doesn’t carry any guarantees for any significant period of time.

The good news is that some lenders have now recognised the need for more flexible criteria regarding contractors, so being on a fixed term work contract won’t necessarily stop someone from getting a mortgage.

The key factor in any mortgage application is proof of income.  For contractors lenders will want to see some track record that they can base their lending decision on.  Therefore lenders will usually want to see that there is at least 12 months history of contracting without a break in employment.  They will often like to see that a contract has been, or will be, renewed and that there is 6 months or more remaining on the current contract.

For those with zero hours contracts it can be difficult to establish a pattern but lenders are prepared to consider applications where there is track record, so the longer the history of the better.

Lenders are becoming more flexible in how they approach contractors especially in sectors where contracting is more commonplace.  For example a lot of IT professionals work on a contract basis so more lenders will be able to be help.   In addition, some specialist lenders may be able to take a more individual view of a borrower’s situation, for example considering whether the previous employment was in the same field.

Having a big deposit will help but although it can seem tougher for contractors there are mortgage options that may be able to help.

Guild Mortgage Service, Provided by London & Country Mortgages

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