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Mortgages for fixed term contractors

There is a growing number of people in the UK working on a fixed term contract basis to fit with their aspirations and lifestyles.

You may have been told that mortgages for fixed term contractors is difficult and that you may struggle. This is not necessarily the case and as an area where we specialise, there is often plenty of options available to you.

Whilst it may be true that there will be certain challenges when applying for mortgages for fixed term contractors, most lenders will consider this as a fairly normal type of income.

Some of the main challenges for fixed term contractor mortgages are:

  • Type of income (e.g. salary, dividend, profit, etc.)
  • Length of contract term
  • Company structure (e.g. Limited or Sole Trader)
  • Proof of income
  • Credit history or score

All of these are areas where we have experience and specialise in to help you to get the best mortgage rates and deals.

Fixed term contractor stats UK

Recent years have seen a steady incline in the numbers of people working on fixed term and temporary contracts. The recent introduction of the IR35 rules have changed the landscape slightly but the numbers are still strong.

  • Contract workers (UK): 1.1 to 1.3 million
  • Percentage of contractors in public sector: 50%

What is a fixed-term contractor?

The following is what is legitimately classed as a fixed-term contractor, according to government guidelines.

If both of the following applies then employees will be classified as being on a fixed-term contract:

  • Must have an employment contract with their employer
  • Contract will end on a specific date or on completion of a project or task

People may be on a fixed-term contract if any of these apply:

  • Seasonal or casual employees that are taken on for up to 6 months (e.g. peak periods)
  • Specialist employees working on a specific project or task
  • Maternity leave cover

The following are not classed as fixed-term contract workers:

  • Working through an agency rather than employed by the company
  • Work placement as a student or trainee
  • Apprenticeship contracts
  • Working as a member of the armed forces

Can a fixed term contractor get a mortgage?

The answer is almost always going to be yes, unless there are particular factors that cause issues with your mortgage application.

Some of the main areas where your fixed term contractor mortgage will be assessed will be the same as a standard mortgage application. There are ways to secure the best rates and reduce the overall cost of getting your mortgage.

Here are some of the main areas you’ll need to think about:

  • How long is your fixed term contract?
  • Can you provide proof of income?
  • Do you have an accountant?
  • Any adverse credit history
  • Are you employed or self employed?

There are only a handful of reasons why you might struggle to get a fixed term contractor mortgage:

Even some of these can be overcome so it’s always worth checking to see what’s possible for you and your circumstances.

Mortgages for self employed fixed term contractors

Generally a fixed term contract means that you will be employed with an employment contract. However, there are some instances where you might be classed as being a self employed on a fixed term contract.

If you are self employed then you will need to provide proof of income from your accountant or business bank account.

Some other considerations for self employed fixed term contractor mortgages:

  • Type of company (e.g. Limited, Sole Trader, or Partnership)
  • Accounts and accountant reference (usually 3 years)
  • Business trading history
  • Self assessment tax return (SA302)

For more information on getting a mortgage when self employed CLICK HERE.

For more information on using an SA302 to evidence your self employed income CLICK HERE.

Mortgages for fixed term contractors with bad credit

We speak to lots of contractors who have either got or had credit problems and need to get a mortgage.

There are often lots of mortgage options for people with bad credit and so it’s definitely worth looking in to it. You should get proper mortgage advice from a specialist to get the best deals and make sure that it is the right thing to do.

Some of the common credit problems we can help with:

For mortgages for fixed term contractors with bad credit you might also find that there are other factors to consider. Your contract employment will also be taken in to consideration to assess your affordability and suitability for a loan.

If you have applied for a mortgage and been refused then we still might be able to help and at least tell you what the best options are for you.

For more information on getting a mortgage with bad credit CLICK HERE.

Mortgage lenders for fixed term contractors

There are approximately 100 mortgage lenders, including high street banks and building societies.

Finding the right deal for you can seem a bit like trying to find a needle in a haystack most of the time. You can search online and be faced with literally hundreds of options that are all slightly different.

Some of the best mortgage lenders for fixed term contractors include:

  • Accord Mortgages
  • Barclays
  • Halifax
  • HSBC
  • Natwest
  • Newcastle Building Society
  • Santander

The best mortgage lender for you will be different to someone else’s situation. Some of the key areas that are to be considered are:

  • Type of mortgage
  • Mortgage deal
  • Credit history
  • Income and income structure
  • Loan to Value (LTV)

We will take the hassle and time out of getting the best deal from our panel of top lenders.

Mortgage specialists for fixed term contractors

As a fixed term contractor, we understand that you’re busy and it’s difficult to have the time to sort out your mortgage.

There are lots of potential challenges to getting your mortgage as a fixed term contractor, which is where  we specialise. You shouldn’t pay more for your mortgage just because you’re a fixed term contractor.

You will need someone that appreciates exactly what you need and how mortgages work for fixed term contractors.

Useful resources

Essential Mortgages – Mortgages for contractors – Fixed term employment contracts

Chartered Institute of Personnel and Development (CIPD) – Fixed term contracts: understanding the law

Indeed – Frequently asked questions about fixed term contracts