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How to Get a Mortgage as an Agency Worker without a Permanent Contract
Agency worker mortgages were designed to assist temporary and contract workers in getting on the property ladder despite their unstable income and lack of job security.
They are different from traditional mortgages as they take into account the unique situation of these workers. Keep on reading to find out more about these type of mortgages....
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- Take Our S.M.A.R.T Quiz & Find Out Your Potential Mortgage Savings
- We've Helped 20,000+ UK Homeowners
Key Takeaways
- The agency worker mortgage is designed to help contract and temporary workers on the property ladder.
- These mortgages take into account their unique situation. This includes their fluctuating incomes and employment gaps.
- While agency worker mortgages are more flexible than traditional mortgages, they can be harder to get.
What Are Agency Worker Mortgages?
These mortgages are specifically designed for people who have irregular income or work through temporary employment agencies. These mortgages allow agency workers to obtain mortgage products and achieve their dream of homeownership.
Mortgage lenders often hesitate to offer mortgages for agency workers because of their low salaries and lackluster job security compared to those in other professions. Mortgages for agency workers are becoming more available, as the number continues to increase in the UK.
The applicant must meet certain criteria to qualify for an agency workers mortgage. The criteria will vary according to the lender but usually include:
- Minimum income threshold
- Minimum length of employment
- Credit score: A good credit score
- Proof of income for a specified period
Note that the affordability assessment for agency workers will differ from that of permanent employees. It’s because their income is less predictable and it makes it more difficult to determine their ability to pay regular mortgage payments.
Mortgages for agency workers may have higher interest rates than traditional mortgages. The reason for this is that lenders view agency workers as higher-risk borrowers.
But agency worker mortgages are still a viable option for those who cannot secure a conventional mortgage because of their employment status. To find the best mortgage, it’s crucial to compare lenders and shop around.
The criteria for agency worker mortgages
Lenders will evaluate several criteria when you apply for an agency worker’s mortgage to determine if you are eligible. Three main criteria are considered by lenders: income assessment, credit assessment, and employment history.
Tax Assessment
The lender will assess your income in order to determine if you can afford the mortgage. To determine your regular income, they will usually require proof of income such as bank statements or payslips. You may be required to submit additional documentation if you are a casual employee.
Credit Assessment
Lenders also use your credit report and score to evaluate your creditworthiness. Credit history shows your borrowing and repayment behavior in the past. Lenders will use this data to determine your ability to pay back a mortgage. You may find it more difficult to get a mortgage if you have a bad credit rating. Or, you may receive a higher rate of interest.
Employment History
When assessing whether you are eligible for a home loan, lenders will also take into account your work history. They prefer workers who have a long-term work history. This shows your ability to keep a regular job and maintain a stable income.
You should be aware that affordability plays a major role in determining whether you are eligible for a mortgage. Lenders assess your income and expenses to determine if you can afford mortgage payments. You may be required to submit additional documentation as an agency worker to prove your ability to pay.
Challenges for Agency Workers Getting A Mortgage
Temporary contracts
The fact that agency workers are often on temporary contracts can make it hard to obtain a mortgage. Lenders typically consider mortgage applications only if the applicant has a steady employment history. There are some lenders that offer mortgages to agency workers. Some lenders are more willing to accept applicants on temporary contracts but may have stricter criteria.
Unregular Income
A challenge that agency workers face is their irregular income. It can be difficult to prove to lenders that you have a steady source of income. There are ways to solve this problem. Some lenders will consider the average income of an applicant over a certain period, instead of just looking at recent pay stubs. Also, agency workers might want to build up a bigger deposit to help mitigate the risk associated with irregular income.
Bad Credit
Bad credit agency workers may have additional difficulties when applying for a mortgage. Lenders may view them as high-risk borrowers. There are also solutions for this problem. If you are an agency worker with bad credits, it may be worth working with a mortgage broker. They can help find lenders that will accept applicants with poor credit. Also, agency workers might want to improve their credit score prior to applying for a loan.
Types of Mortgages for Agency Workers
The income of casual workers and agency employees is different from that of full-time workers, making it more difficult to obtain a mortgage. There are mortgage options for agency workers who live in the UK.
Mortgage Lenders
Some mortgage lenders may have stricter criteria for agency workers than others. Compare mortgage lenders and shop around to find the right one for you.
Mortgage Products
For agency workers, there are several types of mortgage products, including tracker mortgages, fixed-rate and variable-rate mortgages. Fixed-rate loans have a fixed rate of interest for a certain period, while variable rate mortgages can fluctuate. Tracker mortgages are based on the Bank of England’s base rate.
Mortgage Options
Depending on their income and employment status, agency workers may be able to choose from a variety of mortgage options. Some mortgage lenders require proof of income over a specific period of time while others accept income from multiple sources.
Competitive Rates
Mortgage lenders will offer agency workers competitive rates to attract new customers. Compare rates and terms with multiple lenders to get the best deal.
Additional Considerations for Agency Workers
Larger Deposit Requirements
It is important to know that if you are an agency worker and apply for a mortgage, lenders may ask for a higher deposit than they would for a permanent employee. The reason for this is that agency workers often have a higher profile of risk due to their nature of employment. Lenders can require up to 20% deposit on the value of the property, depending on your circumstances.
Agents may have to save more money in order to meet this higher deposit requirement. It can be difficult, especially if a person is managing multiple financial obligations. To ensure the deposit is met, it’s important to manage your finances carefully and to prioritize savings.
Financial Stability
Financial stability is another consideration when agency workers apply for a mortgage. Lenders want to see proof of a consistent income for a long period of time in order to make sure that an individual can afford their mortgage payments. It can be difficult for agency workers to prove their ability to pay mortgages, since they may have a fluctuating income depending on work availability.
Agency workers may be required to submit additional documentation to demonstrate their financial stability. This could include bank statements or tax return to prove a consistent income. A mortgage broker with experience in working with agency workers can also help identify lenders more likely to be willing to work this type of borrower.
A worker who works for an agency may have additional challenges in applying for a home loan due to their nature of employment. With the right financial support and careful management, you can secure a mortgage to take the first steps towards home ownership.
FAQ’s
Answers to your most common questions.
Yes, it is possible to obtain a mortgage if you have a temporary position. It may be harder to get a mortgage approved by a bank. Your employment history and your income stability will be considered by lenders. Having a stable income and a long-standing work history will improve your chances of approval. When applying for a loan as a temp worker, it is best to get expert support and advice.
Yes, UK agency workers can apply for mortgages. It may be difficult to find a mortgage lender that offers mortgages for agency workers. There may not be many lending options, but mortgage brokers can help you locate the best lender. To increase your chance of approval, you need to have a stable income and a long-term work history.
Lenders prefer workers who have a long-term work history. This is usually between two and three years. This shows your ability to keep a regular job, which will increase your chances of being approved for a loan. Depending on the individual’s circumstances, some lenders will consider agency workers who have less experience. When applying for a loan as an agency worker, it is best to get expert support and advice.
A temporary agency worker is a person who is employed by an employment agency. You must have a stable income and a long-term work history to qualify for an Agency worker mortgage. When assessing your eligibility to receive a mortgage, lenders may also consider your credit history, your employment stability and other factors. When applying for a loan as an agency worker, it is best to get expert support and advice.
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