Getting a mortgage if you’re a contractor
In recent years the UK has seen a significant growth in the number of people moving in to contracting but what effect is this having on accessing mortgages?
Since the credit crunch in 2007, the number of self-employed contractors has reached record levels.
As mortgage specialist, we receive 100’s of calls a month from distressed contractors struggling to remortgage or even get their foot on the housing ladder. We feel it’s important that contractors know the facts about getting a mortgage and who you can turn to for advice.
Self Certification Mortgages
Before the credit crises, a great number of mortgage lenders offered specialist mortgage products to the self employed called self certification mortgages. All you were required to do is “self-certify” your own income rather than provide evidence using trading accounts. Borrowers simply stated their income and lenders made it clear they would not carry out any checks. Nearly one million people took out these types of mortgage loans before the credit crunch. With no income checks, this meant that the system was wide open for abuse. Which is why the Financial Services Authority banned self certification mortgages in 2009.
Who can contractors turn to for mortgage advice?
Getting a mortgage as a contractor needn’t be difficult, but you need to work with a mortgage specialist that has arrangements with contractor friendly lenders. These lenders include: Halifax, Clydesdale, Skipton, Virgin Money, and Investec. The same best buy mortgage deals that are available to salaried employees are also available to Contractors. These lenders offer bespoke “contract based” underwriting through a number of London based contractor mortgage specialists.
Contractor Mortgages are available to all contractors who work on a contract rate and can confirm their income using a contract. The key is choosing a specialist mortgage adviser to avoid the difficulty of dealing directly with high street lenders who are not familiar with the contracting environment. A competent mortgage adviser can arrange a competitive mortgage, easily and quickly, with no fuss at all.
A mortgage specialist can arrange mortgages for contractors operating through different trading structures and payment mechanisms, including Limited company, Umbrella pay roll and EBT schemes.
There are currently very few mortgage specialists that cater specifically to UK Contractors. A contractor Mortgage Specialist can present your mortgage application directly to underwriters to be assessed on your total contract earnings. They have relationships with “High Street” banks that provide excellent mortgage rates that are simply based on a multiple of your annualised contract earnings (as much as 5 times your annualised contract income). E.g. If you’re on a daily rate of say £500, you can potentially borrow as much as £540,000.
For further information on mortgages for contractors, Please Google Freelancer Financials on Google and a number of specialist can be found.
The following documentation is required when arranging a contractor mortgage:
- A copy of your latest CV
- A copy of your current contract confirming your contract rate
- Proof of ID and address