Guide to mortgages for umbrella company contractors
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Guide to mortgages for umbrella company contractors
In this guide, the terms umbrella company contractor, umbrella company employee, and umbrella company worker are interchangeable, and all refer to anyone working under an umbrella company for the purposes of performing a fixed-term contract of some kind.
As a contractor working through an umbrella company, getting a mortgage can present unique challenges. Many high street lenders don't cater to this type of employment structure, making it harder to secure a mortgage. However, our specialist umbrella contractor mortgage partner Freelancer Financials can find umbrella company employees suitable mortgage options, with affordability based on their contract day rate alone.
In this guide, Freelancer Financials cover everything you need to know about getting a mortgage as an umbrella company employee, from the eligibility criteria to identifying the right lenders and maximizing your borrowing power.
Employed or self-employed?
If you've switched to working under an umbrella company, you'll be classed as an employee by mortgage lenders. This might make you think that lenders are more sympathetic to you than when you were a limited company contractor, after all you have payslips to show your income now…
Regrettably, you'll find that many lenders will fail to understand how to interpret umbrella company payslips or calculate the true borrowing potential of an umbrella employee. This is where Freelancer Financials comes in. As a specialist contractor mortgage broker with years of experience in securing mortgages for umbrella company employees, you'll be in safe hands.
Can an umbrella company employee get a mortgage?
The short answer is yes, but the process may involve more complexity compared to traditional employed or self-employed applicants. A significant number of mainstream lenders will consider mortgage applications from umbrella company contractors, though the pool of potential lenders is often more limited.
The key is understanding the specific requirements and lending criteria that umbrella company employees need to meet. Lenders will assess your situation on a case-by-case basis, looking at factors like your contract duration, income stability, and credit history. Freelancer Financials will present your case to the right lender in the right way, in order to get the best mortgage deal for your individual circumstances.
Eligibility criteria for umbrella company contractors
Lenders will have their own unique eligibility criteria for umbrella company contractors. Some common requirements include:
- Minimum time as a contractor - day one, 3 months, 6 months, 12 months, or longer
- Restrictions on the maximum time allowed between contracts
- Requirements around the remaining duration of your current contract
- Calculations based on payslip averages or day rates multiplied to an annual salary
It's essential to be aware of the specific criteria of a range of mortgage lenders in this market, as they can vary significantly. Working with a specialist mortgage broker, such as Freelancer Financials, that understands the nuances of umbrella company employment can be invaluable in navigating this process.
To see how much you can borrow for an umbrella company mortgage, use the Freelancer Financials mortgage calculator below.
The mortgage application process for umbrella company contractors
When applying for a mortgage as an umbrella company contractor, you'll need to provide the following documentation:
- Copies of your current and, if applicable, previous contracts
- The last 3, 6, or 12 months of payslips
- Bank statements covering the same period as the payslips
- Any other relevant financial information, such as your credit history
Your mortgage broker can help you gather and organize this documentation to present a strong application.
Identifying suitable mortgage lenders for umbrella company workers
Not all lenders are willing to work with umbrella company contractors. Some key points to consider:
- The overall pool of potential lenders is smaller than for PAYE employees
- Some lenders may not consider your application if you work for multiple firms simultaneously
- If you have a less-than-ideal credit history, your options will be further reduced
Working with a specialist mortgage broker who has experience in the umbrella company sector can be incredibly beneficial. They'll be able to identify the lenders most likely to approve your application and secure the best possible terms.
How to maximise your borrowing power as an umbrella company employee
Calculating the maximum amount you can borrow as an umbrella company contractor can be complex. Lenders often use a different approach compared to traditional employed or self-employed applicants. However, after many years developing relationships with lenders, Freelancer Financials may be able to secure a mortgage with an income multiple up to 5 times your annualised contract day rate.
To calculate your annualised day rate:
- Multiply your day rate by 5 to get your weekly rate.
- Multiply the weekly rate by 48 to get an annualised salary equivalent.
Or simply use our calculator below.
This approach allows lenders to base their affordability calculations on your contract income rather than just your payslips.
Speak to a specialist umbrella company mortgage broker
Finding the right mortgage lender as an umbrella company contractor can be challenging, but working with a broker who specializes in this area can make all the difference.
Freelancer Financials is a specialist umbrella company mortgage broker with extensive experience in this field. They can guide you through the application process, help you gather the necessary documentation, and identify the lenders most likely to approve your application on the best possible terms.
Don't let your employment status as an umbrella company contractor hold you back from achieving your home ownership goals. Get in touch with Freelancer Financials today and let them help you navigate the mortgage market as an umbrella company employee.
Contact Freelancer Financials here for immediate mortgage advice
