Mortgage on a Fixed-Term Contract
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Mortgage on a Fixed-Term Contract (Part 1)
Podcast approved by The Openwork Partnership on 19/12/2025
What is a fixed-term contract? How does a mortgage on a fixed-term contract differ from a standard mortgage?
A fixed-term contract is an employment contract with an end date, effectively. A contract might run for six or 12 months or two years. If it’s got an end date, you’re on a fixed-term contract.
When it comes to applying for a mortgage, it changes the lenders and banks you have access to, and also the documents and evidence you’ll need.
What are the income proof requirements for self-employed applicants? What documentation do I need as proof of income for a mortgage on a fixed-term employment contract?
There are two ways we can look at a fixed-term contract. To some lenders, you may be classed as self-employed. You might have your own company and deal with multiple contracts, or you could just be classed as employed with a fixed-term contract with a particular employer. You might only work for them for six or 12 months, etc.
As a self-employed applicant, lenders might ask for one or two years’ proof of your income. Typically this is done via self-assessments or tax calculations from HMRC. Or, it could be accounts from your accountant, depending on how you’re set up. Usually they require proof for the past couple of years.
If you’re a fixed-term contractor with one employer for six or 12 months, typically lenders just ask for payslips. The big one is a copy of your contract. They need to understand how long it’s for, the pay and what type of work it is.
A lot of people tend to throw out their old contracts, but some lenders like to see those going back a year or two years. So keep those documents. For proof of income, they’ll either use payslips or the contract itself as evidence.
How does the length of your current contract impact your eligibility for a fixed-term contract mortgage? How long should you be in your current job before applying for a mortgage?
The length of your contract has a lot to do with the mortgages you’ll have access to. Banks generally want you to have been in a contract previously, so that you have a history of fixed-term contracting.
Someone who is permanently employed could apply for a mortgage on the first day of any new job, but on a contract, you normally need some history. The length of that history depends on the bank, but it’s often two years. That said, quite a few lenders will accept a one year history of contracting.
If you’ve been in the same line of work previously and there’s no gap between your employment and the fixed-term contract, a few lenders will consider that, even if you’re just about to start.
Six and 12-month contracts are the most common. Shorter contracts are a bit more challenging – there’ll be questions around what’s going to happen at the end of that contract.
Longer contracts reassure the lender that there’s less risk of losing your income.
How long you need to have been in your current job or agency will depend on the lenders you can access, plus your affordability, deposit and credit score. It’s not just the length of your contract or employment history they’re looking at – there’s a lot more to consider. We can give you specific answers in a discovery call over 20 or 30 minutes.
What deposit do you need for a fixed-term contract mortgage?
Normal deposit rules apply for someone who’s on a fixed-term contract. As we speak at the moment in November 2025, 5% deposit mortgages are available for first-time buyers or home movers.
For a £100,000 property, for example, you would need a minimum of £5,000. You’re not being penalised on the deposit if you’re on a fixed-term contract. A lot of lenders are out there offering mortgages for you.
What factors determine how much you can borrow on a fixed-term contract?
How much you can borrow will depend on how you’re paid and how much. The bank wants to understand what your income is, and whether that’s on a day rate or an annual amount, like a salary.
A lot of fixed-term contractors are paid a day rate or a weekly rate. Most banks will be comfortable using that. If you’re on a day rate, a lot of banks multiply that by five days a week and then by 46 weeks a year, allowing for an extra six weeks of unpaid leave.
Other things that determine how much you can borrow include how long is left on your contract, and whether that contract is likely to be renewed. A letter or some kind of evidence might be requested to reassure the bank.
They also look at your financial commitments: any loans, car finance, credit card balances, childcare costs and children who depend on you financially. How long you’re borrowing the mortgage over can also affect how much you can borrow. A longer term would allow you to borrow more than a shorter term. Credit score is another factor, and other things as well. I could go on and on.
What costs are associated with getting professional advice for a fixed-term contract mortgage?
If we talk about the costs of buying a home or moving home, there are a number of things to consider.
Solicitor costs are often a few thousand, and a mortgage broker may charge a fee on completing that mortgage for their advice. On a fixed-term contract, you may want help from a broker who specialises in that area, and the fee they charge can really vary.
If you’re selling a home there will be estate agent fees, and there are also property survey fees to check the condition of a home you want to buy. We can make you aware of the associated costs, particularly if you’re on a fixed-term contract, before you even start moving towards buying a home or remortgaging.
Is it possible to get a remortgage on a fixed-term contract?
Absolutely. The way lenders will assess you will be very similar, whether you’re buying a property for the first time, moving home or remortgaging. You’d still need to prove you can afford the mortgage through proof of income documents, bank statements and credit scoring.
The main difference on a remortgage is that you won’t have a deposit. You might want to borrow more money to do some work to your home: build an extension, get a new kitchen – all those things are still possible if you’re on a contract.
The affordability is usually the complicated part for a fixed-term contractor. We would go through an affordability assessment to give you an idea of how much you can borrow. We then talk you through what we’d need to get you agreed in principle for your remortgage.
We then proceed with applying. Again, that’s something we can run through with you on a discovery call.
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How can I increase my chances of a mortgage on a fixed-term employment contract?
The key thing here, particularly if you’re buying a home, is preparation. You need to understand what documents might be required. If you’re listening now and want to buy a house in the next few months or even a couple of years, have that conversation as early as possible.
Confirm the documents you need to get together, the experience you might need on a fixed-term contract and how much you can borrow.
A mortgage broker can help you understand that and also improve your chances of getting a mortgage approved. It is a challenge if you’re on a fixed term contract. Lenders might look at payslips or your contract, and they might look at your accounts.
There are many different ways they might want to evidence your income. Getting that conversation in early will massively increase your chances of getting approved in the future.
How do you get a mortgage when you’re on a fixed-term contract?
If you’re a fixed-term contractor trying to get a mortgage, you could spend days going direct to lenders, trying to find differences between them and identify which will lend you the most. You’ll be sitting through hour-long appointments, or waiting for them to become available.
You can do that – some people prefer to go direct to their bank and that’s fine. But you might be missing out on a bank that will lend you more, which makes the difference between settling for a home you like, and one you love.
You might go online and use an affordability calculator. Some banks then give you an Agreement in Principle without checking any documents. A lot of people then call us, because they’ve done that, then applied for the mortgage… and once the lender’s seen the proof of income, it doesn’t meet the criteria for a mortgage.
The client is turned away and they’re back to the start. We would have a conversation with you to fully understand the information we need. We’re very aware of the challenges and complexities of being a fixed-term contractor and getting a mortgage. We work closely with lenders and have relationships with their business development teams and lending managers. We can discuss your situation before we even apply.
Another way we help our clients is by doing a full check on your documents. We’ve got a very high success rate of getting our clients approved for mortgages because of the way we work. We gather all that information upfront, before we even proceed with an application. Plus, we’re checking over 75 banks and building societies.
If you go direct to a bank, they’ve only got one set of criteria and if you don’t fit, that’s it.
With us, if it’s a no with one lender, we can look at the next one for you.
Are there any additional steps when applying for a mortgage on a fixed-term employment contract?
We’ve covered it, I think, but one little tip is to remember that lenders might ask for historic contracts. So make sure you keep them on file. You don’t want to have to contact an old employer or HR and to get a copy of an old contract.
Sometimes that history of contracts will really help you, so that’s a big tip for any contractor. We’ve mentioned it already, but it’s also important to get in touch with a broker for advice as early as possible.
Key Takeaways:
- A fixed-term contract is an employment contract with an end date; it affects available mortgage lenders and the required application documents.
- Lenders typically require payslips and the contract itself (for a single employer) as proof of income, or one to two years of self-assessment/tax calculations/accounts (if classed as self-employed).
- Lenders often look for a history of one to two years of fixed-term contracting; it is essential to keep all historic contracts on file.
- The amount you can borrow is determined by your pay structure (day rate vs. salary), remaining contract length, likelihood of renewal, financial commitments, and credit score.
- Consulting a mortgage broker early is recommended to understand requirements, assess affordability, and increase the chance of approval by checking multiple lenders.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
Approved by The Openwork Partnership on 19/12/2025
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