Contractor’s Mortgage

Can I get a Contractors mortgage with 1 years accounts?

If you’ve been a self-employed contractor for a year, can prove your income, have your accountants statements and tax returns in place, then yes we can look at proposing you to multiple specialist lenders to secure you that mortgage offer.

  1. Will I find the mortgage application process difficult as a contractor?

Contractors shouldn’t struggle more than any other employment sector to get a mortgage, and the truth is with a specialist broker helping you, you’ll find the whole application pretty simple and straightforward.

  1. What exactly is a contractor mortgage?

Specialist mortgages aimed at catering exclusively for the large UK sector of contract workers. This includes self-employed contractors, fixed-term contractors, umbrella company employees, zero-hour contract workers and agency professionals. A large sector of the UK now describes themselves as a self-employed contractor, and there are specific mortgage types and mortgage lenders for these workers to consider.

  1. Who is eligible for a contractor mortgage?

Contract workers based in the UK – however, the actual definition of what a contractor can, and does, vary from lender to lender. Typically you will be classed as a contractor for the purposes of your mortgage application if either of the following statements applies to you.

  1. You’re either an employed person working on a fixed or short term contract (for example, IT professionals, consultants and project managers, amongst others)
  2. You’re a self-employed person that works through one main company (often a tradesperson) and you work on one contract at a time

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  1. What if my contract has never been renewed?

Getting a mortgage as a short or fixed-term contractor whose deal has never been renewed is still possible, it’s simply a case of working with a specialist mortgage broker who understands your circumstances and can propose you to the right lenders. It’s worth bearing in mind that a short-term contractor, you may find that your pool of lenders might cap the loan to value ratio (LTV) at between 80-90 per cent of the property value, meaning you’ll need to have 10-20% of the property value as a deposit to secure the mortgage.

  1. How much deposit will I need for a contractor mortgage?

As well as looking at whether you’re a short-term contract worker or whether you have longer-term contracts, lenders will also look at the level of risk of lending to you. This means they’re going to look at your credit score, and that’s going to play a part in whether you can secure a mortgage with just a 5-10% deposit, or whether you’ll need more. Coming through to us early in your decision-making process can be really beneficial here, as we’ll be able to guide you on what will be achievable and what will give you the best deal.

  1. Can I pay my deposit on my credit card?

The rules about mortgage deposits are much stricter now, and there’s no way of using borrowed money towards your house deposit. The only exception to this is if a family member has lent you money specifically for your house deposit, which we can discuss with you to ensure you meet the lending criteria for the loan.

  1. Can I get a self-build mortgage as a contractor?

A self-build mortgage is specifically designed for people who have the skills and the funds to build their own home. It’s worth noting that most lenders who offer these have very different lending criteria, and will, for example, loan up to 75 per cent of the plot’s value and 60 per cent of the build cost. It is possible to get a self-build mortgage as a contractor, providing you have a substantial deposit available to you, and of course the right expertise.

  1. Can I get a mortgage even though I’m on a fixed-term contract?

Depending on your personal circumstances, it should still be possible. Just being on a fixed-term contract itself does not preclude you from getting a mortgage. It’s simply the case that lenders will want to see that you have a history of earnings and a history of contracts. Typically you’ll need at least one years worth of accounts, or at least 1 year trading for yourself, and you’ll need a qualified accountant to verify/sign off those accounts.

  1. If I’m an independent contractor, can I still get a mortgage?

There are specialist lenders who exist to help people in your situation. You’ll need to be able to verify your income and your history of working, but providing you can provide all your paperwork and supporting information, we’ll be able to look into the right lenders for your circumstances.

  1. How much can a contractor borrow on a mortgage?

That’s going to depend entirely on your income, and the length of your contracts. Lenders will want to see your finalised accounts, they’ll want you to have at least 12 months trading, even if you’re a sole trader. This type of mortgage is basically a self-employed mortgage, so you’re going to have to prove your income and sustainability to potential lenders.

  1. How is a contractor’s income assessed for a mortgage?

If you’ve been working as a contractor for a few years, most lenders will average out your overall income to arrive at an average annual income figure. This average figure is then used to work out how much you can afford to repay, and how much you can borrow.  However, a mortgage lender is not likely to use this approach if your earnings have changed dramatically from year to year, and instead may consider your most recent year’s earnings. It’s best to speak to us early so we can guide you with the best mortgage advice.

  1. What advice are you able to give on contractors mortgages?

We’re authorised and regulated by the Financial Conduct Authority, and our registered office is registered in England, so we comply with all statutory regulations for mortgage advisors.

  1. Can I get a mortgage If I’m paid a day rate?

Yes, there are now plenty of mortgage providers who will work with contractors earning daily rates. We’ll look at your individual circumstances and make sure you’re pointed in the direction of the most appropriate lenders for your needs.

By | 2020-03-10T10:00:57+00:00 March 10th, 2020|