Contractor mortgages needn't have a sting in the tail

Despite speculation over the last year that interest-only mortgages were no longer viable, the ContractorUK Money Club is pleased to announce that a new wave of interest-only lending is offering all of the benefits with none of the repayment headache, writes Tony Harris of freelancers’ IFA ContractorMoney.

A mortgage without the sting in the tail

The contractor mortgage specialists at the CUK Money Club have led the way in negotiating contract-based underwriting with many of the banks and building societies that you see on the high street. It is thanks to this history and experience in the contractor market that they have access to a contractor-friendly mortgage, which offers you the opportunity to borrow on an interest-only basis for the first three years.

Interest-only lending has always been popular with contractors who want to keep monthly outgoings low during the early months of being a homeowner. While traditional interest-only mortgages must be accompanied by a repayment vehicle such as an endowment policy, this new ‘low start’ interest mortgage doesn’t.

Instead, you are offered the interest-only rate for the first three years and then automatically transferred to a repayment mortgage once the initial term is up. This way, you won’t need to arrange a separate repayment vehicle and you won’t be left with a large lump sum to repay at the end of your mortgage term.

Other mortgages - still tailored to your contractor status

If the interest-only option doesn’t appeal then there are a wide variety of contractor-friendly mortgages available through the club. Its independent financial advisers are on-hand to help you find the right mortgage to suit your individual circumstances and you can rest assured that they will search the whole of the market to find you a perfect match.

To get started you simply need a copy of your current contract, two forms of ID and recent bank statements. Remember, we understand how busy you are as a contractor so the whole process can be completed using email, phone and post so you avoid the time consuming face-to-face meetings associated with a traditional IFA.

To that end, an adviser from the ContractorUK Money Club will then call you to find out more about your circumstances and to discuss your mortgage requirements before researching the options available to you. Once you have agreed on your chosen mortgage, the adviser will then secure you an agreement in principle with the lender, often within a matter of hours.

Once you have your agreement in principle (AIP), you will know exactly how much you have to play with and can set out in search of your ideal property. An AIP puts you in a far stronger position when negotiating with a seller as you have proof that your funds are in place and you can move quickly once an offer is accepted.

How contractor mortgage hopefuls can save £500-plus

From here, the adviser will take control of your application and help to push the purchase through as quickly as possible. Their unique relationships with the contractor-friendly lenders allow them to process your application far quicker than if you were to apply direct and clients often complete within four to six weeks of that initial phone call. What’s more, the experienced mortgage team handle the whole process for you, allowing you to concentrate on keeping your client happy while maximising your ability to earn. In other words, as well taking out the hassle of securing a mortgage, you will not pay the usual mortgage broker fees (we don’t charge you anything for our advice or for the day-to-day processing of your application), saving you at least £500 on your application.

Wednesday 13th Feb 2013
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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