Can I Buy A House When I'm On A Fixed-term Contract? Ask Susan

Sunday, 10 November 2024, 5:56 am
Article: RNZ

Susan Edmunds, Money Correspondent

Send your questions to susan.edmunds@rnz.co.nz

I want to buy a house in the next year but I am currently on a fixed-term contract. I've been in the industry for a while but have only been with my current employer for six months and have another six months to go.

Is the bank going to want me to have a permanent role?

I've come across a few people with a similar question.

Jeremy Andrews, who is a mortgage adviser at Key Mortgages, says fixed-term contracts can be acceptable for a lender, but will be dealt with case by case.

"Banks always look at the 'big picture' when considering whether any aspect less favourable, becomes a deal breaker or not," he said.

It might help if you have been in the same industry a long time, or you've moved from one fixed-term contract to another in the past without a problem.

"If they have a partner or other income stream making up some of the mortgage payments that will also help to mitigate the risk of being able to keep up payments on the mortgage should the fixed-term contract not be renewed for some reason.

"Having good equity, such as more than 20 percent in an owner occupied [property], or a buffer of spare savings, also help mitigate any higher-risk aspects to an application."

He said lenders might also consider the type of industry you are in. For sectors that are short on staff, such as healthcare or education, a fixed-term contract might often not be such an issue, he said.

He said this was the sort of application for which advisers would often try to provide evidence upfront to help a client get approved.

I've been made redundant, are future employers going to judge me?

I asked Shannon Barlow, who is managing director of Frog Recruitment, about this. She said in the current market where redundancies are common, having been made redundant is unlikely to affect your chances of getting hired in a new role.

"In general, though, recruiters will tend to probe into the reasons for redundancies - how many others were made redundant? How many from their team? Trying to work out if it was a legitimate redundancy or used as a way to exit the employee due to performance or conduct issues without having to go through performance management."

You may want to be prepared with some information about the process to give any future employer some reassurance that it was because of industry factors, or things outside your control.

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