This is when you have a contract in your employment that is for a limited period
of time such as a 6-month contract or a 12-month contract. In order to limit
their liabilities in respect of redundancy payments and to have greater control
over staffing costs many employers now offer employment under these types of
contracts without the right to continued employment at the end of the term.
Lenders are diligent over what contracts and with which employers they are
prepared to lend on, for example IT staff are generally employed on fixed term
contracts but lenders see this as viable lending due to the boom in that
industry and the demand for qualified people in that field, in contrast they
don't like fixed term contracts for factory workers as they can be easily
replaced and therefore the security can be low.
Were there is a fixed term contract of employment that the lender is not
entirely happy with, the client can support their application by providing
evidence that the contract will either be renewed or has been renewed in the
past as this will indicate the likelihood of it being renewed in the future and
put the lenders mind at rest as to the overall security of the mortgage.