Change to Contractor & Re-newing Mortgage

[Broadway81]

Hi all, I’m after some advice regarding contracting and mortgages. I’m thinking of going from full-time employed to working on a freelance basis. The timing of making this decision will depend on the mortgage situation. My two year fixed rate mortgage comes to an end May-16 and switches to a standard variable rate, which is nearly double the current rate!

Ideally I’d like to commence contracting before May-16. Does anybody know whether my existing mortgage provider would require proof of income if I were to obtain another fixed term product with them at that point?

Any help appreciated, thanks

[SlipTheJab]

Hi all, I’m after some advice regarding contracting and mortgages. I’m thinking of going from full-time employed to working on a freelance basis. The timing of making this decision will depend on the mortgage situation. My two year fixed rate mortgage comes to an end May-16 and switches to a standard variable rate, which is nearly double the current rate!

Ideally I’d like to commence contracting before May-16. Does anybody know whether my existing mortgage provider would require proof of income if I were to obtain another fixed term product with them at that point?

Any help appreciated, thanks

Mine didn't (with Santander) and just moved into another discount rate with one simple phone call when my old one ended.

[northernladuk]

Hi all, I’m after some advice regarding contracting and mortgages. I’m thinking of going from full-time employed to working on a freelance basis. The timing of making this decision will depend on the mortgage situation. My two year fixed rate mortgage comes to an end May-16 and switches to a standard variable rate, which is nearly double the current rate!

Ideally I’d like to commence contracting before May-16. Does anybody know whether my existing mortgage provider would require proof of income if I were to obtain another fixed term product with them at that point?

Any help appreciated, thanks

Why don't you speak to them? It's two weeks to the end of May so you should be able to start the process now so the new product kicks in the day after the old one starts. That way you are covered on both fronts, if they need evidence you still have it, if they don't happy days.

I do wonder why people don't pick up the phone and speak to the bank, mortgage provider, accountant, umbrella etc to gather the facts before asking a bunch of strangers.

[SueEllen]

I do wonder why people don't pick up the phone and speak to the bank, mortgage provider, accountant, umbrella etc to gather the facts before asking a bunch of strangers.

Fear that they will be marked.

[AnotherGuy]

It's two weeks to the end of May so you should be able to start the process now

I think OP is referring to May 2016.

[northernladuk]

I think OP is referring to May 2016.

Good point. My mistake. That's a horrible bit of timing.

First off when you say double the rate you need to put it in perspective. Is double the rate back to a fairly standard rate of around 3-4%? If that's the case no way would I let that factor in a decision whether to freelance or not. If you manage to get in ok you will be making a hell of a lot more than you are now so it would be totally irrelevant.

Also if the worst case happens you can still get mortgages as a freelancer. There are options to mix full time and freelancer income, get a mortgage based on rate etc. It's not straight forward though. If you are worried speak to someone like Freelance Financials who will explain it to you.

[TykeMerc]

It should be said that while it's perfectly possible to get a mortgage as a contractor it's trickier without some contracting history and past accounts.

If it was me I'd be looking to get a new mortgage before I made the swap to contractor if it was practical.

[Mark McBurney@CMME]

Hi Broadway81,

I'd check with your current lender - most High Street lenders don't verify income again if it's literally a new product you're switching to, but some may, it really does depend.

Either way, it may not be an issue, depending on the contract etc that you work on. When you say freelance, do you literally mean piecemeal work, or contracting to a client for a set period of weeks/months? As with the former, if income verification is required, you may need to wait until your first accounting year is over to prove income. With the latter, income proof may be possible from your contract itself.

Either way - good luck.

[SlipTheJab]

Hi Broadway81,

I'd check with your current lender - most High Street lenders don't verify income again if it's literally a new product you're switching to, but some may, it really does depend.

Either way, it may not be an issue, depending on the contract etc that you work on. When you say freelance, do you literally mean piecemeal work, or contracting to a client for a set period of weeks/months? As with the former, if income verification is required, you may need to wait until your first accounting year is over to prove income. With the latter, income proof may be possible from your contract itself.

Either way - good luck.

Exactly that. Mine didn't, did explore the Contractor Re-Mortage route but to be honest didn't think it worth the hassle of supplying the reams of paperwork and ID documents required to do so when I could just go with a similar rate with one phone call to my current lender.

[Mark McBurney@CMME]

Exactly that. Mine didn't, did explore the Contractor Re-Mortage route but to be honest didn't think it worth the hassle of supplying the reams of paperwork and ID documents required to do so when I could just go with a similar rate with one phone call to my current lender.

Absolutely understand STJ (as a mad boxing fan, love the username, by the way!), and have advised clients of this - to their surprise! - before. It's frequently the path of least resistance, as long as no 'material facts' are changing, such as borrowing amount, property or term.