So here you are, a brief overview of what makes a contractor mortgage. We will look at what they are, issues you might need to overcome to secure one and how it can be an important step towards the property of your dreams.
What is a Contractor Mortgage?
Well the first thing to say is what they are not. For the majority of lenders they are not a subset of mortgage products specifically labelled 'MORE EXPENSIVE DEALS FOR COMPLEX MORTGAGES CUSTOMERS'. Most lenders will in fact offer the same suite of mortgages to their contractor clients as they will to those that are employed or self employed. A contractor mortgage is a specific piece of criteria that lenders have built into their policy which allows them to group contractors in with their employed customers and lend to them in a similar way. So instead of using your limited company or sole trader accounts as evidence of income, they will look to use a multiple of your day or hourly pay rate to determine your affordability and the level of borrowing you can achieve. In most instances this can lead to a significant increase in the amount that can be lent.
What factors do I need to be aware of?
These are just a few of the considerations that will affect which lender will be right for you and your specific circumstances and for this reason (you will not be surprised to hear) we recommend speaking to a mortgage broker that specialises in mortgages for contractors.
Gaps between contracts
IR35
Umbrella set up
Ownership of the limited company
Multiple contracts
Length of contracting history
Changes in day rate
What documents will I need?
The answer is that each lender does it differently. In terms of your contract, some will need to see just the current contract, others will need 12 months worth. If you are paid via an umbrella then some will want to view payslips, others will rely just on the contract. All will want to see contract income hitting an account related to you, either personal or business. The may also ask for a CV or evidence that you have been in a similar line of work for a number of years.
As you can see contractor mortgages are more complex than an average employed application but done right and tailored to an individual's circumstances they can be of enormous benefit to clients.
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