Finding a Mortgage as a Social Worker on a Temporary Contract
Many social workers have contracts that are not permanent, and a short-term appointment is considered anything lasting less than three years.
The majority of short-term contracts run for three to twelve months, and as such a mainstream lender might deem this an unviable income, and not be able to offer a mortgage.
However, there are several solutions, with the Revolution Brokers lending network able to consider a range of circumstances:
- Contracts with at least six months left to run, where the applicant has a good credit rating and can offer a deposit of 10% or more.
- Applicants, who have one year left on their contract, also have a clean credit history, and can offer a 5% deposit.
- Social workers who are in a contract with at least a year remaining, which has previously been renewed at least once, have a 5% minimum deposit and a clean credit rating.
- As above, if the applicant does not have a clear credit history, then a mortgage is still possible with a higher deposit of around 20%.
Where social workers have a clear credit history, without any missed payments in the last 48 months, there are more lenders to choose from - but in any adverse credit scenario, the longer ago the issues occurred the better.
Mortgages for Agency Social Workers
Another conundrum arises for social workers employed through an agency, which can be difficult for high street lenders. However, agency work can be well paid, and the flexibility is appealing, so this isn't necessarily a less stable role given the high demand of professional social care workers.
Mortgage lenders, however, need as much security as possible, and if there is no guarantee of further work, or reliability that the agency work will meet a minimum threshold, this presents a risk.
Our agency-friendly lenders take a more flexible approach, and can offer mortgages to social workers who:
- Have worked at the same employer through their agency for over a year.
- Have a clean credit history, without missed payments in the last two years.
- Can offer a 5% deposit with a good credit rating, or 20% without.
- Are applying for up to four times their annual income when there are adverse credit issues, or to a maximum of five times annual income with a clear credit score.
Social Worker Mortgages for Staff Employed Through Umbrella Companies
This common structure is where social workers are employed through an umbrella company, and deployed to posts similarly to an agency.
Generally, mortgage lenders consider this a form of employment between the social worker and the umbrella company, and treat it as an insecure form of work.
Although the umbrella company pays the social worker through PAYE, many mainstream lenders will still regard this set-up as a self-employment situation, and therefore need three years of trading history to consider an application.
However, as with self-employed social workers, the Revolution team can recommend lenders who have experience lending in the care sector, and are usually happy to lend against a 12-month work history.
Mortgages for Social Workers Trading as a Sole Trader or Limited Company
In some cases, social workers trade as self-employed, through umbrella companies, as a sole trader, or through a limited company structure.
With these scenarios, lenders will typically apply their usual self-employed criteria, and will:
- Require three years of trading history.
- Base lending decisions on net profits for sole traders.
- Base lending on the salary and dividends paid for a limited company.
Limits and caps very much depend on the lender, with some of our more flexible mortgage providers able to:
- Consider only the last 12 months of trading.
- Accept deposits as low as 5%.
- Incorporate residual profits left in the business for limited companies.
- Offer terms around bad credit scenarios.
Governmental Support Schemes for Social Workers with Low Mortgage Deposits
Historically, social workers were able to apply for keyworker mortgages. However, Help to Buy replaced this mortgage product, where by borrowers can:
- Take out a 20% government loan with a 5% deposit and 75% mortgage for a new-build property.
- Buy an existing property with a 5% deposit and 95% mortgage.
While specific keyworker mortgages no longer exist, some lenders will take a more flexible approach to applications from healthcare professionals in the public sector.
Mortgages for Social Workers with Bad Credit
Credit history can be a major issue when applying for a mortgage - and if you are not permanently employed, can make it extremely difficult to find a lender who will accept your application.
However, where adverse credit issues are causing an issue, an expert broker can help you discover the right lenders to apply to, based on your average income, deposit value, and when the credit issue occurred.
For support with finding a competitive social worker mortgage in any social work structure or scenario, contact the Revolution Brokers team on 0330 304 3040 or email us at [email protected].
