What is a contractor mortgage broker and do I need one?

A contractor mortgage broker is a financial adviser who specialises in offering self-employed individuals and contractors advice on securing a mortgage.

Choosing a contractor mortgage is a complicated process, and knowing what rate, term, lender, features and insurance to get are all time-consuming and complex matters.

Contractor mortgage brokers can therefore provide you with an invaluable service – navigating this arduous journey on your behalf and presenting you with only the best options to suit your situation.

There are specialist contractor mortgage brokers in the UK such as CMME.

Why use a contractor mortgage broker?

You may still be wondering why you really need a contractor mortgage broker and are tempted to cut out the middleman and go direct.

But if you aren’t sure on whether you need a contractor mortgage broker or not, here are just a few of the reasons why you should consider using one.

Experience – contractor mortgage brokers will have proven experience in securing mortgages for contractors. Having dealt with a plethora of contractors means they will understand your needs and are therefore more likely to be able to offer you better products and services. Going direct with banks and lenders that don’t understand your situation could mean you end up with a loan that doesn’t reflect your true borrowing potential; with an interest rate that penalises you just for being a contractor.

Specialist knowledge – with experience comes knowledge; your contractor mortgage broker will have a specialist knowledge of contractors. It’s likely that they will have worked with contractors who would otherwise struggle to get a mortgage, for example those with gaps in their contracts, adverse credit or those needing to consolidate debt. It’s also likely that they will have worked with those who are paid outside the norm such as doctors, sole traders, partnerships and limited companies. They will not be phased when you present them with your situation and will know exactly how to advise you.

• Protection – when you receive mortgage advice your contractor mortgage broker has a duty of care to you. They are required to recommend a suitable mortgage and should be able to justify why the chosen mortgage is suitable for you. If their advice turns out to be no good, you can complain and get compensated. You may not have as much legal recourse if you go directly to a high street mortgage lender.

What should I look for in a contractor mortgage broker?

If you have decided that you need a contractor mortgage broker, there are a few things to look out for when deciding who will help you on your journey to securing your home loan.  

Reliability – you will need to look for a contractor mortgage broker that will be there with you from your first phone call to the day you get your keys. Find out if you will be assigned a specialist consultant or case manager to be on hand with advice and support. This kind of service makes the process as easy as possible for you.

Dedication – does the contractor mortgage broker you are considering work with a comprehensive range of high street lenders and building societies? You should ensure that your broker isn’t just choosing a lender because it’s the easiest route, or because they get a higher fee from them. You need to choose a broker that will go through all of their lenders to find the one that is right for you and your situation.

Success rate – the industry average success rate for a contractor mortgage is 71%, therefore you should seek out a contractor mortgage broker with a success rate of at least this, if not more. It goes without saying that the higher the success rate the better as it proves their track record with those in a similar situation to you. For example CMME have a success rate of around 93%.

Best fees – consider what fee the contractor mortgage broker is charging and what you are receiving for the fee. Do you only pay the fee if the broker secures your mortgage? Some will refund you the money if they do not get you a mortgage. If they aren’t charging a fee at all that’s not necessarily a good thing – it means they will be receiving a fee from the lender. They could be picking a lender based on how much money they can get from them, rather than what’s best for you, possibly resulting in higher rates or a decline for you. They might also not be a specialist who understands your needs, or they might not be willing to put the work in if your case is not straight forward.

Customer service – is your contractor mortgage broker known for their impeccable customer service? Good customer service goes a long way in easing the stress of getting a home loan, and also in ensuring that you understand every step of the process. You can check out potential brokers on review sites like Feefo or Trustpilot to see what their reputation is like, or speak to other contractors on the ContractorUK forum to find out what experiences they may have had with them.

Final considerations

Getting a contractor mortgage can be a minefield without the assistance of a contractor mortgage broker to streamline the whole process for you.

Making the wrong choice about your contractor mortgage can cost you hundreds, even thousands of pounds, and it’s easy to get tripped up with all the mortgages awash with extra fees and charges.

So if the additional cost of using a broker is holding you back – keep in mind that paying their fee could actually save you a small fortune.  

Not only this, but a contractor mortgage broker will ensure that your mortgage application is processed smoothly and efficiently, alleviating any unnecessary stress associated with moving home.

For more information on getting a contractor mortgage visit CMME; one of the UK’s leading mortgage specialists for contractors, freelancers, and business owners.

Friday 19th Oct 2018