Mortgage
Contractor Mortgages
Securing a mortgage can pose challenges for individuals who work in a “non-standard” way, such as contractors and freelancers. While being your own boss offers numerous advantages, it can hinder your ability to own a home. However, with the assistance of a specialised contractor mortgage broker like My Contractor Broker and the right approach, this goal is very much attainable.
Obtaining mortgage advice is crucial in this process. My Contractor Broker is a broker exclusively for contractors and freelancers. We have a thorough understanding of how contractors are assessed and more importantly how you should be presented to potential lenders.
Can contractors get a mortgage?
The answer is yes. Contractors can certainly secure mortgages and often obtain favourable deals. However, it is important to note that the application process is more challenging, and the failure rate tends to be higher if you don’t engage with a broker who specialises in this market.
At My Contractor Broker our consultants have helped 1000’s of contractors obtain mortgage funding, even when lenders have declined applications directly. Whilst understanding of the contractor market has improved, many in-house underwriters at the lenders don’t understand how criteria should be applied.
Whether you operate through your own limited company or a UK payroll umbrella, we possess the expertise to evaluate your relevant earnings for lending purposes. It is important to note that limited company contractor accounts and umbrella pay slips do not provide an accurate representation of your mortgage affordability. Failure to assess a contractor mortgage in the correct way leads to hugely reduced mortgage borrowing or even worse, declined applications.
Take a limited company contractor for instance. Most non specialist brokers will deem you as self-employed meaning the lender will want to assess you in the traditional manner of company accounts. Your accountant focuses on optimising your income for tax efficiency, which is their responsibility. However, the resulting accounts do not reflect your true disposable income. Often assessing a contractor mortgage on the basis of declared salary and dividends will result in restricted maximum loans.
Umbrella company contractors struggle as often the income is presented in a “non-standard” way such as bonus, overtime or commission, resulting in large chunks of income being classified as non-guaranteed. Lenders will be reluctant to use all this income and often only use 50% of these elements of income when assessing affordability.
Fortunately, our contract-based underwriting model eliminates the need for traditional accounts, SA302s or umbrella payslips. By directing the underwriters to the contract rate, we can more accurately assess the true mortgage affordability for contractors. This may come as a surprise, especially if you have encountered difficulties with High Street lenders in the past. Rest assured; we are taking a different approach than the traditional High Street route.
What will the lender want to see?
Given the inherent challenges in substantiating annual income as a contractor, there is a heightened level of preparation required when submitting a mortgage application.
It is also often necessary to provide the following documentation:
- A copy of your current contract: This serves to illustrate the terms of your agreement, encompassing your earnings, termination date, and potential for renewal. If your contract is nearing its conclusion within a few weeks.
- A copy of your curriculum vitae (CV): This serves as a testament to your recent work history and expertise within your respective field.
- Three to six months’ worth of bank statements: This is essential in validating that your income aligns with the figures stipulated in your contract.
Furthermore, just like any other applicant, regardless of contractor status, you will also be required to provide the following: –
- Proof of identification (e.g., passport or driving license)
- Proof of address (e.g., council tax bill) - Utility bills from the past three months.
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Testimonials
I needed a mortgage quickly as I had been let down by a well known high street bank. Andy worked extremely quickly in sorting out a new mortgage offer for me, and even found a lender that took my day rate into account, meaning I could borrow more than I thought I could. The process to get Andy all of the documents he needed was painless and within a few days I had the offer from the bank. Would definitely recommend to anyone looking for a new mortgage or remortgaging.”
Simon Davies
I needed a mortgage quickly as I had been let down by a well known high street bank. Andy worked extremely quickly in sorting out a new mortgage offer for me, and even found a lender that took my day rate into account, meaning I could borrow more than I thought I could. The process to get Andy all of the documents he needed was painless and within a few days I had the offer from the bank. Would definitely recommend to anyone looking for a new mortgage or remortgaging.”
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Speak to a MyContractorBroker specialist on 02394 211122
I needed a mortgage quickly as I had been let down by a well known high street bank. Andy worked extremely quickly in sorting out a new mortgage offer for me, and even found a lender that took my day rate into account, meaning I could borrow more than I thought I could. The process to get Andy all of the documents he needed was painless and within a few days I had the offer from the bank. Would definitely recommend to anyone looking for a new mortgage or remortgaging.”
Simon Davies Manager