Can I get a mortgage on a fixed term contract?
I guess that when you get offered employment your first hope is that the offer of employment is on a permanent basis but there are some industries where a permanent contract is just not the norm. I am thinking here of the professional sportsperson, those who work in scientific research and those covering for employees who are for example on maternity or paternity leave.
The good news is that getting a mortgage on a fixed-term contract is achievable.
I think ideally the lenders would be more comfortable in lending to those who have a permanent contract but it does not discriminate against those who are on fixed-term contracts. They just ask you to jump through a few more hoops - no surprise there then!
As with my last blog post on zero-hours contracts, sustainability is the watchword when it comes to getting a mortgage for someone on a fixed-term contract. Looking through the High Street lenders you are really going to struggle to find a lender who is prepared to look at an application if you have less than 12 months of a track record.
12-month track record
So what you want to look for is a lender who does not have any additional stipulations other than a 12 monthly Track Record. Have a look at Leeds Building Society, Nat West and Santander all of whom have stated in their criteria that they are happy with a 12 month period. Santander offers up a “sustainability” argument and if you can persuade the underwriters that your contract is sustainable then you’ve got a fair chance.
The rest of the market
The nature of fixed-term contracts is that they will end so surely the lenders are a bit jittery in lending where you only have a 12-month track record.
It’s a fair point
If you only have a 12-month Track Record then a lot of the lenders are adding a caveat where you must have a certain length remaining in terms of that particular contract. For example Accord Mortgages want to have at least 3 months remaining whereas Platform, Halifax, and TSB say that you need at least 6 months remaining if you have only been contracting for a 12 month period.
Contracting for a two-year period
The starter is definitely a 12-month track record. If you have however been continuously employed on a fixed-term contract for more than 2 years then Barclays, Halifax, and TSB would be prepared to look at an application from you. Two years obviously gives them sufficient comfort that you have enough experience that you will get another fixed-term contract at the end of the existing one.
So in summary, it looks as if the lenders treat those on a fixed-term contract somewhere between a permanent contract and the self-employed. They want a little bit more evidence that the income is sustainable but they don’t go as far as to demand a minimum of 2 years income as they would for those who are self-employed.
As ever, happy to have a chat with you and steer you in the right direction or help you out by organising the mortgage for you.