Mortgage Without a Permanent Employment Contract
Traditionally, you needed a permanent employment contract to obtain a mortgage. When you apply for a mortgage, the bank wants to be certain that you can repay the loan. In addition, it carries out checks to see if your long-term earnings will be sufficient to pay the mortgage.
However, increased flexibility in the labor market has resulted in a lot of change. Permanent contracts have become less common. Employers are more likely to issue temporary contracts, and the trend for using self-employed workers, freelancers and temporary or on-call workers has grown considerably.
I have also noticed that many of my customers are self-employed.
Fortunately, the banks have recognized this and have launched various initiatives to make it easier to help people without a permanent contract to get a mortgage.
Letter of Intent
If you are employed on a temporary contract, you can ask your boss to sign a letter of intent. Your employer thereby indicates that your next contract will be a permanent one. This is providing, of course, that your performance remains the same and the working conditions do not change.
Usually it will not be a problem to get this letter from your employer. But note, it does not automatically guarantee that you, as an employee, will be offered a permanent contract in the future.
Salary Income Determination
A letter of intent is no longer always necessary when applying for a mortgage with a temporary contract. An increasing number of banks are looking at the wage and employment history of a mortgage applicant. Next, the bank will request an ‘income statement for salaried employment’. For the maximum mortgage, you will be asked for a UWV Insurance Report, which you can download from the UWV website. The bank then looks at your income over the last 2–3 years and determines an average yearly income.
Flex or temporary workers can now request a perspective statement from their employment agency. This indicates that, based on your current level of work, your income will likely remain stable for the foreseeable future.
In addition to a perspective statement, the bank will also look at your future prospects in the labor market based on your education, work experience, role and skills.
Are you unable to get a perspective statement? Then we will look at your average income over the last three years, and use this figure as your maximum annual income.
Labor Market Scan
The labor market scan is now available for salaried flex workers who do not work for an employment agency. Your labor market score and earning capacity are calculated on the basis of a questionnaire. You can get a mortgage if you have a minimum score of 70. However, this does not mean that you will be able to take out a mortgage automatically. Other factors such as your income and the value of your home will also be taken into account.
In order to use the labor market scan, you must have been working for at least 12 of the last 14 months. When applying for a mortgage, your current income is compared with your earning potential. The lower of the two is used to calculate the maximum mortgage available.
If you want to apply for a mortgage as an independent entrepreneur, there is a slightly different process. Your income is taken as the profit you have made from your business. Banks look at your profit over the previous 3 years. When you have made a large enough profit, you can apply for a mortgage.
It is also possible to apply for a mortgage if you have been self-employed for less than 3 years, but you must have been self-employed for a minimum of 1 year. In this case, in addition to the profit earned since the start of your company, the profit forecast for the following financial years is also taken into account.
As you can see, nowadays it is no longer necessary to have a permanent contract to apply for a mortgage. There are several ways to solve this problem. Yes, it may be a bit more difficult than if you had a permanent contract, but we can always schedule a meeting without any obligation on your part.
A lot has changed in the banking world over the last few years, so there’s a good chance that we can help you.