There are several questions that we get asked often when it comes to contractor mortgages, so today Andy McBride, director of Professional Contractor Mortgages, will answer some of the most commonly asked, in order to dispel some of the myths which put people off from seeking mortgage funding.
What is a contractor mortgage?
“Quite simply, a contractor mortgage is no different to any other mortgage that a permanent employee or self-employed applicant would qualify for. The difference is in our access to bespoke underwriting agreements, to ensure that you are assessed on the merits of your application, rather than being compared to others.”
Can I get a mortgage if I’m inside IR35?
“Yes. In essence, a true contractor mortgage doesn’t differentiate between a Limited Company or an Umbrella contractor, as income assessment is taken from the contract itself, so your annualized contract rate is used, rather than looking solely at what you receive in the bank, and how you receive it.”
Will I have to provide accounts?
“It is certainly good practice to provide a copy of your accounts so that we do not rule out any lending options, but it doesn’t matter how much you pay yourself from the company as we are using your contract rate as your overall income. Accounts simply add to your case by showing the sustainability of the way in which you work with retained profits etc.”
How long do I need to have been contracting?
“Another misconception within the industry is that you need two or even three years history as a contractor to get a mortgage. You don’t – lenders or brokers who say this are ultimately trying to assess you as self-employed by using your accounts. This is problematic as lending figures will solely be based on a combination of your personal drawings from the business. Our bespoke underwriting is available from day one and uses your contract rate instead of personal income history. Even if you’ve just started contracting, we can help.”
Will I pay more than a normal mortgage?
“Because of the fact that the mortgage itself is no different to that granted to a permanent salaried employee, the rates are the same, meaning that you can relax safe in the knowledge that you will not be disadvantaged because of the way that you work. There are more High Street options than ever before for contractors, which in turn means that some of the best rates on the market are available.”
Which lenders can I use?
“The choice of lender will depend on your circumstances, but many of the big names in UK banking are contractor friendly, from Halifax to NatWest, to specialist lenders such as Kensington or Kent Reliance, and newer banks such as Metro Bank. Your consultant will explain the options available to you and the reasons for the recommended lender in detail.”
How can I prepare for an application?
“While we try to make it as straight forward as possible for you, it is prudent to ensure that you have a copy of your contract to hand in order for us to assess your income from your current assignment. Along with this, and up to date CV adds great weight to an application by showing the skills and experience that you have built up to get where you are.”
Can I get a contractor mortgage with bad credit?
“Yes. Because of our bespoke underwriting agreements, it is not a one-size fits all approach to lending, meaning that just because your own bank may have said no, there may be a specialist lender out there who is happy to look at things more objectively and to help you to get the mortgage funding that you need.”
To see what your options are as a contractor, visit www.professionalcontractormortgages.co.uk or call 02394 212912 to speak to one of our expert consultants in more detail.