Can you get a mortgage with a part time job? (UK)
In this brief blog, we will consider if you can get a mortgage with a part-time job.
Yes, you can get a mortgage with a parttime job but this heavily depends on if the parttime job is your second job or your main source of income.
Most mortgage lenders will not lend to you if the part-time job is your only source of income except you can prove to them how you will be able to keep up on your monthly mortgage repayments.
There are some mortgage lenders that will give you a mortgage with a part-time job but this is based on a few key facts and how they view them. These include:
- How long you have had the part-time job
- What sort of part-time job is it?
- What your credit score and history are like?
- How much mortgage deposit do you have?
- Do you have other income aside from the part-time job?
- What type of contract do you have?
The length of time you have spent in your part-time job will be a big factor when the mortgage lender considers if they can give you a mortgage with a part-time job.
The longer you have had the job, the more reliable and stable your income will be perceived by the mortgage lender.
Some mortgage lenders will have a requirement for the minimum amount of time you should have been with the employer on a part-time job before they will consider lending to you.
This could be 3 months or 6 months for most mortgage lenders.
If you have just joined the job but are still on your probationary period then there may still be mortgage lenders out there who may be willing to lend to you.
The type of part-time job you have may be a consdered factor when the mortgage lender decides if to give you a mortgage with a part-time job or not. If the job is deemed as not being reliable or from an employer who may fire you or is at considerabled risk of collapse then you may not be able to get a mortgage with a part time job.
If the job is also classed as a low skill job where you can easily be replaced then you may find that the mortgage lender may also not be willing to lend to you as the risks are more.
your credit score and history
Your credit score and history are a big indicator on whether you will be able to get a mortgage with a part-time job or not.
If you have bad credit then you may find it much harder although a bad credit mortgage broker may be able to help you get a mortgage with a part-time job and bad credit.
You should ensure you check your credit score and history to ensure it is fine and there are no errors on it from all four credit bureaus including Crediva.
You can use checkmyfile to check your credit score and history from all four credit bureaus. If you find any issues then you should report this to the credit bureaus so they may correct it.
your mortgage deposit
The mortgage deposit you have may heavily influence if you will be able to get a mortgage with a part-time job. A larger mortgage deposit will make ie easier for the mortgage lender to offer you a mortgage as you will essentially reduce the loan to value for the mortgage lender and in some ways the risk.
Most mortgage lenders now accept a 5% mortgage deposit but with a part-time job, you may be required to put down a larger mortgage deposit.
If you are struggling to save a mortgage deposit then you may be able to use a first-time buyer or home mover government scheme.
Some of these home buying schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
other supplementary income
Can you get a mortgage with other supplementary income?
Aside from using your part-time job to get a mortgage, you may also be able to get a mortgage with your supplementary income. Supplementary income could be benefits or other incomes generated from employment.
Some examples include:
- Pension income
- Investment Income
- Overseas earned income
- Maintenance Payments
- Rental Income
- Attendance Allowance benefit
- Carer’s Allowance benefit
- Child Benefit
- Child Tax Credit benefit
- Disability Living Allowance (DLA)
- Incapacity Benefit (IB)
- Industrial Injuries Benefit (IIB)
- Maternity Allowance benefit
- Pension Credit benefit
- Severe Disablement Allowance
- Widow’s Pension benefit
- Working tax credit benefit
Type of contract
If you have a long term contract then getting a mortgage with a part-time job will be much easier in comparison to if you have a short term contract. Different mortgage lenders will consider this on a case by cases basis.
You may want to use a specialist mortgage broker if you have a short term contract.
A specialist mortgage broker may be able to help you find mortgage lenders who are willing to lend to you.
Yes, you can use your part-time income to qualify for a mortgage but this depends on the form of employment and if it is your main source of income or not. If the part-time income is from a reliable source and there is some guarantee of it continuing for the foreseeable future then you may find mortgage lenders willing to consider it up to a particular amount.
Not all mortgage lenders will accept part-time income and some mortgage lenders will only accept a percentile of the part-time income and not the whole thing.
If your part-time income counts for the majority of your income then you may want to use a specialist mortgage broker to find mortgage lenders who may be willing to lend to you based on this.
If your part-time income is reliable and can cover your monthly mortgage repayments then you may be able to get a mortgage with it.
Buy to let mortgages are usually judged based on the proposed rental income of the properties but most mortgage lenders will also expect the applicant to have a minimum amount of income which can be around £20,000 but may vary amongst different buy to let mortgage lenders. This income is there to cover any potential shortfalls that may occur due to tenants defaulting on rental payments or any period at which the property is unoccupied.
Having this minimum income gives the mortgage lender the confidence that you are able to continue to repay the buy to let mortgage during this period.
Most mortgage lenders will still apply their income multiple tests when conducting a mortgage affordability assessment. This means they will take your total annual part-time income and multiply it by a certain number to see what the maximum you may be able to borrow is.
Most mortgage multiples are around 3 but based on your credit rating and mortgage deposit a mortgage lender cold offer you an income multiple of 5. This may be very rare for part-time incomes.
Most mortgage lenders will also usually have a minimum income you can have before they will lend to you.
This is usually around £20,000 but may be different for each mortgage lender.
If you have bad credit then getting a mortgage with part-time income may be a bit harder.
Different mortgage lenders will consider your mortgage application based on the type of bad credit you have and may still offer you a mortgage. You may want to consider using a bad credit mortgage broker who may be able to assist you in getting a mortgage with part-time income and bad credit.
Not all mortgage lenders will let you use more than 2 part-time jobs on a mortgage application and there are mortgage lenders out there that will accept as much as 4 part-time jobs as long as they feel the income is reliable.
If you find yourself in this situation with multiple part-time jobs then you may be able to get a mortgage with a part-time job by speaking to a mortgage broker and letting them know your circumstances.
If you are considering getting a mortgage with a part-time job then you can speak to a mortgage broker who will be able to assist you in doing this.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.