Mortgage Service
Contractor
Obtaining a mortgage without a permanent income can be challenging. However, Mukul Mehta over the years has assisted many contractors in the securing the mortgage they need.
There are no specific mortgage products exclusively for contractors; however, contractors can access the same mortgage products available to everyone else on the market. There are certain lenders who have a better understanding of your unique position as a contractor. With our wealth of knowledge and experience as mortgage specialist, we strive to connect you with the best lending options to provide a seamless and stress-free process, whether you are a first-time buyer, home mover, or looking to remortgage. We are committed to helping you find the best rates available for your individual circumstances.
The type of contract that you are working under will be a key factor in how your application will be assessed. Most lenders will ask for a larger sized deposit when you apply for a contractor mortgage, usually more than 10%. It is also common to need to provide 1-2 years of Tax calculations and Tax year overviews account history, however it still could be possible for you to qualify for a mortgage even if you do not have that. To help you get approved, we can also advise you on what you should be doing such as ensuring your contract is up to date or not having long breaks between contracts.
What is a contractor mortgage?
A contractor mortgage uses your gross contract rate to determine how much you can borrow for a mortgage, not normally your accounts or payslips. This method is known as contract-based underwriting, and this enables contractors to borrow a much higher amount than they would usually be able to obtain via a traditional underwriting method.
Anyone who is a contractor that has approached a lender directly or a conventional mortgage firm, you will know how complicated many advisors make it for contractors to obtain a competitive mortgage. Untrained advisors and agents often struggle to interpret limited company income or umbrella payment structures, so try to use your accounts or payslips as the basis of their calculations instead. This method is clearly not going to be effective in reaching your maximum potential lending facility.
Fortunately, having dealt with contractor-friendly lenders in the past we can help you find the right contractor mortgage that your income and status deserves.
We will use your gross contract day rate to secure your mortgage with a competitive interest rate. Furthermore, you’ll get a fully bespoke service with Director level Advice and support.
Top tips for a successful contractor mortgage application
There are 5 key things to help an underwriter view your application in the best possible light:
Ensure your contract is current up to date
Make sure you have a copy of your most recent contract and assignment schedule to hand when putting together your mortgage application. It is important to be able to show lenders not only how much income you have, but also how long you have remaining on your contract.
Avoid any lengthy breaks between contracts
There are many perks to working as a contractor, not least being able to take breaks between contracts. This is great for holidays or similar. However, you should try to avoid taking breaks of 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.
Be realistic about your affordable repayments
A common mistake many independent professionals make when searching for a contractor mortgage is being unrealistic when it comes to estimating their repayments. It is extremely important when putting your mortgage application together that you can afford the repayments you’re committing to as failure to do so can put your home at risk.
Have at least a 10% deposit
Lenders typically require a larger deposit for a contractor mortgage, ideally 10-15%. Having this deposit can improve your chances with lenders and secure better interest rates starting at 90% LTV.
If suitable, look for mortgages that allow overpayments
Some contractors can find themselves with a surplus of money on a fairly regular basis due to high-value or multiple 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 more quickly.
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