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Have you recently experienced the disappointment of having your contractor mortgage application declined? It’s a frustrating situation that many contractors find themselves in when they approach lenders directly.
The truth is that lenders often lack a comprehensive understanding of the innovative ways in which contractors are paid and the stability of their income. As a result, they may request documentation that is nearly impossible to obtain or believe that the amount you’re requesting to borrow is unaffordable.
If any of these scenarios sound familiar, it’s crucial to remember that there are alternative avenues to explore in order to secure mortgage funding.
Limited Company Contractors
A tell-tale sign that your lender/broker does not fully understand your situation is when there is a constant focus on your company accounts with question being raised around the salary, dividend, and net profit figures. This shows the lender is attempting to verify your income via their self-employed criteria and not as a day rate contractor.
Umbrella Contractors
Are you being asked questions around the structure if your payslip, the holiday pay element? An experienced contractor mortgage broker understands how to present an umbrella contractor to lenders to ensure your income is assessed on the contract value.
What Next?
So, what steps should you take if you find yourself in the unfortunate position of having your contractor mortgage application declined? First and foremost, it’s important to identify where things went wrong. Reach out to your estate agent and explain the situation. This will not only alleviate any tension between you and the agent, but they may also be able to provide insight into whether the seller is willing to continue working with you as the preferred buyer.
Once you have established this, it’s time to seek the assistance of someone who truly understands your unique circumstances. As a contractor mortgage specialist, My Contractor Broker possess a deep understanding of the contractor space and will ensure that the chosen lender comprehends your work status before submitting a complete application. By ensuring that the lender accurately assesses your application, you minimise the risk of facing another rejection.
Of course, it’s always better to prevent a declined application from happening in the first place. While it’s tempting to chase after the best interest rates available, it’s important to consider the lender’s understanding of your situation. The reality is that lenders with the most competitive rates are often the most risk-averse. Unfortunately, contractors have long been burdened with an unfair perception of risk among many lenders. However, contractors still have the power to choose who they entrust with arranging their mortgage.
Now it is important to understand you will not be penalised for being a contractor and many of the top UK high-street lenders have contractor offerings, often the issue comes down to understanding of how this should be applied, whether by the broker or unfortunately in many instances the lenders themselves.
In conclusion, if you’ve had your mortgage application declined, don’t lose hope. There are alternative options available to you. By seeking the guidance of a contractor mortgage specialist like My Contractor Broker and choosing a lender who truly understands your unique circumstances, you can increase your chances of securing the mortgage funding you need.
Remember, prevention is key. Prioritise finding a lender who comprehends the intricacies of your work status over simply chasing the lowest interest rates. By taking these steps, you can navigate the mortgage application process with confidence and increase your chances of success.