Getting a Mortgage - First House - 4 months Contracting

[Segush]

Hello everybody

I have been following this forum for a while and it has always been of great help.

I was intending to buy my first house. Key facts:

- I have been contracting for 4 months, first time. I used to be a permie.
- The idea is to buy my first property after 6 months, once my contract is renewed, with a property value of circa 200K
- Deposit: 35K

I contacted contractor mortgages made easy and, although I received a good feedback, it seems that I am not eligible. Lenders require a minimum of 12 months contracting. The company I work for is relocating and want me to continue with them so it all seems ok, I was planning to buy a first property near the new location as I have been renting for far too long.

Does anyone have any other companies I could talk to? Or any other recommendations?

I could rent for 6 more months and built up a bigger deposit with views of buying after 12 months, however my preference was not to rent again...

Thanks

S

[alreadypacked]

Hello everybody

I have been following this forum for a while and it has always been of great help.

I was intending to buy my first house. Key facts:

- I have been contracting for 4 months, first time. I used to be a permie.
- The idea is to buy my first property after 6 months, once my contract is renewed, with a property value of circa 200K
- Deposit: 35K

I contacted contractor mortgages made easy and, although I received a good feedback, it seems that I am not eligible. Lenders require a minimum of 12 months contracting. The company I work for is relocating and want me to continue with them so it all seems ok, I was planning to buy a first property near the new location as I have been renting for far too long.

Does anyone have any other companies I could talk to? Or any other recommendations?

I could rent for 6 more months and built up a bigger deposit with views of buying after 12 months, however my preference was not to rent again...

Thanks

S

It would be better to rent in new location, see if you like it, and see any other issues.

Bigger the deposit the better, try to only have a 10 year repayment term, then the interest does not compound.

[Segush]

Thanks for your swift reply. I know the area where the company is moving to and I know I would love it there, better than in the outskirts of London where I am currently working.

I was just a little bit surprised knowing that I could borrow such a big amount based on my hourly rate yet I was not eligible. It may be worth saving over 20% deposit if I can and buy as you say.

Regards

[SueEllen]

Most lenders want you to have been in contracting for far longer than contractor mortgages, particularly now, so the fact that they can find you a mortgage after 12 months contracting is good.

As AP said you should rent in the new area rather than buy as you could find that the company has moved to a sh*thole.

In the meantime save and ensure your credit record is squeaky clean.

[BS1397]

Hope you make it...

I have a slightly different problem, The Nationwide would like me to cough up an extra 1.5% for the privilege of renting out my second property, that's fine except they stopped doing "Interest Only" mortgages which is Tax friendly as the interest can be claimed against Tax if I understand the rules correctly?
So I tried other lenders but as a new LTD company I have another 3 months to go before my first set of accounts, All said "NO" accept for one recommended by "The Nationwide" (Probably owned by them too?) who might be sympathetic, probably because my equity in the house is well over 75%, but it will cost me over £2K for "Surveys & Arrangements Fees" and I will still have to pay a bigger mortgage.

Incidentally, The Nationwide also refused to lend me money in the past to buy another house even though I was paying £300 per month more in rental than the mortgage would have cost me at the time, and I had a 30% cash deposit saved with them and a pile of very nice P60s to prove affordability. Apparently they decided that I couldn't afford the mortgage repayments yet the higher rent was OK? I still can't work that one out...

Best if you rent very low in the new location just to make sure all is OK with the contract and the area, and save a lot more deposit. Good luck

[Segush]

Thanks, will do. I am sure I will like the location as I want to leave in Cheltenham which is quite nice compared to where I am based now. Will try again in six months with a bigger deposit...

S

[SueEllen]

Thanks, will do. I am sure I will like the location as I want to leave in Cheltenham which is quite nice compared to where I am based now. Will try again in six months with a bigger deposit...

S

One problem with contracting is that you often have to travel.

So ensure where ever you buy is near enough to main motorways/A roads or a train station.

This will ensure you can come home at night rather than have to stay away.

Good luck building up the fund. Remember to keep money back from when you are on the bench.

[Scrag Meister]

12 months is pretty good.

The lenders I approached in early 2009 would only consider it if I had 2 years accounts, so had to wait it out til later in that year.

As others have said it may be wise to rent initially and see how it goes in the new area.

GL with your eventual purchase.

[Lockhouse]

Hope you make it...

I have a slightly different problem, The Nationwide would like me to cough up an extra 1.5% for the privilege of renting out my second property, that's fine except they stopped doing "Interest Only" mortgages which is Tax friendly as the interest can be claimed against Tax if I understand the rules correctly?
So I tried other lenders but as a new LTD company I have another 3 months to go before my first set of accounts, All said "NO" accept for one recommended by "The Nationwide" (Probably owned by them too?) who might be sympathetic, probably because my equity in the house is well over 75%, but it will cost me over £2K for "Surveys & Arrangements Fees" and I will still have to pay a bigger mortgage.

Incidentally, The Nationwide also refused to lend me money in the past to buy another house even though I was paying £300 per month more in rental than the mortgage would have cost me at the time, and I had a 30% cash deposit saved with them and a pile of very nice P60s to prove affordability. Apparently they decided that I couldn't afford the mortgage repayments yet the higher rent was OK? I still can't work that one out...

Best if you rent very low in the new location just to make sure all is OK with the contract and the area, and save a lot more deposit. Good luck

Forget The Nationwide, in fact, forget the High St, just get a contractor friendly IFA.

[Scrag Meister]

Forget The Nationwide, in fact, forget the High St, just get a contractor friendly IFA.

The High Street in my experience will offer better rates once you have the accounts to back up the application.

I had some "contractor" quotes and the interest rates on those was huge (5-7%) in comparison to the 0.49% above base I ended up getting on the high street by waiting a few months.