Fixed Term Contractor Mortgages FAQS

A Fixed-Term Contractor Mortgage refers to a standard mortgage, but one in which the income is calculated in a specific way, often using a calculation of the ‘day rate’ rather than salary or self-employed income figures. Learn more >

Fixed Term Contractor Mortgages FAQS

How much can I borrow with a Fixed-Term Contractor Mortgage?

This is dependent on your income and deposit level but in theory you may be able to borrow up to 95% of the property’s value (subject to there being 95% LTV products available at the time) Due to the way Fixed-Term Contractor Mortgages are calculated, the amount you can borrow is usually significantly more than if a conventional income calculation is applied.

How much deposit do I need for a Fixed-Term Contractor Mortgage?

The minimum deposit for a Fixed-Term Contractor Mortgage is 5% (subject to there being 95% LTV products available at the time).

Can I have an interest only mortgage with a Fixed-Term Contractor Mortgage?

Yes. There are lots of lenders that will offer interest-only and calculate your income using a Fixed-Term Contractor specific calculation.

What’s the process to apply for a Fixed-Term Contractor Mortgage?

To apply for a Fixed-Term Contractor Mortgage, the process is largely the same as a standard mortgage. The steps would involve:

• Initial enquiry.

• Agreement in principle.

• Mortgage application (borrower checks, income verification, valuation etc)

• Mortgage offer issued.

• Solicitor progression.

• Completion and release of funds.

Do I need to be in my role for a minimum time to apply for a Fixed-Term Contractor Mortgage?

No. There are A Fixed-Term Contractor Mortgage lenders who will consider you if you have only just started contracting, if you have some experience in the same industry. If you are a first-time, Fixed-Term Contractor, with no experience in the industry, then you may have to be in your role for 6 months before a lender will consider using your income.

Can I apply for a Buy-to-Let Fixed-Term Contractor Mortgage?

Yes. Being a Fixed-Term Contractor won’t usually affect your ability to apply for a buy-to-let mortgage with most lenders. A small number of buy-to-let lenders require you to have a substantial income to be able to meet their affordability model. If this is the case, then you may need to approach a lender who will recognise Fixed-Term Contractor income.

Can I get a Fixed-Term Contractor Mortgage with bad credit?

As with most forms of borrowing, having adverse credit can have an impact on; either your ability to obtain finance, or the terms that are available to you. A Fixed-Term Contractor Mortgage is no different. Thankfully there are lots of lenders out there that will consider both adverse credit and Fixed-Term Contractors so with a good mortgage broker, you should be able to find a solution.

How do lenders calculate my income for a Fixed-Term Contractor Mortgage?

Fixed-Term Contractor lenders will calculate your income by taking the day/weekly rate and multiplying this with an expected weekly projection for the year, usually 46/48 weeks (to allow for holidays or time off) For example, if you are paid £500 per day, on 5 days a week, the calculation may be 500 x 5 = £2,500 x 48 weeks = £120,000. If your income is through a limited company or as a sole trader, your net profit or personal drawings will likely be considerably lower than this, which may equate to lower borrowing amounts.

I am on zero hours; will this meet criteria for a Fixed-Term Contractor Mortgage?

A Fixed-Term Contractor Mortgage lender may be able to lend to you, but they have different criteria for zero hours. Usually, an average of the last 12 months’ worth of income.

What are the alternatives of a Fixed-Term Contractor Mortgage?

If you don’t meet the criteria to apply for a Fixed-Term Contractor Mortgage, or haven’t been contracting for long enough you can still apply for a standard mortgage, although your income will be calculated in the traditional way, usually by using your company profit or personal drawings from your business.

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Book A Call To Discuss Fixed Term Contractor Mortgages

If you have an enquiry and would like to discuss Fixed Term Contractor Mortgages in more detail, please get in touch or schedule one of our Fixed Term Contractor Mortgage broker experts to give you a call.

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At MRG Private Clients, we believe in providing our clients with personalised guidance and support when it comes to making important financial decisions. We are based in Medway, Kent but offer our specialist mortgage services nationwide. Learn more about our specialist mortgage services >