Rachel Lacey
Richard Eagling
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If you are in standard employment, working full or part time in a permanent role, it’s pretty straightforward to prove your income to a lender. You simply need to declare your annual salary and provide documents, such as your payslips and bank statements, to verify it.
However, if you are in non-standard employment – for example, working on a fixed-term or zero-hour contract – or if you have income from multiple sources, it can be more complicated, even if your earnings are high.
It is still possible to get a mortgage in non-traditional employment – you will just need to approach the right lender and provide more information about your earnings and employment history.
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What qualifies as income?
In order to work out whether you can afford to repay a mortgage, lenders will need to assess and verify your income.
This income can come from a variety of sources, including:
- your job, a second job, commission, bonus payments, overtime and freelance work
- pension and investment income
- child maintenance payments
- payments from ex-spouses
- benefits
Often, the most significant of these sources will be your earnings, but unfortunately how lenders treat and assess income from non-standard employment varies.
» MORE: Getting a mortgage on benefits
Fixed term employment contract mortgages
If you don’t have a permanent job and work on fixed-term contracts instead, you should still be able to get a mortgage.
However, as the nature of working for different clients on different projects means you may have gaps between roles, you will need to prove that you have had a steady and reliable income over a decent period of time.
When assessing your application lenders will want to know:
- the length of your current contract and when it will end
- whether the contract is likely to be, or has previously been, renewed
- how long you have worked in this way
- the nature of the industry you work in
- whether you are working for one employer or for a number of companies
The more information you can provide about your work history, the better you can prove your services are in demand and that you don’t have problems finding work.
Not all lenders will offer fixed-term contract mortgages, and criteria will vary between those that do. For example, many lenders will require at least one year of proof of earnings, but ideally two. The lenders may then use this evidence to calculate your affordability using brackets based on your average earnings, generally using the lowest average to do so.
Zero-hour contracts mortgages
Also known as casual contracts, zero-hour contracts are work contracts with no guaranteed hours. As such, workers are rarely certain how much they are likely to work in any one week, or how much they will earn.
Although the flexible nature of this type of working can suit some people, it does not make it easy to apply for a mortgage. This is because there is no certainty or guarantee around how much applicants will earn.
There are huge differences in the way lenders treat applicants on zero-hour contracts. While some lenders will instantly say no, others will take it into account if you can produce evidence of 12 months’ earnings. Alternatively, some may only consider 50% of income from zero-hour contracts.
Your chances of being accepted for a zero-hour contract mortgage are increased if you are in a skilled occupation and can show a strong employment history, either working for the same employer or within the same industry. It doesn’t look so good if you are working multiple jobs across different sectors.
Can you get a mortgage as a temporary worker?
It may not be easy getting a mortgage if you are a temporary or agency worker, because your future income is not certain.
However, if you have a good credit record and can show a good employment history with stable earnings, some lenders may consider your application.
» MORE: All about mortgage eligibility
How to improve your chances of getting a mortgage in non-traditional employment
There’s nothing to stop you from applying directly to a lender, but see if you can get a mortgage in principle first. This gives an indication as to whether you may be offered a mortgage, and for how much, often without affecting your credit score.
Alternatively, it may make sense to consult a mortgage broker and get mortgage advice.
Different lenders will use different criteria and a good broker should be familiar with this and know which are most likely to accept your application.
If you apply directly to a lender and are rejected, this will leave a mark on your credit record and could put off other prospective lenders – particularly if multiple applications are made over a short period of time.
You should also check your credit record and ensure it is accurate. The better your credit record, the more likely you are to be accepted for a loan. If there is room for improvement, it could be worth focusing on improving your credit record and delaying your purchase for a while.
Also bear in mind that lenders will want to see that you have a strong history of employment – so the more information you can provide them with, the better.
» MORE: Best mortgage lenders
What help or support is available?
There is no specific support for borrowers in non-traditional employment, however you may still be able to take advantage of wider schemes that support homeownership, such as shared ownership.
There is also the Lifetime ISA, which enables savers aged from 18 to 40 to get a bonus worth 25% when they put money away to buy their first property or for retirement. You can save £4,000 a year in a Lifetime ISA, providing a maximum bonus of £1,000 a year.
» MORE: See current mortgage rates
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