Getting a Mortgage With a Part-Time Job

Despite what you may have heard to the contrary, it is possible to get a mortgage if you only work part time, and in this guide, you’ll learn how to go about this.

Here, we will explore the ins and outs of securing a mortgage based on part-time income. From eligibility criteria to additional income sources, we will delve into the factors that could make all the difference in securing a mortgage that suits your unique situation.

Can you get a mortgage as a part-time worker

Yes. Navigating the world of mortgages can be challenging, especially for part-time workers. But with the right guidance and an understanding of the lending criteria, it is indeed possible to secure a mortgage on a part-time income. Job stability and meeting a minimum income threshold are necessary for part-time workers to be eligible to get a mortgage.

It is possible to get a mortgage on part-time hours under the following circumstances:

• The mortgage you need is relatively small
• You have a large deposit to put down
• You have other sources of income on top of your part-time job
• You are applying with another applicant
• You are approved by a lender who uses higher income multiples

By taking charge of your finances and dedicating a few months to prioritising your mortgage application (including saving towards a larger deposit), you may have a change of approval.

Utilising a mortgage broker is the suggested course of action for part-time workers. An adviser can assist with the application process, including advising on how much deposit is needed, the minimum acceptable income, and introducing the part-time worker to a mortgage provider that caters for them.

Eligibility criteria

The eligibility criteria for part-time workers who are applying for a mortgage is generally the same as it is for applicants in full-time employment. A strong application is typically one whether the applicant has plenty of deposit funds and a clean credit history.

However, for those in part-time work, mortgage lenders place extra scrutiny on job stability and minimum income thresholds. Read on for more information on these factors:

Job stability

Job stability is of great importance for part-time workers looking to acquire a mortgage. Lenders must evaluate the risk associated with the customer and ensure they are able to continue making mortgage payments. Mortgage lenders take into account the minimum employment history, length of the contract, regular hours, and contract type when assessing job stability for part-time workers. The contract type can have an influence on the eligibility for a mortgage, with permanent contracts being deemed less perilous by lenders.

Multiple incomes and secondary jobs can assist in mitigating the lender's risk for part-time workers with fluctuating hours. Different lenders evaluate second jobs in various manners, some simply amalgamate the two incomes, while others request evidence of income and evaluate affordability. This highlights the significance of approaching lenders who are willing to lend at higher income multiples and consider secondary jobs when working part-time. 

Minimum income thresholds

To be eligible for a mortgage, part-time workers must meet a minimum income threshold. Some lenders may specify a minimum income threshold of £15,000. While this may seem daunting, it is important to remember that there are options available, such as including benefits such as child tax credits as part of their income.

Income from benefits, such as child benefit, a pension, child maintenance payments, or investments, may be taken into account in a part-time worker's mortgage application. In addition, the size of a mortgage for a part-time worker depends primarily on their income, and having a permanent contract can be advantageous in this process.

Deposit requirements

Deposit requirements are another key factor to consider when applying for a mortgage with a part-time job. The Loan-to-Value (LTV) ratio is a measure to calculate the amount of money a borrower can take out in the form of a mortgage. It represents how much of the property value the loan covers. The combination of the deposit and mortgage must total 100%, so if the LTV is 80%, the deposit must be 20%.

To a point, the greater the deposit, the more favourable the interest rate that can be offered.

Saving towards a larger deposit can be tough, especially with a part-time income. However, securing a deposit is typically a vital component of your mortgage preparation. It is essential to have a clear understanding of the loan-to-value (LTV) ratio and the necessary deposit requirements when applying for a mortgage on a part-time income. This will help ensure that you are well-prepared and have a better chance of securing the best mortgage deal.

There are some mortgages available with low or even zero deposit requirements, however, it can be challenging to meet the criteria with a part time job. An experienced mortgage broker can help you assess your options when it comes to low or zero-deposit mortgages. 

Your credit history

Credit history is an important factor that potential mortgage lenders take into consideration when assessing a mortgage application and determining the applicable interest rate.

While credit history is important when applying for a mortgage, it is not the main factor for obtaining a mortgage with a part-time job. Even with a part-time income, it is conceivable to acquire a mortgage with bad credit. 

It is essential for part-time workers to be aware of their credit history and take steps to improve it if necessary. This will not only increase their chances of securing a mortgage but also ensure that they are able to secure a mortgage with the most favourable terms possible.

Bad credit challenges

• Your credit score is a numerical representation of your creditworthiness based on history. 
• A low credit score may indicate that a person has a history of not fulfilling their payment obligations in a timely manner, or has defaulted on loans.
• Individuals with bad credit may encounter elevated interest rates and more rigorous lending requirements. This is due to the fact that lenders view them as higher-risk borrowers and may necessitate a larger deposit to qualify.

Building and repairing credit

• Building and repairing credit is helpful for part-time workers looking to secure a mortgage. 
• Establishing a good credit history may mean sensibly using a credit card, ensuring timely payments of bills, and keeping credit utilisation at a minimum.
• Repairing credit could involve challenging inaccuracies on credit reports, settling debts, and engaging with creditors. 

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Affordability criteria

When it comes to determining eligibility for part-time mortgages, affordability plays a crucial role. Income multiples and monthly outgoings are taken into account, as well as debt ratios. 

Affordability is a determination based on one's income and expenses and reflects their ability to regularly make payments.

Lenders evaluate the financial feasibility of a mortgage loan by assessing income and expenditure. By cutting excessive expenditures and maintaining a sensible amount in the bank account each month, you can assist in improving the affordability of a mortgage.

Income multiples

Mortgage lenders usually offer a multiple of an average individual's gross income of around 4.5x. This maximum is commonly set at 6x an individual's yearly gross income. The mortgage amount is typically calculated by multiplying the total income, which may include joint applicants, by 4.5.

It is important to approach lenders who are willing to lend at higher income multiples when working part-time, as it can augment the sum of money that can be borrowed.

You can find out how much you can potentially borrow on your part-time hours by entering your annual salary into our affordability calculator below:

Outgoings and debt ratios

Fixed outgoings and debt ratios are also considered in determining affordability for part-time mortgages. Most mortgage lenders generally take into account outgoings such as childcare, utility bills, credit card payments, and other regular expenses, including monthly repayments.

Debt ratios are an indicator of the proportion of a borrower's income that is utilised to settle debt. Mortgage lenders will usually evaluate debt ratios to decide the amount of a borrower's income that is available to make monthly repayments on their mortgage.

Additional income sources

Additional income can play a significant role in enhancing affordability for part-time workers. 

Sources such as benefits and tax credits, as well as secondary jobs, can boost your overall income and increase your chances of mortgage approval. It is important to remember that different lenders have varying criteria when it comes to additional income sources, so it's crucial to do your research and seek advice from an experienced mortgage advisor.

People with part-time jobs may be eligible for benefits if they work at least 16 hours per week and are on a low income. Other benefits may also be accessible depending on the number of hours worked, such as housing benefits and council tax discounts. These additional income sources can make a difference in securing a mortgage with a part-time job.

Secondary jobs

Secondary jobs can also help part-time workers meet mortgage eligibility criteria. 

Part-time work, freelance work, and income from investments are all examples of multiple incomes. Lenders generally view secondary jobs and multiple incomes in a positive light, as they can augment total earnings and boost qualification for a mortgage application.

It is important to consider the stability of the second job when applying for a mortgage, as different lenders may have varying criteria when evaluating secondary income sources.

How a broker can help you get a mortgage on part-time hours

Whole-of-market mortgage brokers (like our team at Teito!) play a significant role in helping part-time workers find the best mortgage deals. 

They can access the entire lending market within the UK, including those who specialise in part-time or non-standard income applicants.

By working with a mortgage broker, part-time workers can ensure that they are well-informed about the various mortgage options available to them, and are able to secure a mortgage that suits their unique financial situation. A mortgage broker can provide valuable advice and assistance to part-time workers, helping them navigate the complex world of mortgages and find the most suitable mortgage deal for their needs.

Furthermore, they can assist borrowers who have been declined by conventional lenders.

Comparing mortgage deals

When evaluating mortgage deals, it is essential to take into account the interest rate, the duration of the deal, any fees associated with the deal, and any incentives or discounts provided. It is also wise to consider the lender's reputation and customer service record.

By comparing mortgage deals and working with a mortgage broker, part-time workers can ensure that they are well informed about the various mortgage options available to them and are able to secure a mortgage that suits their unique financial situation.

Why choose Teito for your mortgage needs?

Obtaining a mortgage on a part-time income is indeed possible with the right guidance and understanding of the various factors that contribute to eligibility and affordability. 

By focusing on job stability, meeting minimum income thresholds, exploring additional income sources, and working with a mortgage broker, part-time workers can improve their chances of securing a mortgage that suits their unique situation. Don't let part-time employment hold you back from achieving your dream of homeownership; take the first step today and get in touch with our friendly team.

You can arrange a free, no-obligation chat with a broker who specialises in mortgages for part-time workers by getting started here.