If you have been having trouble finding a competitively priced self-employed mortgage on the high street, you are certainly not alone. The truth is that the mainstream lenders are simply not always the best place to secure this type of homeowner loan.
The high street lenders are typically risk averse and extremely cautious when dealing with anything other than the perceived stability of PAYE employees. For that reason, the self-employed, and contractors specifically, can struggle to find an attractive deal.
The good news is that the high street lenders only account for a small proportion of the mortgage market. When looking for more niche products, there are many smaller, specialist lenders who could be more likely to meet your needs. Simply follow these tips to find a competitively priced mortgage.
Steps for a Mortgage on a Fixed-Term Contract
1. Use a Self-Employed Mortgage Specialist
When searching for a self-employed or contractor mortgage, the first problem you may encounter is the limited knowledge call centre agents and bank-based mortgage advisers typically have. They simply may not know the right questions to ask to process your application. For this reason, you should always find a mortgage broker that specialises in this kind of loan. They will know the right questions to ask, the best lenders to approach and the most attractive way to present your application to the lender. This will save you the time it takes to approach multiple lenders individually.
2. Keep Your Credit Rating Clean
Even with a good income and a decent deposit, lenders will still think twice about accepting a mortgage application from a self-employed person with a poor credit rating. If you operate through a limited company, lenders may also credit check the business to make sure your finances are in order. For this reason, it is essential you do everything you can to get and maintain a healthy credit rating. Simple things like making sure you are on the electoral roll and checking your personal details are accurate can make a difference.
3. Have a Deposit
Having a deposit is still important when obtaining a self-employed mortgage, however, these should still be available with the minimum 5 percent. Having a larger deposit could give you more options and in turn a greater chance of obtaining a mortgage, and it will usually afford you a more attractive interest.
4. Have an Up to Date Copy of Your Contract
Another simple step you should take is to have an accurate, signed and up to date copy of your current contract. This should clearly state the length of the contract and your rate. This information can be used by your mortgage broker to support your mortgage application.
5. Be Realistic
As with any mortgage, it is essential you are realistic about what you can comfortably afford. Although your current contract rate might be £300 per day, would you still be able to afford your mortgage repayments if this were to fall to £200 for the next 12 months? Mortgage rates can and likely will go up from their present record lows, so self-employed workers should factor the uncertainty of variable incomes and even periods out of work into their calculations.