Contractor Mortgages: advice, information and quotation 2021
What is a contractor mortgage?
A contractor mortgage is a mortgage that is secured based on your contract rate, not your accounts. It can be more complicated for a contractor to get a competitive mortgage deal directly from high street lenders as advisors can struggle to interpret your limited company income, often trying to use accounts to do so.
However through Freelancer Financials, you'll get a bespoke service that uses your contract rate, not accounts, to secure your interest rate. Having dealt with contractor-friendly lenders for over 15 years, Freelancer Financials can help you find the contractor mortgage your income and status deserve.
What are the benefits of using a contractor mortgage specialist?
As a contractor, you can make getting a mortgage as hard or as easy as you like. Using a contractor specialist will help in a number of ways:
- They have detailed knowledge of the contractor market
- They understand your specific needs and your income whether that is via a limited company, umbrella company or sole trader
- They know how to get you the best rate available for your circumstances
Contractors engaging with a specialist advisor for their contractor mortgage will speak to someone who understands contract income, contractor affordability and the contractor lifestyle. More importantly, an advisor with a direct line to underwriters willing to accept a short-term contract as proof of income.
ContractorUK have partnered with Freelancer Financials who have been helping contractors secure mortgages since 2005. Their expertise doesn't stop at knowing which lenders will and won't accept your application. They've been instrumental in helping banks and building societies develop tailored contractor mortgage lending criteria.
How can Freelancer Financials help with my contractor mortgage?
- Award winning company and trusted by contractors on the ContractorUK forum for years
- Wholly independent, with access to all contractor-friendly mortgage lenders;
- Have helped banks and building societies devise their contractor lending criteria, so know precisely what is best for each contractor
- Have been successfully getting mortgages for contractors since 2005
- They understand contracting, so can interpret contract income to mortgage lenders
- Borrow up to 5 times your annualised contract rate (subject to status)
- They can often use just your current contract, an up to date CV, 3 months' bank statements and proof of ID to secure your contractor mortgage.
The biggest difference is that Freelancer Financials get to know you. Your situation, career status and ambitions - they all should play a part in your mortgage choice. A free, confidential chat with one of our experienced team will point you in the right direction. Start that conversation by filling in this form.
How much can I borrow for my contractor mortgage?
How much you can borrow for your contractor mortgage will depend on a number of factors including the below:
- the value of the mortgage itself
- how much you’ve managed to set aside to date for the deposit
- how long (or short) you want to repay the mortgage over
- any existing financial commitments you need to uphold
- what credit agencies hold on record for you
- how many dependants you’re responsible for and their respective ages
- how long you’ve been contracting (if it’s only a short time, they’ll need your recent work history too)
- your contract rate and its duration.
The below calculation will give you a general idea of how much you can borrow, however do keep in mind that all lenders have different contractor mortgage criteria.
- Your daily rate in £;
- x 5 days per week;
- x 48 weeks per year;
- x 4.5, the average multiple contractor friendly lenders use to calculate your affordability.
To get a precise estimate, get in touch with Freelancer Financials by filling in this form.
5 Top Mortgage Tips to a successful
contractor mortgage application
1. Ensure your contract is up to date
Make sure you have a copy of your most recent contract to hand when putting together your mortgage application. It’s important to be able to show lenders not only how much income you have, but also how long you have remaining on your contract.
2. Avoid lengthy breaks between contracts
There are many perks to working as a contractor, not least being able to take breaks between contracts should you wish to. This is great for holidays or similar. However, you should try and avoid taking breaks of anything more than 6-8 weeks. This is because lenders ideally want to see consistent income and contracts stretching back 12-24 months prior to your mortgage application.
3. Be realistic about your repayments
A common mistake many professionals make when searching for a contractor mortgage is being unrealistic when it comes to estimating their repayments. It’s really important when putting your mortgage application together that you make sure the repayments you commit to are going to be affordable for you.
4. Have at least a 10% deposit
Most lenders will require you to have a good-sized deposit when you apply for a contractor mortgage. Ideally, you should aim to have at least a 10% deposit ready to pay upfront.
5. If suitable, look for mortgages that allow additional payments
Some contractors may find themselves with more money than they need on a regular basis thanks to high-value or frequent contracts. If this sounds like you, you should try to find a mortgage that allows you to pay chunks off in addition to your regular monthly repayments. This will enable you to take maximum advantage of your position and pay-off more of your mortgage quicker.