How To Get A Fixed Term Contract Mortgage

The definitive guide to getting a Fixed Term Contract Mortgage.

The good news is you may still be eligible for a variety of mortgages. The hard part is simply proving its affordability. We strongly recommend using a mortgage advisor. Your financial advisor can help you succeed in applying for a mortgage.

 It is important to seek advice so that your mortgage loan application is accepted the first time. Not only does this make home purchases faster, but every time customers apply for a home mortgage it will show up on the credit check. Hence, clients applying for a mortgage must seek financial advice to be accepted for the first time; otherwise, poor credit can make it difficult to accept a second time.

What is a fixed-term contract mortgage?

 A fixed-term contract mortgage is a way of describing certain forms of employment. If your current employment contract has to end after a certain period or after you finish a certain job, you likely have a fixed-term contract.

 Here you can read and learn more about fixed-term employment contracts. It is about every open-ended employment contract.

Can you take out a fixed-term mortgage?

 It is possible to take out a mortgage as a contractor if your employment is structured in one of the following ways:

  • Self-employed
  • Sub-contracting
  • Temporary workers
  • Fixed-term with many other contracts
  • Cooperation with umbrella companies

 In a professional field (accounting, medicine, law, Teacher), there are also lenders considering approval even if you’ve only been a contractor in the UK for six months.

Applying for a Fixed Term Contract Mortgage

 If you have a fixed-term or fixed-term contract, obtaining a mortgage may not be easy. The term is limited. Don’t worry, some specialized lenders offer pretty competitive rates.

 A single-term contract gives lenders an idea of ​​the length and income of your contract. Even if you only have a one-year contract, specialty lenders can still say yes.

 If you are a new contractor it will likely take at least six months of track record with a portfolio of future jobs. Renewing old contracts also shows lenders that your income and employment are viable on a mortgage.

Contracting an Umbrella Company

 If you work through an umbrella company, mortgage approval is a little more complex as it can be difficult for lenders, and especially insurers, to determine whether or not your income is sustainable.

 Some lenders will reject applications outright and just won’t lend, no matter how much proof of income you have. However, this only happens if you contact the wrong lender.

 If you’ve worked for an umbrella company for more than 12 months or have a previous contract renewal, getting a mortgage should be easy. That said, it can be difficult to speak to a lender on your own. give you an idea of ​​the right lenders to avoid rejection.

How Much Can Contractors Borrow on a Mortgage?

 Lenders use various methods to assess contractor affordability. The amount you can borrow depends on the lender you borrowed from.

Lenders generally rate affordability using the following calculation:

 

  • Contracted Daily Rate x Number of Work Days Per Week = Your Weekly Income
  • Your Weekly Income x 48 Weeks = Your Annual Income
  • Your Annual Income x 3.4 or 5 = Your Maximum Mortgage Amount
  • If Your daily wage was £ 250 and you worked 4 days a week, your weekly income is £ 1,000.
  • Your contracted annual salary is £ 48,000 for 48 weeks.

 

 Some lenders can only borrow up to three times your annual income, while others can borrow up to four or five times your annual income. In this case, your maximum mortgage amount based on four times your annual income for that lender is £ 192,000.

 

Others can borrow up to four to five times their annual income. In this case, the maximum mortgage loan amount based on four times the annual income of that particular lender would be £192,000.

Money Needed As A Contractor

 As a rule, a down payment of at least 10% on a mortgage is always recommended, as lower amounts and interest rates become unattractive. because the interest rates tend to be lower on larger mortgage deposits.

 It is possible to get a 5% down payment mortgage using programs like Help to Buy. Don’t forget to calculate your mortgage and whether you can keep your payments for the life of your mortgage.

Money Needed As A Contractor

 As a rule, a down payment of at least 10% on a mortgage is always recommended, as lower amounts and interest rates become unattractive. because the interest rates tend to be lower on larger mortgage deposits.

 It is possible to get a 5% down payment mortgage using programs like Help to Buy. Don’t forget to calculate your mortgage and whether you can keep your payments for the life of your mortgage.

Got a question we haven’t answered? Get in touch and we’ll answer it and likely add it to this article to help others!

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