Mortgage rate while working under Umbrella

Hi team,
My first post - thanks for having me here.

I am near future, first time buyer. My chosen mortgage broker provide me 2-year fixed rate mortgage rate of 3.11% which feels VERY high.

I have been IT contracting since 2016, working for the same employer for 18 months, used to work under Ltd since may 2019, then switched to Umbrella because IR35 changes in March 2020, still working for the same employer toalling 18 months, based on 3 months extensions.

I realize that it is a subjective matter but wonder if anyone can give an idea what rate I should expect or give me own experience?

My mortgage application is based on 2 applicants where my partner is full time employed on PAYE.

Many thanks!

[eek]

Rates are set on the percentage of the purchase price being borrowed and the income multiplier being borrowed

if you are borrowing over 80% that rate is probably right. And did you use a contractor specialist broker or one of the estate agents own?

finally from anecdotes I’ve heard a lot of banks just aren’t lending money and finding any excuse they can to avoid lending the money so the fact they are lending at all means something

i will ignore the move from outside to inside with the same agency and end client - that’s opened you up to a back claim if hmrc get round to it

[northernladuk]

I have been IT contracting since 2016, working for the same employer for 18 months, used to work under Ltd since may 2019, then switched to Umbrella because IR35 changes in March 2020, still working for the same employer toalling 18 months, based on 3 months extensions.
!

Jesus wept... You must be HMRCs favourite person. You are like gold dust to them and are exactly why they've made all these changes. Employer?? You were never a contractor, either in the clients eyes or your head. I don't know how you sleep at night with thst carry on.

But anyway.. Speak to John Yerou at Freelancer Financials. They can get contractors much better rates than that. I do believe he told me awhile ago some lenders can still lend on rate not income which sounds like madness to me but if its possible then you are laughing.... Well not really as you are at risk of losing it all looking at your situation but there you go.

[eek]

Jesus wept... You must be HMRCs favourite person. You are like gold dust to them and are exactly why they've made all these changes. Employer?? You were never a contractor, either in the clients eyes or your head. I don't know how you sleep at night with thst carry on.

But anyway.. Speak to John Yerou at Freelancer Financials. They can get contractors much better rates than that. I do believe he told me awhile ago some lenders can still lend on rate not income which sounds like madness to me but if its possible then you are laughing.... Well not really as you are at risk of losing it all looking at your situation but there you go.

Rates depend on the percentage being borrowed 3.1% is actually very good if you are trying to borrow over 80% in this market.

[northernladuk]

Rates depend on the percentage being borrowed 3.1% is actually very good if you are trying to borrow over 80% in this market.

Hmm.. Haven't looked for awhile or at those levels so quite possible very true.

[NowPermOutsideUK]

As eek and NL said it all depends on LTV rather then income multiplier although there are affordability calculators which just prove you can pass their criteria

Rates set exclusively on LTVs

In the past I remember someone earning 600 a day borrowing 700K ish but they have in the past few years limited it to fives times income / day rates

[cezary]

Thanks all for reply,

Working in the same place and switching to Umbrella,thats another matter and I am aware of the risk

@northernladuk, I think with your language used would make you a good fiction books writer - please dont get over excited with my working situation, that is not subject of this post.


My application is based on 80% borrowing and my partner as another applicant.

Thanks for for counstructive response.

[MrButton]

Jesus wept... You must be HMRCs favourite person. You are like gold dust to them and are exactly why they've made all these changes. Employer?? You were never a contractor, either in the clients eyes or your head. I don't know how you sleep at night with thst carry on.

It’s a very long shot but it’s possible the OP is in the public sector. Which would mean this is not an issue for the OP.

It’s happened to a bunch of people in the gov dept that I’m in.

But if not yeah the OP should probably get up to speed.

But anyway.. Speak to John Yerou at Freelancer Financials. They can get contractors much better rates than that. I do believe he told me awhile ago some lenders can still lend on rate not income which sounds like madness to me but if its possible then you are laughing.... Well not really as you are at risk of losing it all looking at your situation but there you go.

+1 for freelancer financials.

[radish2008]

Just about to renew @ 1.45% for 5 year fixed rate.

Can't decide if I should go for 2 or 5 year fixed rate - may have plans to sell or move but can take the mortgage with me in that case.

I'm more concerned about the impact of Brexit in Jan and getting a long term fixed rate now if the contract work dries up and I end up in permiedom.

Anyone in a similar position ?

[Lance]

Just about to renew @ 1.45% for 5 year fixed rate.

Can't decide if I should go for 2 or 5 year fixed rate - may have plans to sell or move but can take the mortgage with me in that case.

I'm more concerned about the impact of Brexit in Jan and getting a long term fixed rate now if the contract work dries up and I end up in permiedom.

Anyone in a similar position ?

Do the maths to work out what the fee will work out as. If you're not borrowing much then paying a £1,000 fee for a lower interest rate doesn't work out.
CO-OP do a 5 yr fixed rate for 1.6% with no setup fee.

I would normally advise to not bother with fixed rate, but they are cheaper rates than variable from what I can see right now. Maybe lenders are wary of borrowers finding themselves unable to pay.
Or they fear tracker rates if the BoE drop interest to negative rates.

Brexit effect on interest rates is likely to keep them down. Potentially drop to negative rates.