Contractor Mortgage FAQs
ContractorUK has teamed up with the specialist contractor mortgage advisors at ContractorMoney to offer solutions to all your home finance needs. You can also call them direct on 03450 628888.
Check out the FAQ below and make use of the 'mortgage finder' for tailored recommendations to fit your requirements.
Q. What makes ContractorMoney so different from other mortgage advisers?
A. Like you, we are specialists in our field. Too many guys have horror stories to tell of using well meaning but less contractor-focused, general financial advisers or worse still the poorly trained, de-motivated staff in the High Street branches and call centres of the big lenders. Every week we pick up the pieces for clients who have been given the run-around by less specialised brokers and unfortunately by this stage the pressure is really on to save your purchase. The majority of our clients are referred to us by other contractors who appreciate the fact that we have avoided the 'jack of all trades and master of none' approach to financial planning.
For further details of our regulatory status please read our Initial Disclosure Document.
Q. How much can I borrow?
A. ContractorMoney has negotiated specialist underwriting criteria for contractors with many 'High Street' lenders. We should be able to secure a mortgage of up to 4 times your annualised contract rate-make use of our mortgage assessor to find out more. These terms are not easily available through the branch networks of the mortgage companies and instead we ensure that your application is processed by key personnel at the lenders centralised admin units who understand our requirements and who are sympathetic to your contractor status.
Q. Can I get a mortgage agreed in principle before I buy?
Yes, in many cases we can secure you an agreement, based purely on your contract rate alone (ie no question that the lender will backtrack once they see your accounts), all within a matter of minutes. Armed with this information you will then be an even stronger position to negotiate and we will happily verify with the seller/estate agent that you are 'good for the money'.
Q. Will I have to pay higher interest rates because I am a contractor?
A. Not at all. Whereas in the past those working on short-term contracts would have often been looked on as 'non-status' borrowers and would have paid high deposits and uncompetitive interest rates with niche mortgage lenders, we have spent many years of patient negotiation to secure you the same low rates enjoyed by permies. Choose from discounts, fixed rates or the new generation of cheque book 'Offset' mortgages.
Q. Do I need a deposit?
A. Lenders are demanding higher deposits at the moment but this is in no means a reflection on your Contractor status. It is still possible to secure a mortgage with a 10% deposit but increasingly lenders are favouring homeowners with a 15-25% deposit which will allow you to secure the most competitive rates.
Q. How long do I need to have been contracting?
A. We have the ability to arrange a mortgage within a week of you starting your first contract.
Q. How long do I need to have remaining on my contract?
A. Most lenders will require 6 weeks left to run on your contract although we can often have room for negotiation on this and often we will be able to convince your agency to help 'talk up' your prospects of a renewal/fresh contract for mortgage purposes.
Q. How long does the mortgage process take?
A. Depending on which lender we eventually agree is best for your circumstances we can have approval of your loan within minutes. Once the survey has been done and the necessary legal searches performed by your solicitor the whole house buying process generally takes 3-6 weeks.
Q. What supporting documentation will I need to provide?
A. We would ordinarily just need a copy of your contract, CV, bank statements and ID.
Q. Will I need accounts?
A. Definitely not. Unlike less specialist advisers we fully understand that you may not have three years worth of accounts. Far better to simply work from your contract rate alone.
Q. What costs will I need to find?
A. There will be valuation and legal fees and sometimes an arrangement fee to book a particular interest rate. Often we can secure schemes where the lender will pay some or all of these fees for you as an incentive.
Q. What about stamp duty?
A. One of the great stealth taxes, stamp duty kicks in at 2% of the purchase price above £125k. At £250k the government's cut rises to 5% and above £925k to a massive 10%. There may be scope to negotiate a lower purchase price with your vendor if you are buying at a price close to these thresholds. Thankfully, you will only pay the increased percentage of stamp duty on funds over the threshold rather than paying the full percentage on the whole purchase price.
Q. What is a mortgage indemnity and will I have to pay it?
A. Indemnity premiums are a hefty fee that many lenders will charge you if your unable to put down a large enough deposit. This protects them (not you) against your defaulting on the loan and leaving them a debt higher than the value of the house. Contractormoney will always attempt to avoid lenders that charge this costly fee.
Q Will I have to accept costly loyalty clauses to secure a mortgage?
A. We pride ourselves on always securing you competitive 'High Street' interest rates whilst avoiding schemes that feature stings in the tail. Too many contractors have been tempted by lenders offering a low headline grabbing rate only to find that they suffer long periods at higher rates with penalties that are charged if you attempt to break free. We can recommend a competitive selection of schemes that will allow you complete freedom to move your borrowing at any time or at the very least allow that freedom as soon as your current rate expires- allowing you to move onto the next good rate as soon as this one ends.
Q. What will happen to my mortgage rate after the initial scheme expires.
A. Too many people allow inertia to set in once an initially competitive interest rate expires. We will be in touch 2 months before the expiry of any special rate that you may be on so that we can explore the options available if you. We will look at what is on offer from the current lender and compare this with what is available elsewhere in the market. If appropriate we can often arrange a new lender to pay all fees to move your loan across to their schemes. In this way Contractormoney will be on hand to keep an eye on future market conditions and will help to ensure that you secure competitive interest rates throughout the life of your mortgage.
Q. Will I need to take out compulsory insurances with my mortgage?
A. We will always try and ensure that there are no hidden shocks when we make a mortgage recommendation to you. We will avoid schemes that insist on you taking out uncompetitive home insurance etc. We also avoid lenders that insist that you must take out life cover although as IFAs we would always recommend that your debt is properly protected and will be happy to provide no obligation advice on this subject.
Q. I want to move but can't/don't want to sell my current home
A. 'Let to buy' is the ideal solution if you're unable to sell your current house (maybe it needs updating to realise its full potential, perhaps its proving slow to sell at the right price or possibly you've lost a buyer but still want to complete your purchase). Contractormoney can arrange a buy to let loan on your current property to release the deposit on your new purchase
Q. I have an existing property. Can I release some of the profit made from my house?
A. We can arrange a fees assisted (i.e. the new lender pays some of your costs) re-mortgage to allow you to switch to a lower interest rate and release some of the equity in your home at the same time. In this way a larger loan may even cost you less than the existing one! Funds can be used for any purpose-debt consolidation, tax bill, business venture, a deposit on a buy to let property etc.
Q. I have had a CCJ. Will this stop me from getting a mortgage?
A. No. We have access to a range of 'impaired credit' schemes to get you back on track and allow you to buy a property/move up the property ladder.
Q. What next?
A. Simply complete the form here and one of our qualified mortgage advisers will quickly be in back in touch by email with some recommendations to exactly fit your mortgage requirements. Alternatively please call the ContractorUK Money Club direct on 03450 628888.
The value of investments may fall as well as rise and past performance is not a guide to future returns.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Financial advice is given by ContractorMoney, which is a trading name of Contractor Financials Ltd and is regulated and authorised by the Financial Conduct Authority.