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Guide to mortgages for agency workers

We look at how mortgages for agency workers works and the answers to some of the main questions that people have

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 26 July 2022

6 min read

Guide to mortgages for agency workers

Agency workers can have slightly different challenges when it comes to applying for a new mortgage or a remortgage. It’s important to understand your options and what you should expect before applying for a loan. 

In this guide, we look at how mortgages for agency workers works and the answers to some of the main questions that people have. Ultimately, you want to get the best outcomes and borrow the right amounts at the best mortgage rates. 

If you’re an agency worker and you’re concerned about getting a mortgage then we’ll aim to help you to find the right mortgage deals. 

According to statista.com there is an estimated 1.65 million workers that are employed on a temporary basis at December 2022. This compares to just over 1.45 million temporary workers in January 2020, showing that these levels are rising. 

What is an agency worker for mortgage purposes? 

There are several main types of agency workers and the main definition is ‘someone that works through an agency on a temporary contract term basis’

You will be classed as an agency worker if your contract of employment is held through a recruitment agency or temp agency. Other types of agency work includes those working in the entertainment industry or modelling agency workers. 

Examples of agency workers includes: 

  • Administration staff (temporary) 
  • Seasonal workers 
  • Teaching assistants (agency) 
  • Medical agency workers 

Can agency workers have a mortgage? 

It should be possible in most instances to get mortgages for agency workers, as long as it fits with standard lending criteria. There are a number of mortgage lenders that specialise in this area and some lenders that simply aren’t good for agency workers. 

The most simple and straight forward applications will be for agency workers who are employed on a ‘fixed term contract’. The more stable and reliable that your income and employment history is, then the easier it will be to be approved for a mortgage. 

There are lenders who will lend to people who are employed on short term contracts so it’s not a requirement. An agency mortgage specialist will be able to assess your needs and circumstances to establish which deals are best for you.

Find out more about mortgages in our guide ‘What is a mortgage?’.

How to get a mortgage with a temporary contract 

When you apply for a mortgage as an agency worker, there are a few simple steps to follow to make the whole process quicker. You can also improve your chances of being approved for a mortgage by getting yourself properly organised. 

  1. Get your information ready – there are a number of things that will be required for your mortgage application by most lenders. Being properly prepared will make your mortgage application smoother and a lot more straightforward for your mortgage advisor. 

Standard document requirements include: Photo ID (e.g. Passport or Driving License), Proof of residency (e.g. utility bill, bank statement, phone bill etc.), payslips and P60. 

Agency workers requirements include: proof of current and previous contracts, references, any other evidence you can provide. 

  1. Credit score and reports – Every mortgage application will be assessed based on your credit history and your current credit score. You should be prepared for this and get as much information upfront as you can. It is possible to get a mortgage with bad credit as an agency worker, but it’s better to be prepared. Your credit score will take into account things such as debts, payment defaults, CCJs and IVAs.

You can gather this information for free by using services such as ClearScore, Check my File, Equifax or Experian. There are certain mortgage lenders that would be best in this situation and it’s always advisable to speak a qualified mortgage expert. 

  1. Get expert mortgage advice – it is often best with mortgages for agency workers to get proper advice from a qualified mortgage specialist, to make sure that you get the best deals and rates. You should make sure that your mortgage advisor has experience and expertise in dealing with your type of mortgage applications. 

Eligibility for agency worker mortgages 

There are some standard eligibility criteria with mortgages for agency workers that most lenders will apply similar rules to. The best lender and deals for you will be based on your individual circumstances. 

Standard mortgage lender criteria includes: 

Type of contract – lenders will look at different types of temporary and agency contracts very differently, based on their own lending criteria. There will be certain lenders that will definitely be better for each type of contract for agency workers. 

Getting proper guidance from a qualified mortgage expert can help you to quickly identify which lenders are best for you. 

Length of contract – there are also some strict criteria around the term of any contracts with some lenders, and others are more flexible. The minimum requirement for most standard mortgage lenders is 1 year, but this can vary for some specialist lenders. 

Loan to Value (LTV) or deposits – it is also likely that there will be some stricter rules around the maximum LTV that you will be able to obtain with some lenders. It isn’t unusual for some lenders to restrict to a maximum of 85% or even 80% Loan to Value, meaning you will need a 15-20% deposit when buying a new home. 

Some specialist lenders might be able to lend more against the value of your property, but it’s often best to get proper advice from a mortgage expert

Continuous employment (no gaps) – another common requirement with mortgages for agency workers is that you’ll need to be able to evidence constant employment with no gaps for a period of time. It is likely that most standard lenders will be more strict with this particular area, but some specialist lenders might be more accommodating. 

Credit score and history – your mortgage application will also be assessed based on your credit history and your credit score. Borrowers with higher credit scores and less bad credit will find it far easier to get a mortgage than those with credit problems. 

Affordability with mortgages for agency workers 

Your affordability as an agency worker might be calculated differently to other mortgage applications, and other criteria might apply. Some lenders are slightly more strict when it comes to lending to agency workers based on the potential uncertainty of their income. 

There are a number of calculations that will be factored in to an affordability calculation from each lender. When assessing an application for agency worker, they might apply different criteria, as it can include multiple positions for example. 

Standard mortgage affordability for lenders is usually between 4 and 5 times your income which is evidenced with 3 months payslips and a P60. 

Agency workers will usually be assessed over a 12 month period and a similar income multiple may be applied. There are some lenders that might be more flexible with agency workers affordability criteria, depending on your circumstances.

You might also hear the phrase ‘mortgage capacity report’ when applying for your mortgage. This is a way for your broker to assess your suitabililty for a mortgage loan. Find out more in our ‘Guide to mortgage capacity reports’.

Best mortgage lenders for agency workers 

There are certainly some lenders that are better than others with mortgages for agency workers. This is purely because some lenders prefer to accept certain types of business than other lenders and they offer loans to different groups. 

Some of the best lenders with mortgages for agency workers are: 

How to get mortgages for agency workers 

If you are looking for the right mortgage deal as an agency worker then you should get proper advice from a qualified mortgage expert. You might have very specific needs that you weren’t aware of and a mortgage advisor will be able to help you with this. 

Applying for mortgages for agency workers through your bank or building society and online might result in your mortgage application being declined, which can also damage your credit score. 

Resources

Gov.uk – Your rights as an agency worker

NI Direct – Agency workers

Legislation.gov.uk – The Agency Workers Regulations 2010

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