A customer got in touch earlier this year after they had attempted to get a mortgage but had been knocked back. The knock back was due to them only having 2-3 months remaining on their fixed term employment contract.
It was also the applicants first contract with his employer. Either of those things can cause a problem with mortgage applications. For people on Fixed Term Contracts (FTCs) most mortgage lenders need you to have at least 6 months remaining on your contract and for the contract to have been renewed at least once previously.
The customer wanted to see if we could help them overcome these issues. They had spoken to a couple of mortgage brokers before getting in touch with us and were getting mixed messages which was causing confusion and anxiety.
What we did
After I had got over the shock of being second or third choice of brokers for them to call(!) (only joking). We had a brief chat to get some details.
This included basics like the purchase price, loan amount and income in addition to information more specific to this scenario which included when their contract started, when it is due to end and whether or not it is likely to be extended.
Once we had the information needed, I was able to let the client know it was quite likely we could help and it would be normal rates (circa 4% to 4.2% depending on what was available at the time).
The client felt happy and chose to proceed with us as we were able to offer the most reassurance without over promising. We gave the client a few things to get together for us so we could double check everything.
The outcome
We already had a pretty good idea of who the application would end up with due to the limited number of options.
As this is the sort of thing we have dealt with before on a few occasions we were able to fly through everything quite quickly. We were able to confirm what the options were on the same day!
Once the customer gave us the green light, we applied for A decision in principle (DIP) which passed and then submitted the application once they had agreed a purchase price on the new property.
With this being a success story, I am guessing you know what came next…
The mortgage was offered in 4 days! 4 days is pretty good for any application but to have it when your circumstances are not straight forward for the majority of lenders is pretty good. The interest rate was one of (if not) the cheapest lender on the market at the time. Although I have to admit that that part was more down to luck than judgement as we have no control over who the cheapest lenders are on any given day.
Summary
Fixed term contract mortgages are generally quite easy to place. Most lenders have the same criteria so if you fit that criteria you probably have the pick of the market.
However, for those of you who may not fit that criteria it does not necessarily mean it will cost you more. It does mean you might need a broker though to help you navigate the market. If you do not fit the mainstream criteria, who better than us to help you? We have done this sort of thing time and time again for many customers over the years. You will be in safe hands.