Fixed Term Contract Mortgage

Fixed Term Contract Mortgage

Buying a house with a fixed term contract mortgage can have some extra challenges. Don’t be confused with a fixed rate mortgage. This page helps people who are employed (not self-employed contractors) on PAYE on a fixed term contract. That means it’s a contract that has a set start date, and more importantly, a fixed end date. Therefore your employment is not permanent.

Please be aware that by clicking onto the above link you are leaving the Jamie Thompson Mortgages website. Please note that neither Jamie Thompson Mortgages nor PRIMIS are responsible for the accuracy of the information contained within the linked site accessible from this page

Last updated: 24th October 2023

Fixed Term Contract Mortgage

Can I get a mortgage on a fixed term contract?

Yes, some lenders will still consider you, not every lender though. You need to make sure you are applying to a fixed term contract mortgage friendly lender. Even most mortgage brokers will not know which lenders are bets for new fixed term contracts so you may need to contact a specialist such as myself. 

Even the banks and building societies that give mortgages to people on a fixed term contract have different rules to each other.

Agency workers on a zero hours contract or another types of temporary workers will typically need 12 months history. This isn’t the case for fixed term contracts though.

How long do you need left on a fixed term contract to get a mortgage?

Some lenders need just three months left, some just one month. They might have other rules though, like having had your contract extended in the past.

But if you have more than six months remaining on your fixed contract at the time you apply for your mortgage, you will have options. It’s then just a case of taking advice to see which one is the best for you. If you have more than a year’s experience on fixed term contracts you may only need 1 to 3 months remaining. 

Some mortgage lenders will even consider a mortgage application from somebody on a fixed term contract contract before it has even begun. It needs to be starting the next three months and run for at least a year though.

See the do you qualify for a fixed term contract mortgage page and select your specific situation.

Can you get a mortgage on a 12 month contract?

Yes, it’s possible to get a mortgage on a 12 month contract so long as you either have 6 or more months remaining, or have previous fixed term contracting experience. Not many lenders will consider you so work with a mortgage broker specialising in fixed term contacts.

If your total fixed term contract length is under 12 months it can still be possible to get a mortgage so long as you have more than half of the contract’s duration remaining or are classed as a professional, for example in a role that required a degree level qualification such as an accountant. 

Can you get a mortgage on a temporary contract?

Yes. It depends on exactly how long you have been on a temporary contract, or contracts for. It also depends on how long your temploary contract still has to run.

As a general rule, if you’ve been on a temporary contract for more then a year, so long as you have 3 months remaining you can qualify with some mortgage lenders. If you haven’t been on temporary contracts for more than a year it can depend n the time remaining and even your occupation. 

Can you get a mortgage on a maternity cover contract?

Yes. If you have a maternity cover contract and it is 12 months or more, and you have six months or more remaining  there are lenders that will consider your income. If you are simply being seconded to cover a position and it comes with a temporary pay increase but will  revert back to your normal position on a lower salary at the end then only the lower salary could be used. However if you are on, or due to start a maternity cover fixed term contract then the income from the contract can be used to get a mortgage. 

Do you need to have already had a contract extension to get a mortgage?

This depends. Some lenders want to see that you have already been on a long term contract for over a year and that it has been extended before they will consider you for a mortgage.

However, there are some lenders that don’t have a minimum time already served on a fixed term contract, nor do they need it to have been extended.

Can you get a fixed term contract mortgage before the job starts?

Yes. There are lenders who make mortgage offers to people who have signed fixed term contracts that don’t even start for another three months! This can be particularly useful for trainee solicitors trying to get a mortgage

This is great for people already in work who are waiting for their fixed term contract to start, or people who will be starting their first role on a fixed term contract.

They may have a minimum length of the contract, but if it’s 12 months in total, you certainly have options.

You may also want to see the New Job Mortgage page for more information on this.

Are interest rates higher for people on a fixed term contract?

No not really. The very very lowest ones might not be available to you, but you can still get ‘high street’ interest rates on a fixed term contract mortgage, so long as you know which ones you qualify with.

The better your credit score is the easier it will be to get a lower interest rate as you’ll qualify with more lenders.

How much can you borrow with a fixed term contract mortgage?

Most lenders will treat your affordability the same as somebody on a permanent contract. Some lenders like Halifax reduce your usable income just because you are on a fixed term contract though.

A rough guide is to times your annual salary by 4.5. This doesn’t account for any credit commitments you may have though.

A single person or couple e earning jointly or singly over £70,000 may be able to borrow five times their income so long as there’s a year left to run on the contract or 3 months left if they’ve already been on a FTC for more than 12 months.

The best way to find out is to contact a mortgage advisor for an affordability assessment with a fixed term contract mortgage friendly lender and also discuss what repayments on your mortgage are realistic each month.

Please be aware that by clicking onto the above link you are leaving the Jamie Thompson Mortgages website. Please note that neither Jamie Thompson Mortgages nor PRIMIS are responsible for the accuracy of the information contained within the linked site accessible from this page

What documents will I need to get a mortgage?

You’ll certainly need to provide a copy of your contract. If your job has already started, or you’re finishing off in a current job, your pay slips will be requested. Your bank statements may also be needed. Some lenders will ask for payslips covering a 12 month period, some will ask for just three month, some can just look at a contract starting in the next three months.

A tax return isn’t usually applicable for PAYE contractors but your latest P60 may be requested.

What deposit do I need for a fixed term contract mortgage?

A full range of deposit sizes is available, just like a permanently employed person. This means 5% and 10% deposits options are out there for people on a fixed term contract. It might vary slightly depending on how long you have been on your fixed term contract, and how long you have left though.

A larger deposit will mean you can access lower interest rates.

Larger deposits are sometimes needed on flats and new build houses for people in your situation. Unless you have a very long history of fixed term contracts with a long term still to run, 10% deposits are usually the minimum for flats and new builds. New built flats might require a 15% deposit. It can be possible with a 5% deposit, there are just fewer options.

 

Don't have indefinite leave to remain in the UK?

If you aren’t a UK citizen but you have settled or pre-settled status you’ll be treated like a British citizen. 

Some lenders require larger deposits for people without indefinite leave to remain in the UK. Combining this with a fixed term contract can limit your available lenders even further. It’s bet to give me a call to discuss but for an overview you can read about getting a mortgage on a spouse visa, and mortgages for people with pre-settled status

Will gaps in my work history be an issue?

Potentially. Any gaps will have to be well explained. If the lender thinks you like to take a 12 month contract and then always have 3 months off, they might not want to lend to you.

Gaps that can be explained due to travelling, redundancy or family matters aren’t a deal breaker. They just need to be well explained and make sense.

Can I apply for a mortgage even if this is my first ever job?

Absolutely. Some lenders want to see some work history. They might get suspicious if you are taking this job as your first ever job after not working for a decade.

However, if you have just finished university and you are taking your first role on a fixed term contract, this should be fine. Read more about graduate mortgages and how your student loan affects a mortgage.

See the New Job Mortgage page for more information on this.

Does it matter what my job or role is?

Not with the best fixed term contract mortgage lenders. They have set criteria and if you fulfill it you can be considered without your specific occupation being taken into account. 

Some lenders will have preferable criteria for certain occupations. Some lenders will allow shorter times in employment for professions such as lawyers, solicitors, doctors, teachers, or other professions where at least a degree is required to do the role. 

These lender’s criteria are some times not as flexible as the bets fixed term contract mortgage lenders, however for people in these occupations it is great as they have more lenders willing to lend to them, and more options and competition usually means a lower cost mortgage can be attained. 

Can a first-time buyer get a fixed term contract mortgage?

Of course. Everything on this page applies to first time buyers, home movers, and remortgages.

Is it possible to remortgage while on a fixed term employment contract?

Yes. If you have experience of 12 months or more on a fixed term contracts is relatively simple so long as you approach the right lender. If you are new to fixed term contracts it can still be possible to remortgage so long as your contract was originally for 12 months or more and you have six months of it remaining. 

How much does professional advice cost?

I charge £245 for mortgages where your income is from a fixed term contract.

After you get in touch we’ll have a quick chat on the phone, I’ll ask you some questions, and you can as me anything you like, and so long as I expect you to qualify we will arrange a full appointment. At our appointment I’ll get all of your details so I’m sure you’ll qualify. I’ll send you a list of documents that I’ll need to confirm this and this is when you’d pay the £245. If I can’t get you an agreement in principle or a mortgage offer this would of course be refunded. This rarely happens though as I insist on getting all of your information right at the start of the process. 

You can read more about mortgage broker’s fees and mine specifically here.

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