Getting a Mortgage with a Part-Time Job
Securing a mortgage with a part-time job may seem challenging, but it’s certainly possible with the right approach.
Many potential homebuyers with part-time employment worry that their income might not be sufficient to qualify for a mortgage or cannot be used.
However, lenders consider various factors beyond just income. In this blog, we’ll explore the key considerations for getting a mortgage with a part-time job and how Kerr & Watson can assist you in navigating this process.
Key Factors Lenders Consider
When applying for a mortgage with a part-time job, lenders assess several criteria to determine your eligibility:
Employment Status
Permanent vs. Temporary: Lenders often prefer applicants with a permanent part-time contract, as it demonstrates job stability. Temporary or short-term contracts may pose more challenges, but exceptions exist based on other financial aspects.
Length of Employment: Typically, lenders like to see a stable employment history. While some may require at least 3 months in the current job, others might be flexible, accepting 1 month or even future employment contracts. If the part time job is a second job, most lenders want to see job history to ensure it’s sustainable.
Income Assessment
Total Income Consideration: Lenders evaluate your total income, including part-time earnings, benefits, and any additional sources like rental income, bonuses, or investments. This comprehensive view helps determine your affordability. You can use our affordability calculator to give you a guide on your affordability.
Minimum Income Requirements: Some lenders have minimum income thresholds, for example, around £12,000 annually. This can vary, so it’s crucial to find a lender that suits your financial situation by speaking to a mortgage broker.
Affordability and Debt-to-Income Ratio
Lenders calculate your debt-to-income ratio by comparing your monthly debts with your gross monthly income. A lower ratio indicates better financial health and may enhance your chance of approval.
Credit History and Score
Credit Score: A strong credit history increases your chances of securing a mortgage with favourable terms. Even if your score isn’t perfect, Kerr & Watson can search for lenders willing to work with lower scores, if you meet the rest of the lender’s criteria.
Deposit and Loan-to-Value (LTV) Ratio
Deposit Amount: A larger deposit reduces the loan amount you need, thereby lowering the LTV ratio. Lower LTV ratios often lead to better mortgage deals.
Find out Your Options
Can You Get a Buy-To-Let Mortgage with a Part-Time Job?
Yes, obtaining a buy-to-let mortgage with a part-time job is possible. Lenders primarily focus on the projected rental income and your overall financial situation. However, being an experienced landlord or having a substantial deposit can improve your chances.
Kerr & Watson can assist in finding lenders who cater to part-time employees on lower incomes and offer suitable buy-to-let mortgage products.
Tips for Getting a Mortgage on a Part-Time Salary
Securing a mortgage on a part-time income is absolutely possible – you just need to present your finances in the best light.
Here are some key tips to improve your chances as a part-time worker:
- Demonstrate stable employment: Lenders love stability. If you’ve been in your part-time role for a while, make sure to highlight your continuous employment history. If you’ve recently gone part-time or started a new role, a letter from your employer confirming your position and hours can help.
- Maximise your income sources: Don’t forget to include all forms of income on your application. This could be additional part-time jobs, freelance earnings, benefits, or regular bonuses. Lenders will consider your total income picture when assessing affordability.
- Save a larger deposit if you can: With a bigger deposit (e.g. 10% instead of 5%), you’re asking the bank to lend less relative to the property value. A lower loan-to-value (LTV) makes you a lower-risk borrower and could open the door to more favourable mortgage deals.
- Improve your credit profile: Since your income is lower, a strong credit score becomes even more crucial. Pay all bills on time, register on the electoral roll, and avoid taking on new debt. A clean credit history gives lenders confidence that you manage money responsibly, regardless of working hours.
By following these tips, part-time employees can greatly enhance their mortgage prospects. Remember, preparation is key – budgeting carefully and perhaps using a free credit report can reveal areas to tighten up before you apply.
How a Mortgage Broker Helps Part-Time Workers Secure Loans
If you work part-time, partnering with a mortgage broker can be a game-changer in your home-buying journey. Brokers like Kerr & Watson have whole-of-market access, meaning we know which lenders are most welcoming to applicants with non-standard or lower incomes. This insight is crucial – some lenders might decline a borrower who works 20 hours a week, while others will happily consider them, especially if other aspects of the application are strong. We’ll help you identify lenders that accept your employment type, whether you’re on a permanent part-time contract, a zero-hours contract, or juggling multiple jobs.
Additionally, a broker will package your application to highlight strengths: for example, emphasizing a long track record in your role or pointing out that your part-time income is supplemented by a secondary income or a partner’s full-time earnings in a joint application. We also advise on paperwork – ensuring you have the right proof of income, such as payslips and bank statements covering any additional earnings.
Importantly, using an advisor can save you time and protect your credit score; we’ll only recommend applying to lenders that are a good match, helping you avoid unnecessary credit checks. Our experience has shown that with the right lender and a properly presented case, part-time workers can secure mortgages with competitive rates.
Conclusion
Securing a mortgage with a part-time job is feasible, provided you understand and meet the lender’s criteria earning enough to qualify for the loan. If your part time job is a new position, you may need to wait to use this income for the mortgage so the lender can be confident that the job has not been taken for mortgage purposes only.
At Kerr & Watson, we specialise in helping clients with diverse employment situations find the right mortgage solutions. Whether you’re a first-time buyer, looking for a buy-to-let mortgage, or need expert advice on improving your application, our team is here to support you.
Contact Kerr & Watson today for personalised mortgage advice.
