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How Moving to a Permanent Contract will Affect Your Mortgage?

<strong>How Moving to a Permanent Contract will Affect Your Mortgage?</strong>

May 7th, 2024

Transitioning from contracting to permanent employment can have significant implications for your mortgage aspirations.

 While there are advantages, such as a wider range of lenders and simplified income documentation and a more consistent flow of income, there are also several other factors to consider.


1. More Lender Options: Moving to permanent employment opens up the possibility of applying to a broader selection of lenders, which can increase your chances of finding the right mortgage offer.

It’s no secret that lenders are more picky when it comes to freelancers, due to their unique income situation.

Becoming a permanent worker should relieve you of this judgement from lenders, although their assessment of you will come with a different set of queries, as specified further down.

2. Simplified Income Documentation: Documenting your earnings for affordability assessments becomes more straightforward compared to the complexities of contract-based income verification.


1. Lower Borrowing Potential: Contractors often enjoy higher gross earnings than their counterparts in permanent roles. Lenders typically consider this when assessing borrowing potential.

For example, a contractor earning £500 per day could potentially borrow significantly more than someone in a permanent position with a lower annual salary.

2. Minimum Employment History Requirements: Some lenders may require a minimum of six months of PAYE employment history before considering a mortgage application, regardless of industry experience.

Gaps in employment, especially between contracts, can further complicate matters. Additionally, probationary periods may pose additional challenges for mortgage approval.

3. Remortgaging Challenges: Contractors who initially maximised their borrowing capacity may face difficulties when remortgaging after transitioning to permanent employment.

Even if their income remains stable or increases, the affordability gap between their previous borrowing and new salary may pose challenges.

4. High Risk at First: If you’ve only just started a new job, lenders may view you as higher risk, due to the substantial change to your individual circumstances. This is of course not applicable if you are already settled into your new role, and passed any probationary periods that your new workplace may offer.

We as a broker specialise in helping self-employed individuals, however we are here to help no matter your employment circumstances. CMME Mortgages are equipped to assist you in finding the right mortgage offer tailored to your needs.

Whether you’re transitioning from contracting to permanent employment or facing challenges with remortgaging, our team is here to help navigate the process and secure the best solution for you.

Click here to book a FREE no obligation call with one of our team, and see what options are on the table for you.

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