If you earn your living through a fixed-term or temporary contract, you might be wondering if getting a mortgage is a possibility. The good news is, some lenders do offer mortgages to contract workers, it’s just a matter of being able to meet their criteria.
We look at securing a fixed term contract mortgage in today’s market, which lenders are more likely to accept your application, and how expert advice can lead to a successful outcome.
Can you get a mortgage on a fixed-term contract?
Applying for a mortgage on a fixed term contract is more complex than applying for a mortgage with a full time 9-5 job, but it's absolutely possible. It’s important to understand which lenders to approach and which to avoid, as well as what you’ll need to provide as evidence.
However, provided you can show that you’ve maintained a stable and regular income as a temporary contract worker, and will be able to continue to do so in the future, you can absolutely secure a mortgage while on a fixed-term contract.
What criteria will lenders have?
Lenders will typically focus on the following areas when reviewing your application:
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Track record in your industry/profession - You’ll typically need to show evidence of multiple fixed-term contracts in your current industry or profession to cover at least 12 months, but more commonly 24 months in the same or a similar role
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Profession - Some professions will find it easier than others to secure a fixed-term contract mortgage. For example, in industries where it’s well known that this type of employment is common, such as teachers and healthcare professionals
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Remaining contract - Most lenders will want there to be at least 6-12 months remaining on a fixed-term contract at the time of application. Some will also want to see evidence that this will continue, such as previous or future renewal agreements that show a consistent employment term
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Contract gaps - If you’ve worked in fixed-term roles for some time, but have employment gaps between them, lenders will typically want to know why. This is particularly the case if you have gaps of 12 months or more between contracts
Are fixed-term and temporary contracts treated the same by mortgage lenders?
While the terms ‘temporary contract’ and ‘fixed-term contract’ are often used interchangeably, they aren't the same thing. Fixed-term contracts have a definite end date, and you are typically employed directly by the employer. A temporary contract may have an end date, it might be ongoing but could end at any time, or it could be a zero hour contract. While sometimes these types of contract are directly with an employer, they are more likely to be arranged through a temp agency.
Lenders tend to prefer fixed-term contracts as they are more predictable than temporary contracts. This makes it easier to calculate your long-term earnings. While some specialist lenders are happy to look at temporary contract workers, it’s likely you’ll need to provide a longer track record of continuous work.
How to get a mortgage on a fixed-term contract
As fixed term contract workers become more prevalent in the UK, lenders have had to become more accommodating when it comes to underwriting this type of application.
Being proactive and planning well ahead of your application can also greatly improve your chances of success. The following tips should help:
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Prove continuity: It’s important to make your temporary contract history look as consistent as possible, so the more renewals or longer term agreements with the same client, or within the same sector that you can provide, the better your chance of meeting lender criteria. Ensure you keep strong records of your contracts and pay rates, as well as having bank statements to back up your earnings over time
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Provide additional support: An employer letter confirming their intention to renew your contract at the end of your current one can sometimes help boost your chances. It’s worth explaining your scenario to your employer to see how they can help
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Speak to a broker: As important as it is to be able to show a strong history in your profession, it’s also crucial to approach the right lender. Some lenders will flat out refuse to consider applications from those on fixed-term contracts. Seeking help from a mortgage broker with experience of helping contractors will help you focus your efforts in the right place
Begin your mortgage journey
Which lenders are available?
Some lenders are more open to fixed term contract mortgage applications than others. While there are high street lenders operating in this niche, specialist lenders often have more flexible criteria. It’s also worth noting that many specialist providers only accept applications via independent mortgage brokers, like ourselves.
The below table shows the current lending criteria of some UK lenders around fixed-term contract workers, however, speaking to a mortgage broker with experience in this field is recommended to avoid missing any opportunities:
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Lender |
Lender Type |
Typical Stance on Fixed-term Contracts |
General Experience Requirements |
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High Street |
A Halifax looks at overall career continuity rather than just the time left on your current clock |
Usually requires a 12-month track record in the same industry with no major gaps |
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High Street |
Nationwide focuses heavily on overall income sustainability and the likelihood of renewal |
Requires a history of 12 months, with at least 6 months remaining on the current contract |
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High Street |
Great for professional contractors, Natwest works smoothly if you fall into a higher-earning day-rate bracket |
Prefers a 12-month history of continuous contracting in the same line of work |
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|
High Street |
Barclays requires clear sight of contract sustainability |
Minimum of 12 months in the same profession, with a preference for at least 6 months left on the current term |
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High Street |
Santander assesses the clear likelihood of your contract being extended or replaced |
Generally requires a 12-month history of employment in a similar role |
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High Street |
HSBC looks closely at the consistency of your earnings over the tax years |
Requires a minimum 12-month track record as a fixed-term or temporary worker |
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High Street |
TSB uses standard affordability metrics |
Requires a solid 12-to-24-month industry history to prove income stability |
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High Street |
Lloyds assess similarly to its sister bank, Halifax, but with slightly tighter risk parameters |
Prefers a continuous history of employment with minimal gaps between contracts |
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Specialist |
Ideal for getting a mortgage on a fixed term contract when you have a shorter history or are newly contracting |
Can consider applicants with less than 12 months of history if they have a strong background in the same industry |
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Specialist |
Supportive of complex income. They specialise in mortgages for people with fixed term contracts who may also have complex circumstances or slight credit blips |
Focuses on the forward-looking viability of the contract rather than just historical consistency |
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Specialist |
Excellent for atypical temporary contract setups that high-street banks reject |
Will look at the global picture of your employment sector to assess long-term risk |
How it impacts what you can borrow
Depending on how you are paid, lenders may treat your income differently when calculating how much you can borrow. Most lenders will treat fixed-term income similarly to employed workers, and use your annual income based on your contract rate, or average payslips.
However, some lenders multiple contractor income by 46-48 weeks, rather than a full year. This is to account for gaps between contracts and the lack of holiday pay.
Most lenders will let you borrow around 4.5 times what they consider your annual salary to be, depending on their calculation method. However, certain professionals, such as doctors, may be offered higher income multiples.
You can use our calculator below to see how much you might be able to borrow:
How we can help
Because getting a mortgage on a fixed-term contract can be slightly more complex, comparing all your available options makes all the difference.
At Money Helpdesk, our expert advisors specialise in helping people on both employee and agency contracts to secure a mortgage regularly. They understand which lenders are most flexible and how to present your case to them.
For your free initial chat with a fixed-term contract mortgage expert, get started here.
FAQs
Yes, possibly, but it depends on your background. If you have transitioned from a permanent to a contract job in the same field or have years of experience contracting in this role, many lenders will accept the application based on your career continuity.
However, if you are entirely new to the industry, you may need to demonstrate a few months of stable earnings under your new employment type before a lender will consider your application.