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May 5, 2022

Can You Get A Mortgage On A Fixed Term Contract?

Can You Get A Mortgage On A Fixed Term Contract

Are you looking to purchase a house but are on a fixed term contract? You might have heard that it’s simply not possible to have both a fixed term contract and mortgage at the same time. So why is it an issue? Periods of unemployment, short term contracts and variable income are just some of the reasons that mortgages for fixed term contractors might be difficult to obtain. 

Luckily with the help of Bolt Mortgages, you can have vital help with getting mortgages on a fixed term contract. Bolt Mortgages are an expert team of mortgage specialists dedicated to helping first-time buyers secure the home of their dreams. This guide is carefully designed by Bolt Mortgages to help those on a temporary contract secure a mortgage. Read on for expert advice from our mortgage specialists.

Can I Get A Mortgage On A Fixed Term Contract?

With specialist advice from Bolt Mortgages, you can get a mortgage on a temporary contract. Your choice of lenders or the market might be slightly different to those with a permanent contract, but every year fixed term contractors can successfully get a foot on the property ladder. With expert knowledge from a mortgage broker, you can discover what deposit rates and loan to value opportunities are with certain lenders catering to fixed term contracts. 

While lots of ‘problems’ on a mortgage might affect a mortgage application, there’s no reason that a fixed term contract should stop you from fulfilling other eligibility criteria when applying for your home.

Tips For Getting A Mortgage On A Fixed Term Contract

Mortgage On A Fixed Term Contract

There are many tips that can help ensure that your fixed term contract is not going to affect your mortgage application. Certain helpful hints include:

  • Keeping up-to-date with your tax returns and records - if you are registered as self-employed, make sure you have a copy of all your tax returns for at least the past year, preferably for the past three years. Keep records of your expenses and accounts. This part of the application process is vital as you need to ensure your accounts are up-to-date as errors can affect your application.
  • Organise your employment contracts - if you have several fixed term contracts, then organise your records of these. It’s important you can show that you’ve successfully been able to source employment on multiple occasions, as proof that you are able to pay for your mortgage every month.
  • Work with a mortgage broker - working with a mortgage broker can save you hours of time trawling through lenders that will accept you getting a mortgage on a fixed term contract. They will also be able to help prepare and submit the documentation you need to provide to your lender.
  • If possible, apply as early as possible in your fixed term contract - each lender will have their own limitations on when you will be granted a mortgage on a fixed term contract. If possible, give yourself as much time as possible when applying for a home on your fixed term contract. Some mortgage lenders will only lend if you have a certain amount of time left on a fixed term contract. If you are coming to the end of a contract but have other work lined up, be prepared to submit evidence of this as part of your application.
  • Have proof of your deposit - gather proof of a deposit and any additional savings you have when submitting your mortgage application. Declaring savings in addition to your deposit early on will help support your mortgage application.
  • Have reasons for any employment gaps - if you have any employment gaps in the past twelve months, this might impact your ability to get a mortgage. Be sure to have evidence for all of your employment gaps, and be prepared to show how you paid your rent or any bills during this period of time.
  • If your application is declined, don’t immediately apply for another one - if you are declined for your first mortgage application, it’s advisable to wait a while before applying to the next one. Multiple declined financial applications can affect your credit history, so it's advisable to wait a while before applying to the next lender. Your Bolt Mortgage advisor will be able to tell you when it’s best to submit your next application.
  • Do not apply to multiple lenders in one go - for the same reason as above, you want to avoid applying to multiple lenders, as this can affect your credit rating, even before they decline.

Getting A Mortgage On A Fixed Term Contract

To a lender you might present more risk than someone on a full term contract. They might think that a variable income might impact your ability to pay your mortgage. Your aim is to convince them via submitting evidence that you can successfully afford a mortgage and have a sufficient deposit. 

Some of the contract types that can work in your favour are:

  • Fixed term contracts that last for over a year
  • Roles that you have worked in for over a year
  • Zero hours contracts for in-demand roles like doctors or teachers
  • If you have been part of the same agency for over a year (e.g. employment agency, carer agency)
  • Contracts with more than three - twelve months left when you apply for a mortgage
  • Evidence of a new contract after your current one ends
  • No career gaps in the past year, or periods of 4 weeks or less over a twelve month period

If the above doesn't apply to you, your Bolt Mortgages advisor will be able to tell you how to prepare your mortgage application. In the case that you do have employment gaps or a shorter contract, there are a number of things you can do to boost the rest of your mortgage application. This can include keeping your accounts error-free and up-to-date, and keeping your outgoings low to boost your disposable income. This can signal to the lender that you have the means to afford mortgage payments.

What Lenders Will Give A Mortgage To Fixed Term Contractors?

There are a number of mainstream lenders like banks that might help with getting a mortgage on a fixed term contract. Some of these include:

  • Barclays
  • Halifax 
  • Nationwide
  • Santander 
  • Natwest
  • Lloyd 
  • RBS

As well as building societies like:

  • Coventry Building Society
  • Leeds Building Society
  • Yorkshire Building Society

How Much Can I Borrow For A Mortgage On A Fixed Term Contract?

How Much Can I Borrow For A Mortgage On A Fixed Term Contract

If you have been in a fixed term contract for a number of years, or still have over a year left on your contract, there’s no reason why you can’t get a 95% mortgage and apply for the standard 5x your salary mortgage. However, if you have employment gaps or a short time left on your contract, you may need a higher deposit to become eligible with certain lenders. The more stable your employment and contracts, the more you will be able to borrow when applying for a mortgage.

At Bolt Mortgages, We Can Help You With Mortgages For Fixed Term Contractors

With the right advice, you can secure the home you love with the help of Bolt Mortgages. A fixed term contract doesn’t mean you are ineligible for a mortgage with all lenders. It simply means you have to submit additional evidence - like an annual tax return, and your employment contracts. Providing a rationale for any employment gaps and presenting evidence of your deposit will all work in your favour when submitting a mortgage application. 

As fixed term mortgage specialists in Essex, Bolt Mortgages can help you through the mortgage application process and ensure you find the right lender so you can secure your first home.

Fixed Term Mortgage Application FAQS

Can I Get A Guarantor For A Fixed Term Contractor Mortgage?

If you are having difficulty securing a lender because of your employment status, then a guarantor might be useful. However, the guarantor might be required to be able to pay the whole of the loan, and also needs to be a relative. This might make it difficult to find a suitable guarantor for your application.

Is It Possible To Remortgage On A Fixed Term Contract?

Yes, it is possible, but it is advantageous to stay with your current lender, especially if your employment status has changed to fixed term since your initial application. You should always talk to a mortgage broker before applying to lenders as they will be able to best advise on your options for remortgaging.

Should I Wait Until Starting A New Fixed Term Contract Before Applying For A Mortgage?

For many lenders, the rules surrounding new roles and mortgages are similar to those at the end of a fixed term contract. This means if you have less than six months left on a contract or are less than six months into your current role, for certain lenders this might make you ineligible to apply with them. For this reason it’s important to speak to a lender before you apply for a mortgage at the start or end of a fixed term contract

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