Mortgages for Agency Workers
For the majority of people, getting one’s foot onto the property ladder is exceptionally difficult. Finding your dream home requires a great deal of time, dedication, and patience because the market, especially today, is singularly competitive and demands a lot personally. Again, this is the case for almost everyone, but the issue is amplified considerably in the context of those whose employment is slightly unconventional, as typified by freelance workers. Indeed, although there are multifarious types of employment, in which an increasing number of people now are more likely to undertake, the mortgages and housing market categorically doesn’t cater towards those whose jobs fall outside of the ‘norm’.
One such instance is that of agency workers. The term agency worker refers to an individual who is on a contract with an agency, but who is also temporarily under the employment of a hirer. Agencies include anything from specific recruitment agencies, all the way to entertainment and modelling agencies. In the UK and Wales there is a collective estimate of around 800,000 agency workers, taking into account permanent, self-employed, and temporary agency workers. Yet, despite this fairly large presence, agency workers will find that when they inevitably come to get a mortgage, the prospect is definitively more difficult for them, as opposed to if they were under a relatively standard employment agreement. Reason being, that high-street lenders consider the latter to inherently carry less of a risk than the former.
Of course, this represents a narrow outlook, but it remains a central part of the unwavering criteria by which all the big mortgage lenders adhere to. However, this doesn’t go to say that there aren’t mortgages for agency workers out there, the key is in finding a lender who is accustomed to handling cases which resonate with your personal circumstances and financial situation. This can prove quite taxing to achieve yourself, and so we highly recommend you to hire the services of an expert mortgage broker to thoroughly assess your position in order to match you with a suitable lender. We at The Mortgage Genie have assisted plenty of our UK clients by getting them a mortgage as an agency worker, regardless of the common obstacles. If you’re interested in joining those among our success stories, then be sure to contact us at 01915809890 today.
Notwithstanding what we can do for you, it’s still suggested that you familiarise yourself with all the important details surrounding mortgages for agency workers and how they might differ from other types. So that you can inform yourself, we’ve put together this piece which covers the specifics of the matter. We’ll go over:
Why are mortgages for agency workers harder to get?
Being employed by an agency is attractive to many people because it offers an incredible degree of flexibility. Such employment allows individuals to work when, as much, and where they like. Therefore, it may seem curious as to why these benefits mean that it’s harder for agency workers to get a mortgage, relative to those who are in full-time employment within a single business or company. The pertinent reasoning can be found in how mortgage providers assess those who wish to borrow money from them.
Namely, lenders gauge the ‘risk’ of a mortgage candidate principally by inspecting the proof of income they provide. For those on a Monday to Friday 9-5 contract, their wage will show little variation, allowing for a more straightforward assessment. Whereas, an agency worker’s income will probably be more changeable, owing to the nature of their employment.
Fundamentally, high-street lenders will characterise such income as being somewhat unstable and thereby ‘high-risk’, as compared with a fixed income. Lenders need to be wholly convinced that there is no chance of you failing to meet your monthly mortgage repayments, and an income gained from agency work complicates the matter, even if you earn a respectable sum every month. The added difficulty concerns finding a suitable lender for agency workers. In practice, you won’t find such a mortgage provider on the high street due to these lenders conforming to rigid eligibility criteria, so you’re required to seek out a specialist lender who shows understanding towards alternative employment.
What proof of income do agency workers need for a mortgage?
For the aforementioned reasons, lenders generally tend to apply a rigorous attitude when evaluating the income of an agency worker. Essentially, this means that you are required to provide a thorough account of your income.
This proof equates to evidence of steady earnings over, at least, the last twelve months. One year of employment is typically regarded as the minimum for one looking to get a mortgage. On top of this, you might also need to get a reference from the agency which you’re attached to, in order for your chosen lender to verify your employment status.
Can I get a mortgage as an agency worker?
As we’ve tried to make clear, it’s more than possible to get a mortgage if you’re an agency worker. But, there is the significant prerequisite of having a specialist mortgage broker at hand to aid your case. This is because mortgages for agency workers are classed as specialist mortgages, those which require you to locate a specialist lender.
Specialist lenders are a necessity for agency workers attempting to get onto the property ladder because they assess candidates on a case-by-case basis. That is, their approach accounts for people who rely on a relatively complex income. The crux is that specialist lenders occupy a niche category, and so are trickier to find yourself, compared to how easily you can find a big high-street mortgage provider.
Having said this, mortgage brokers like us have access to a pool of specialist lenders readily available, virtually simplifying the matter by reducing the issue to a case of matching your personal situation and financial circumstances with an according mortgage provider. What’s more, we guarantee to get you the best deal on the market, that which comes with competitive interest rates comparable to what a regular salaried worker would have the option of.
What will impact my mortgage application as an agency worker?
As with any mortgage, there are a vast variety of influencing factors which will ultimately determine the success of your application. Albeit, on the topic of agency workers, there are some distinct added dimensions which will impress an impact upon your application overall. These are as follows:
Your job role - Specifically, your job role denotes what industry you operate in. It’s favourable if you’re in an industry where there will always be a demand. For instance, educational and medical professions are reliably held in society.
The type of contract you’re on - This point regards whether you’re fulfilling a temporary position or you’re on a fixed-term contract for a long period of time. Evidently, the latter evinces itself as more secure than the former, leading lenders to prefer such arrangements.
A renewal of contract - Lenders also have a bias towards consistency, and a contract renewal intrinsically represents this because it signals future employment. On the other hand, gaps in employment, however justified they may be, are red flags for lenders.
Again, if these positive factors do not apply to you personally, then it doesn’t mean that you can’t get a mortgage as an agency worker. The above merely act as guidelines for what most lenders will view as being favourable in a candidate.
Can I get a mortgage as an agency worker with bad credit?
All high-street mortgage providers have a similar set of narrow criteria by which they measure the suitability of potential clients. Almost universally, this criteria rules out those who have bad credit. Lenders discern bad credit by carrying out a hard credit check. Bad credit is perceived as an unequivocal sign that someone has a poor financial history, and so has a substantial potential of not being able to comfortably repay their mortgage loan each month, manifesting as rejection. Markers include a person having a low credit score, failing to meet payday loans, having past court county judgements (CCJs), IVAs, or ever claiming bankruptcy.
In addition to the inherent risk of mortgage applicants who are agency workers, it may appear as if your chances at securing that dream house as an agency worker with bad credit are nil. While it may mean your chances are slimmer, it doesn’t go to say that the prospect is invalid. You can absolutely get a mortgage as an agency worker with bad credit, provided that you have a specialist mortgage broker to match you with a fitting lender who is accustomed to such cases. Moreover, if you’ve saved up a sizable amount of money for a mortgage deposit, then this can work to offset any past financial troubles, given that it is a clear indication of good money-handling capabilities. Whatever your situation, it’s best practice to have a decent sum put away anyway because of the extra fees and charges that come in tow with all mortgage deals. Likewise, if such related problems occurred over six years ago, and you currently show positive reform, then the severity of their presence is reduced.
It’s salient that hard credit checks leave a mark on your report. Followingly, if you want to get a notion of your current financial suitability before you apply for a mortgage, you can use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you to identify any possible mistakes or fraudulent activity on your profile, so that you can deal with such problems as soon as possible. The trial and subscription can be cancelled at any time.
How much can agency workers borrow?
How much an agency worker can borrow from a mortgage lender is determined foremostly by their total income over the past year. This is a key part of what makes up a mortgage provider's affordability check.
Take, for example, if you were on a steady fixed-term contract and had little-to-no gaps in your employment history while making around £30,000 annually. In this case, you could expect to borrow up to 5x your income, as well as to have access to a maximum loan-to-value (LTV) ratio of 95%. In essence, entitling you to borrow around £150,000. Although, if you were to opt for a higher LTV mortgage, then this would reduce your chances of securing a home due to these mortgage types carrying an associated risk.
We at The Mortgage Genie have an in-depth understanding on how to get a mortgage and are dedicated to helping people secure loans of all types, whether they’re agency workers or otherwise. We hope that this article has answered all of the pressing questions and addressed any concerns you may have had surrounding mortgages for agency workers.
Each day we help an increasing number of people to achieve housing happiness by finding them a mortgage product which is specifically tailored to their personal situation and financial circumstances, all while guiding them through every step of the, often complex, process. If you’re in need of a team of expert mortgage brokers, then be sure to get in touch at 01915809890 and we’ll have you owning that dream property in no time! And why not see how much you could borrow up to today by using our mortgage calculator?