Getting on the property ladder can feel like a daunting task when your employment situation falls outside the traditional full-time role. Whether you’re a contractor, on a fixed-term contract, working through an agency, or employed on a zero-hour basis, it’s important to know that securing a mortgage is possible – and there are options tailored specifically for your needs.
In this guide, we’ll break down the different employment types and explain how they can affect your mortgage application, while offering practical advice for each situation.
Contractor Mortgages
Being a contractor can offer flexibility and often higher earnings, but it also brings an element of unpredictability. Lenders are generally happy to work with contractors, but their requirements can be a little stricter. They typically want to see a solid track record of contracts to assess your reliability as a borrower.
Here’s what can help:
- Contract Length: Lenders will often require proof of at least six to twelve months of contracted work, as well as evidence that you have future contracts lined up.
- Income Stability: Rather than looking at one year of earnings, most lenders will average your income over two to three years. Keeping detailed records of invoices and bank statements is key here.
- Day Rate Calculations: Some lenders will calculate your affordability based on your day rate, multiplying it by the number of working days in a year, usually 46-48 weeks. This approach can sometimes work in your favour, depending on your day rate and workload.
CIS (Construction Industry Scheme) Mortgages
The Construction Industry Scheme (CIS) is a common employment structure for those working in construction. If you’re paid under the CIS, you might think it’s harder to get a mortgage, but the reality is that many lenders offer specific mortgage products for CIS workers.
Things to keep in mind:
- Proof of Income: You’ll need to show your CIS payslips to demonstrate your earnings. Many lenders will accept just six months of payslips, which can be beneficial if you’re newer to the industry.
- Gross Income Consideration: Some lenders will base their mortgage calculations on your gross income (pre-tax), which can make it easier to borrow more.
- Tax Returns: You may also be asked for your self-assessment tax returns. Keep these up-to-date and accurate, as they can be a crucial part of your mortgage application.
Agency Workers and Fixed-Term Contracts
If you’re employed on a fixed-term contract or working through an agency, your income is still considered, but lenders will want to see evidence of regular earnings. The length of time you’ve been in this kind of employment, and the likelihood of future work, are key factors.
Here’s how to prepare:
- History of Work: Ideally, lenders like to see at least two years of continuous employment in your current role or industry. However, some may accept 12 months or less, depending on the strength of your overall application.
- Future Contracts: Showing that you have a renewal or a future contract in place can boost your application, as it reassures lenders of your income continuity.
- Agency Employment: If you’re working through an agency, regular payslips and a proven track record are essential. Lenders may require you to have been with the same agency for at least 12 months, though some will accept six months.
Zero-Hour Contract Mortgages
Zero-hour contracts can be tricky when applying for a mortgage due to the inconsistent income, but they are not an automatic barrier. Many lenders are willing to work with applicants on zero-hour contracts, especially if you can show that your earnings are consistent over time.
To strengthen your application:
- Income Evidence: You’ll need to demonstrate regular work and earnings over a longer period, typically two years. This shows lenders that you are capable of maintaining steady income, despite the nature of your contract.
- Multiple Jobs: If you’re working several zero-hour jobs, combine the earnings from all your roles. Lenders will take this into account when calculating affordability.
- Bank Statements: Provide detailed bank statements that reflect your income stability. Regular payments into your account will help reassure lenders that your work pattern is reliable.
General Tips for All Employment Types
- Deposit: Having a larger deposit will always work in your favour, regardless of your employment type. A higher deposit can reduce the risk for lenders and improve your chances of getting approved.
- Specialist Lenders: Mainstream lenders might be cautious about lending to those in non-traditional employment, but there are plenty of specialist lenders who offer flexible criteria for contractors, agency workers, CIS employees, and those on fixed-term or zero-hour contracts.
- Seek Professional Advice: Every situation is unique, and working with a mortgage broker can help you navigate the complexities of applying for a mortgage in your employment situation. They’ll know which lenders are best suited to your needs and can help you present your case in the best light.
Final Thoughts
Being in non-traditional employment doesn’t mean you have to give up on homeownership. With the right preparation, documentation, and advice, you can find a mortgage that works for you. Understanding how lenders view your income and taking the necessary steps to strengthen your application will put you in the best position to secure the mortgage you need.
If you’re unsure where to start or need advice, get in touch with Quick Mortgages. We’re experienced in helping clients with all kinds of employment backgrounds secure the right mortgage and get on the property ladder.
Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
