Re-mortgaging while on temporary contract

acl2009

When my husband and I sold his flat and purchased our house in January 2011, I had only been in my job for just under a year and on a temporary contract. We were told due to this, only my husbands income could be taken into account. Wasn't too much of a problem but we were limited with lenders due to income multipliers, however secured a reasonable, though there were better, tracker 3 year deal with Santander.

Our deal will end in January 2014 and obviously we don't want to move onto SVR. I am still in the same job but still on a temporary contract which has been renewed several times, and the most recent extension takes me to March 2014. I'm not the only one within the organisation in this situation, however due to various cuts etc... no permenant contracts are being given.

In the time since we moved into our house I've been pregnant, had a baby and been on maternity leave. I now work part time at 50% FTE. I'm fortunate enough to be on a salary that would be some people full time salary.

Do lenders look at how long you have been on a temporary contract? Mine will be nearly 4 years with the same employer come mortgage renewal time. We really don't want to be limited with lenders again, especially as we want to chop about 15 years off our mortgage term, making higher payments. However if my income can't be taken into account we won't get a huge amount of deals to pick from let alone be allowed to up our payments so much.

So any mortgage experts, what's the rules about people on temporary contracts?

Thank you

TBagpuss

I think it depends on the lender, and how cautious they feel about lending generally. Did you have a high LTV when you bought?

Lenders will look at a range of risk factors and each lender has their own criteria.

My experience has been that I've been asked how long I've been in a particular job, rather than whether I had a permanent contract - it may be that they asked about the contract because you'd been working there for less than a year.

Also look for more flexible mortgages - you can often make over-payments (shortening the mortgage) even if youdon't formally put the mortgage on a shorter term, so you could look at getting a mortgage over the same time period, but chose to make over payments in order to pay it off early.

ch3101

I work in a loans department and we don't let you borrow any money while on a temporary contract on the basis that your employer could just say in March that you are surplus to requirements, bye bye.

Of course you'd get no severance package or anything and would have no income.

What I suggest for paying lots back is save up while on a fixed contract. So say you have the 22k saved there, just add that into the mortgage when buying it.

As I understand, the new lender will pay their amount to the solicitors, then you could give them 20k and hence have borrowed less money.

You could then hopefully get a bit better LTV and hence better deals?

Is that a possibility?

Mrstickle

OP, I can't advise on the mortage situation, but I have been in a similar situation previously with temporary contracts. Have you reviewed the law in this area? Once you have been with the same employer over a certain period of time, i think it is two years, even if you are still on a temp contract you assume the rights of a permanent member of staff in terms of employer obligations such as redundancy and t&cs.

I know this as I was recently made redundant from a fixed term contract, and got a sizeable pay out.

There are also rules about how long you can stay temporary with the same employer before they must give you a perm contract. It may be worth looking into if you are it sure of the law, or your employer is unaware.

My employer was unaware, and my case brought it to their attention and they were forced to change their whole policy on temp and fixed term contracts (nhs) . Hope that helps, good luck with your mortgage.

Thrugelmir

acl2009 wrote: »

Do lenders look at how long you have been on a temporary contract?

After four years by default you will become a permanent member of staff. As that's the limit for employing people under fixed term contracts.

So maybe worth holding off and letting the situation formalise first.

acl2009

Mrstickle and Thrugelmir that's very interesting to know. I shall definitely look into the employment law and the 4 years thing I certainly didn't know. Thank you.

Tbagpuss, our LTV was about 78% originally, we will be at just under 75% in Januray, so not too high though of course could be lower.

Thank you all for your comments