Mortgage offers on a recurring 12 or 18 month employment contract

Stravinsky

I'm at a point of loaning my daughter and her partner a deposit for their first house. She is an OP in the NHS, but he has worked for a regulatory authority for the last 2 years or so on a contract basis. His first contract was 12 months, the second was renewed for 18 months as they very much like his work. He is on quite a good salary, almost double of my daughters salary, and he has been told the likely hood is that his contract will continue to be renewed.

We are worried about how mortgage companies will treat his employment and although they haven't found a property yet, they thought about setting up a mortgage offer so all is in place but are worried about having an application rejected and the ramifications of that on future applications. Combined salary around £85k

The house is likely to be in the £100k - £125k and the deposit will be £20k - £25k.

Does anyone have any experience of contract work mortgage applications or banks that you know that will deal with such work situations?

Bermonia

Yes it’s quite common, would suggest finding a good broker as they will ensure that they are matched up with a lender that will accept their employment with as little fuss as possible.

Stravinsky

Thanks, I must admit I'm surprised, as I thought it would be more of a hassle when in theory you could be out of a job at the end of 12 / 18 months.

MortgageMamma

Some lenders are OK with contract workers, but most want to see that the contract has at least been renewed once and that they have a reasonable amount of experience in the profession they work in. Contractor mortgages are not a big deal but each lender has their own interpretation of how a contract will be calculated for affordability.

If your daughter and her partner are well qualified and in what is considered a profession, there is a lender that you may remember from adverts with a good looking woman wearing a black cape who specialise in medical professionals (Scottish Widows). I'm not saying they are the right lender in this case, plenty of high street banks are willing to do this type of mortgage,

Probably best just to use an experienced mortgage adviser but if you do not, ensure your daughter/son have copies of their contracts when they approach a lender.

MM

amnblog

Sounds like a simple job for a Broker, a potential nightmare for an applicant going direct.

This business of having an application rejected and the ramifications of that on future applications is a red herring.

Why would you submit a formal application to a Lender unless you knew they were comfortable with the Contract situation?

There is no reason for any sensibly handled application to result in a 'rejection' here.