Can You Get a Mortgage on a Fixed Term Contract? Expert Advice for Contract Workers
If you’re working on a fixed term contract and wondering whether it’s possible to get a mortgage, the short answer is yes, you can in the right circumstances. That said, the process can feel more complex than it does for someone in a permanent role, and lenders may want a little extra reassurance about your income and job security.
At Kerr & Watson, we help people in your exact situation. We understand how mortgage lenders assess contract income and know exactly how to package your application for the best chance of success. Whether you’re a first-time buyer, moving home, or remortgaging, we’re here to make the process clearer and more manageable.
What Is a Fixed Term Contract?
A fixed term contract is a type of employment that has a set start and end date. It means you’re employed on a temporary basis, often for a specific project, covering maternity leave, or working in an industry like teaching, healthcare or tech where short-term contracts are the norm.
You’re usually paid through PAYE and have similar deductions to permanent employees. The key difference is that your employment is not open-ended, which makes some lenders a little cautious when assessing your mortgage application.
Can You Get a Mortgage on a Fixed Term Contract?
Yes, you can. Lenders are increasingly recognising that modern work patterns aren’t always based around permanent employment. A good number of mortgage providers are happy to lend to fixed term contract workers, particularly if you can show that your income is stable and that you have a history of continuous work.
At Kerr & Watson, we work with lenders who understand your situation. Some are more flexible than others, which is why it’s so important to speak to an adviser who can match you with the right one.
What Do Lenders Look For?
Every lender is different, but most will want to assess your financial stability and earning potential before approving your mortgage. Here’s what they usually consider:
Contract Length
The more time left on your current contract, the better. Some lenders may wish to see at least 3 months remaining. However, if you’ve been contracting for a while, some lenders may be comfortable with less, especially if you have a strong history of renewed or back-to-back contracts or extensive industry experience.
Contract History
A track record of steady employment on similar contracts gives lenders confidence. If you’ve been in the same field or role for over 12 months, it suggests you’re likely to secure future work. Having said that, some lenders will consider brand new contractors if they have been in the industry for a number of years and they have secured their first contract. A mortgage adviser will be able to explore this further for you.
Gaps in Employment
Short gaps between contracts are usually fine, especially if they can be explained. However, longer breaks or inconsistent work history may raise red flags. Lenders define a “gap” differently, some may worry about a week off, while others might be fine with several months. That’s why it’s important to work with someone who knows each lender’s criteria.
Proof of Renewal
If you can provide a letter from your employer confirming that your contract is likely to be renewed, that can go a long way in strengthening your application if the contract is due to expire soon.
Industry Type
Lenders may also look at the field you work in. Certain professions, like education, medicine, or IT, are seen as more stable, and this can make lenders more flexible.
Find out Your Options
How Much Can You Borrow?
In general, lenders will base the amount you can borrow on your current and historic income. Many apply the same affordability calculations they use for permanent employees, which could be 4 to 5 times your annual salary. Many lenders will use a multiple of the day rate of the contract over a set number of weeks in the year, for example, 46.
For example, somebody on £500 per day will be assessed by some lenders as:
£500 per day x 5 days per week x 46 allowable weeks in the year = £115,000 per annum
This is where expert advice really makes a difference, we’ll help ensure your income is assessed in the most favourable way possible whilst taking into account the rest of your situation.
What Documents Will You Need?
To apply for a mortgage on a fixed term contract, you’ll usually be asked to provide the following documents:
- Your current employment contract
- Payslips and bank statements (typically covering the last 3 months) if you are paid via an umbrella company
- Proof of ID and address
- Employment history or CV
- P60 or proof of previous earnings
- A letter confirming the likelihood of contract renewal if your contract is due to expire soon
The exact documentation depends on the lender. We’ll guide you through what’s required and check everything is in order before submission, helping avoid delays or unnecessary questions.
Tips for Improving Your Chances
If you’re on a fixed term contract, there are a few things you can do to improve your mortgage prospects:
- Avoid long gaps between contracts where possible
- Keep clear records of all past contracts and roles
- Build up a good deposit, although 5% may be enough, a larger deposit can open up better deals. Your mortgage adviser can guide you here.
- Maintain a strong credit history by managing any existing borrowing responsibly
- Consider applying before your current contract nears its end, as more time remaining may strengthen your application
Most importantly, speak to a mortgage adviser early on. At Kerr & Watson, we can help you prepare and present your case in the best possible way.
Can You Remortgage on a Fixed Term Contract?
Yes, and many people do. If your initial deal is ending and you’re on a fixed term contract, you might worry about your options. It’s true that lenders will reassess your affordability, and if your income has changed or become less consistent, this could affect your remortgage terms.
However, with the right preparation, and the right lender, remortgaging is often still achievable. Whether you’re staying with your current lender or switching to a new one, we’ll guide you through the process and ensure you’re matched with a lender who understands your circumstances.
What If You’re a First-Time Buyer?
Being a first-time buyer on a fixed term contract doesn’t rule you out of getting a mortgage. In fact, many lenders are open to working with buyers in your situation, especially if you’re in a professional role or industry where fixed contracts are common.
If you’re just starting your first job after university or a training programme, you may still be eligible, even without a long work history. We’ve helped plenty of clients take their first steps onto the property ladder while on temporary contracts, and we’d be happy to help you too.
Does It Matter What Job You Do?
To some extent, yes. Certain professions are considered lower risk by lenders. Doctors, teachers, solicitors, and other degree-qualified roles may be looked at more favourably. However, there are lenders out there for almost every situation, and having the right support is the key to finding them.
Why Work With Kerr & Watson?
The mortgage market can feel like a maze, especially when your employment status isn’t straightforward. At Kerr & Watson, we specialise in helping people with complex income types, from fixed term contracts to freelancers and contractors.
We’ll take the time to understand your situation, explain your options clearly, and search the market to find lenders that suit you.
Our advice is tailored, friendly, and always in your best interest. Whether you’re buying your first home or remortgaging, we’re here to support you every step of the way.
Conclusion
Getting a mortgage on a fixed term contract is possible as long as you are meeting lender criteria.
Lenders want to see stability, but that doesn’t mean you have to be in a permanent job to qualify.
By showing consistent income, keeping your documents in order, and choosing the right lender, you can secure a mortgage even with a fixed contract.
Get in touch with us today to find out how we can help.
