Getting a mortgage while in a contract role?

lastusername

Hi guys,

Wondering what the situation is with banks giving a mortgage to someone in a full-time contract role. I am in a well-paid job with a large company, but it is a contract role.

I've been in the role since last July and have been told that they will be extending the contract for another year from July this year at the very least. They are also looking to make me permanent and this should happen at some stage this year.

My understanding is that a bank wants to see you in a permanent role, but I am wondering if this is across the board with all banks, or what people's experiences are here? It will likely be early next year before I'd be looking to buy, and while I should be permanent by then, it's not certain.

Thanks

Blingy

lastusername wrote: »

Hi guys,

Wondering what the situation is with banks giving a mortgage to someone in a full-time contract role. I am in a well-paid job with a large company, but it is a contract role.

I've been in the role since last July and have been told that they will be extending the contract for another year from July this year at the very least. They are also looking to make me permanent and this should happen at some stage this year.

My understanding is that a bank wants to see you in a permanent role, but I am wondering if this is across the board with all banks, or what people's experiences are here? It will likely be early next year before I'd be looking to buy, and while I should be permanent by then, it's not certain.

Thanks

I got mortgage approval last year however they needed confirmation I had passed my probation for my permanent job. They said they wouldn't look at me if I was on a contract. However I am sure some people will have had different experiences. It also depends on the type of job etc.

lastusername

Blingy wrote: »

I got mortgage approval last year however they needed confirmation I had passed my probation for my permanent job. They said they wouldn't look at me if I was on a contract. However I am sure some people will have had different experiences. It also depends on the type of job etc.

Cool, I'm guessing they take various factors into account alright and will depend a lot on your salary and savings. The company I am with is very established and I'm on above average pay for the role / level of seniority too. I also make around a thousand a month extra from a side business too, which should help...

Blingy

No harm making an appointment with one of the banks and having a chat with them and get an idea of what they need and then you can work towards it.

Banks don't like the contract with a view to permanency gigs for mortgages, the extension for another year in bankspeak is just confirmation that there isn't a permanent role / headcount there at the moment.

Worth trying of course.

kk2014

Hi I got approval from AIB while I was in a contract role within the public sector. Husband is permanent in private sector and we had a lot of equity so we weren't the riskiest I would imagine as it was a small mortgage. We drew down in February just gone and my contract was due for renewal in March and AIB had no issues at all. Our current mortgage at the time of applying was with BOI and they said no, as did KBC and UB. Might be worth contacting AIB if I was you. We applied over the phone to the direct mortgages team in Naas and had a very positive experience.

I was very disheartened initially when we contacted banks but AIB were good for us. Best of luck.

lastusername

Blingy wrote: »

No harm making an appointment with one of the banks and having a chat with them and get an idea of what they need and then you can work towards it.

Yep defo, will do soon. I went in last year when I was on a lower income so it'll be nice to go in again a second time having changed jobs to see what the options are

lastusername

Augeo wrote: »

Banks don't like the contract with a view to permanency gigs for mortgages, the extension for another year in bankspeak is just confirmation that there isn't a permanent role / headcount there at the moment.

Worth trying of course.

Yeah worth having a chat anyway, and I'd be hoping to be permanent by the time I'm applying too.

Captain Flaps

I have a really lucrative freelance/contract based role waiting for me but I've had to stay in my current full time perm role as the bank sees that as a safer prospect, despite the fact that I'll be earning twice as much. Pretty much handing in notice the day I get the keys.

tailgunner

kk2014 wrote: »

Hi I got approval from AIB while I was in a contract role within the public sector. Husband is permanent in private sector and we had a lot of equity so we weren't the riskiest I would imagine as it was a small mortgage. We drew down in February just gone and my contract was due for renewal in March and AIB had no issues at all. Our current mortgage at the time of applying was with BOI and they said no, as did KBC and UB. Might be worth contacting AIB if I was you. We applied over the phone to the direct mortgages team in Naas and had a very positive experience.

I was very disheartened initially when we contacted banks but AIB were good for us. Best of luck.

Similar situation here. I've just been made permanent in the private sector and my girlfriend is on a contract in the public sector. BOI practically laughed down the phone at the very idea of us applying for a mortgage, but AIB had no problems with it at all.

I had no issue getting mortgage approval while on contracts, no contract was longer than one year at a time but it was in the same place and for a number of years in a row. I also had a letter saying my contract would "most likely" be renewed for another year.

I have colleagues on similar contracts who also have no issue getting mortgage approval.

lastusername

Jairo Prehistoric Arrow wrote: »

I had no issue getting mortgage approval while on contracts, no contract was longer than one year at a time but it was in the same place and for a number of years in a row. I also had a letter saying my contract would "most likely" be renewed for another year.

I have colleagues on similar contracts who also have no issue getting mortgage approval.

Wow that's great to hear! Makes sense too as there will be hundreds of thousands of people on contracts all over the country!

Hoochiemama

I just got mortgage approval last month on an IT contract job. I got the approval with Haven. I have been in my role for over 2 years and I got a letter from my company saying they had no reason to end our relationship.

John_Mc

You're fine with getting a mortgage while contracting if you can provide 3 years of audited accounts and personal tax returns instead of P60's.

lastusername

John_Mc wrote: »

You're fine with getting a mortgage while contracting if you can provide 3 years of audited accounts and personal tax returns instead of P60's.

Hey John, it's actually a full time PAYE role which happens to be a contract role for now. I do have additional self-assessed income though, which should help too!

gnf_ireland

It can be done but it does make things trickier. I managed to get a mortgage being a contractor in 2010/2011 but was very tricky. They wanted a 25% deposit as a FTB at the time. I have switched my mortgage without issue since and the only ask was company accounts to be provided.

I should add I was only 3 months into a 12 month contract at the time - but I was a career contractor and had been contracting for a decade at that stage

If you struggle via standard banks, do consider Pepper Money who definitely offer them and then switch the mortgage when you are made permanent and post probation period !

There is always a way ...

I think there is some mix ups happening between contractor and on contract. Contractor being a self employed person doing contract work and a person on contract being a full time paye worker in a company/public service who has a fixed term contract in their role rather than being permanent.

gnf_ireland

Jairo Prehistoric Arrow wrote: »

I think there is some mix ups happening between contractor and on contract. Contractor being a self employed person doing contract work and a person on contract being a full time paye worker in a company/public service who has a fixed term contract in their role rather than being permanent.

Fair enough, but is the principle not the same here - both are not permanent and both risk not being able to pay the mortgage if their respective contract is not renewed. In theory the contractor is more at risk, as the duration of their contracts are normally shorter.

You also have the CID - contract of indefinite duration, which of course is still a contract but with no end date.

Jairo Prehistoric Arrow

Jairo Prehistoric Arrow wrote: »

I think there is some mix ups happening between contractor and on contract. Contractor being a self employed person doing contract work and a person on contract being a full time paye worker in a company/public service who has a fixed term contract in their role rather than being permanent.

Indeed

gnf_ireland wrote: »

Fair enough, but is the principle not the same here - both are not permanent and both risk not being able to pay the mortgage if their respective contract is not renewed. In theory the contractor is more at risk, as the duration of their contracts are normally shorter.............

I'd disagree, there are lots of relatively unskilled folk on contract in admin and production roles, they are mostly chomping at the bit to become fulltime.

The vast majority of career contractors have in demand skills and have next to no interest in becoming an employee.

gnf_ireland

Augeo wrote: »

I'd disagree, there are lots of relatively unskilled folk on contract in admin and production roles, they are mostly chomping at the bit to become fulltime.

The vast majority of career contractors have in demand skills and have next to no interest in becoming an employee.

Fair enough, but there are also hybrids as well - so people with in demand skills who are on longer term fixed contracts (say 2-3 years).

A career contractor is just as exposed to economic downturns as other employment types. In many cases they are let go as there are no major capital projects or they are likely to take rate cuts during this window. They are seen as easy targets by and large. This is no difference to government cutting capital funding during a recession - companies do the same, and contractors rely on these big programmes for their pay cheques...
Very few industries are that recession proof ....

gnf_ireland

gnf_ireland wrote: »

..........

A career contractor is just as exposed to economic downturns as other employment types...............

If you ignore the fact most career contractors have a skill or qualification ................

gnf_ireland

Augeo wrote: »

If you ignore the fact most career contractors have a skill or qualification ................

I am not ignoring this at all. I am a career contractor and have been for 20 years...

However, the point still stands - even with a skill or qualification, there were a large number of contractors who were let go during the last recession who struggled to get replacement work, and if they did, they are likely to have taken a reasonable rate cut to do so.
Contractors by and large are based on capital projects within companies. Very few companies hire career contractors for BAU type activities, as it is a very expensive model. When capital spend is reduced, career contractors take a direct hit - skill or no skill/qualification.

Yes, some will get replacement work, especially if they are internationally mobile, but others will not be as lucky in the short term.

Having a skill/qualification may make you employable in general, but in times of economic downturn, capital projects tend to take a higher hit...