Contractor Mortgages

Contractor Mortgage Specialists

While being your own boss is undoubtedly one of the biggest perks of working as a contractor, there are also a number of disadvantages you have to consider before deciding to go it alone. One of the largest problems can often be the difficulty in gaining a contractor mortgage. Thankfully, for most these days, this is a thing of the past.

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Mortgages for Contractors

These mortgages are products designed to meet the specific needs of contractors. As pay is typically based on a daily or weekly rate, in many cases they do not have a yearly salary or the 3 years of accounts some mortgage providers ask to see. Instead, specialist mortgages for contractors allow you to borrow money based purely on your contract rate. If your credit rating is fine and you fall into the low-risk category, you should be able to borrow at the same rate of interest as a PAYE employee.

Do I need 3 years of accounts to get a contractor mortgage?

No. For the last couple of years, contractors have been able to get a mortgage without producing 3 years of accounts. Although every lender will have their own criteria which dictates who they lend to and what they need to see, most specialist lenders will be happy to arrange a mortgage based on the contract you have now, rather than past performance.

 

Who can get a contractor mortgage?

Typically this type of mortgage is designed for;

  • Anyone who is either employed on a fixed/short term contract or
  • Is self employed but working through one company, usually a tradesperson or industry specialist ( I.T. for example ).

Lenders take a variety of views and use a number of different criteria depending on the type of contract. It may be possible to get a mortgage at the beginning of a new contract if you have worked in the same industry previously.

It is very important to speak with a specialist broker to fully explore the options.

What type of contractor mortgages are available?

  • Agency workers – Usually a track record of 12 months working history is needed.
  • Self-employed – Typically a 6 month minimum contract needs to be in place.
  • Fixed term contracts – Previous experience as a contractor is usually needed
  • Working under an “umbrella company” – Usually 12 months working history is needed.
  • Zero hours contracts – It is usual for lenders to expect evidence of a 12 month track record. However, depending on individual circumstances and an overview of the whole lending proposition, it may be possible to use this type of income when it can be proved for less than a year.

A full assessment of your circumstances and requirements can easily be carried out by one of our expert advisers in order to establish which lenders will be happy to consider your application.

How do I get a contractor mortgage

Getting a mortgage as a contractor may be more difficult and time consuming than a “regular employee”. It is important to be clear on the type of contract, terms remaining and your past experience in order to find a suitable solution. Our specialist advisers will be able to review your circumstances and requirements in order to recommend the best way forward.

I have just started contracting, can I get a mortgage

Depending on the type of work you carry out, you may be able to get a mortgage without a particular track record although a minimum contract term of 6 months is usually expected. It may be necessary to have a history of employment in a similar line of work.

Discuss your situation with us and we will be able to let you know if it is possible or if you need to build up a history

I am on a short term contract, can I get a mortgage

Having a short term contract does not necessarily prevent you from getting a mortgage. Lenders will normally look for evidence of a track record of earnings on this basis.  As with any self-employed borrower, a lender will be looking to see that income is sustainable based on past contracts and future prospects.

how much deposit do I need for a contractor mortgage

There is no specific requirement for a minimum deposit. A 5% deposit may be sufficient. As with any other type of mortgage, the amount of deposit will directly reflect in the interest rates available. A larger deposit will normally produce a lower rate of interest and repayments. However, this will be dependent on your income being adequate to support a mortgage for the balance of the purchase price.

Our specialist advisers will be able to review your circumstances and requirements in order to recommend the best way forward.

how much can I borrow with a contractor mortgage

As a contractor on a daily rate, a typical calculation is to multiply your current contract day rate by the number of days worked each week. This is then multiplied by 48 weeks to give an indicative annual income figure to be used for a mortgage calculation. Different lenders may use a different number of weeks to calculate the overall income but once the figure is established, potentially this may be multiplied 5 times to find out a maximum borrowing figure.

For example, a contractor day rate of £500 x 48 weeks could produce a maximum borrowing amount of £600,000.

It is vital that your individual circumstances and requirements are matched to a suitable lender and a discussion with one of our experts will save time.

can I get a right to buy mortgage if I am a contractor

Yes. A Right to Buy application is not affected by your employment status as a contractor. However, not every lender accepts this type of application and some lenders may expect a personal deposit in addition to the Council discount, provided the lender’s criteria regarding your income source is met, there is no reason why a Right to Buy purchase cannot proceed.

contractor buy to let mortgages

Buy to let mortgages are generally based on the rental yield of the property. As such, the terms of your employment contract may not be important although some lenders may require a minimum term of the contract remaining. A discussion with one of our Buy to Let/Contractor specialists will quickly establish options available to you. However, the Help to Buy loan and the mortgage will be dependent on your income being adequate to support the borrowing. We also have access to specific in-depth calculators.

Our specialist advisers will be able to review your circumstances and requirements in order to recommend the best way forward.

contractor help to buy mortgages

The Government Help to Buy scheme is available to contractors and will assist by providing a low interest loan from the Government in order to increase the size of the deposit. This will result in a more attractive mortgage interest rate.

We can discuss the pro’s and cons of buying under this scheme so that you can proceed with confidence.

can I get a shared ownership contractor mortgage

Obtaining a Shared Ownership mortgage requires the correct research as these may not be widely available. Combining this option with an income on a contractor basis becomes a little more difficult but certainly is possible.

Our specialist brokers will review your circumstances and requirements in order to recommend the best way forward.

can I get a contractor mortgage if I have bad credit

The simple answer is YES.. There is no reason why as a contractor or specialist self employed worker you cannot obtain a mortgage, even if your credit profile is less than perfect. The severity, frequency and type of any past or current credit issue will need to be fully discussed in order to establish the options available to you.

best mortgage lenders for contractors

There are a number of lenders who may be considered “contractor friendly”, depending on your individual contract type together with your overall financial circumstances.

A discussion with one of our self-employed/contractor specialists will quickly establish options available to you.

agency worker mortgages

As a worker through an Agency, you will need to provide documents in addition to your regular payslips. Usually a copy of your contract and also evidence of a track record in the same line of work. It is important to speak to a specialist broker in order to make sure that any application is placed with a suitable lender. The application process could take longer but with the correct advice and packaging, this should not be a problem.

Best Mortgage rates for Contractors

The interest you’ll pay on mortgages for contractors should be very similar to a PAYE employee in the same circumstances. In many cases, the generous rates of pay for those working on contracts allow them to save larger deposits than employees. These substantial deposits then lower the interest rate and reduce the cost of the loan. There are also no limitations on the type of mortgage contractors can access, with fixed, variable and tracker rates all available.

Mortgage Advice for Contractors

A Contractor Mortgage Broker will specialise in helping self –employed people and specialist industry contractors. Choosing the correct mortgage lender is not easy and requires a detailed analysis of your situation and objective. We have a team of experts on hand to assist and advise on all aspects of self-employed mortgage arrangements.