How to Secure a Million Pound Mortgage

A million pound mortgage – it’s got a great ring to it. Be you hero or villain – it’s always beneficial to have an underground command centre to impress guests (or deter infiltrators.) Beside the aesthetic, comfortable living or secret sliding doors – high value property can be an investment. A ‘boost in your rocket boots’ towards grander schemes or a nest egg when you hang up the contracting cape. Securing a large mortgage loan can be a major mission even for those with super earning powers.

A Growing Army

You may think a well-funded and focused finance contractor could procure a large mortgage solo. When trying to raise my skyline HQ off the ground however, securing a sound financial foundation was fraught. Today, contractors are a growing army. Our specialised services are in demand more than ever. Still, it could be that some lenders are hesitant to loan large, despite contractor’s high earning powers.

Sole Trader or Limited Company

Part of the problem is that contractors operate in different ways. Where a sole trader may be Batman’s style, Iron Man’s role as an Avenger is more of a company director. With the latter, lenders will look to a combined salary and dividends in a financial year; possibly problematic for contractors who leave profits within the business. In this case, it would be wise to apply for a plus large mortgage to a lender willing to take into account the company’s retained profits.[1]

Specialist Intelligence

There are lending allies out there who know how to assess large mortgage loan applications. You could save time by bringing in a specialist contractor mortgage broker with experience and existing lenders intel to provide a large mortgage loan super-fast!

Broker Boy!

Because even heroes have heroes. There’s times when you have to secure a sidekick so choose well. I sent out the signal for Broker Boy after hearing reports of his modus operandi from fellow super contractors. When he explained how he successfully liaises with allied lenders on a regular basis to secure large mortgages for contractors I was impressed. When he told me he wouldn’t even charge me for doing so I asked him to repeat that. Sorry I asked – you’re a fee free broker? There might be some other types who make contractor mortgages sound easy, but they neglect to mention they charge YOU for the service. Check out this handy matrix on the best contractor mortgage brokers here.

Property Prices Post Brexit

You may have the means but contractors need to look after their money and invest wisely. Well, now could be the time to move to a large mortgage where they are most prevalent – London. A recently published report by Rightmove has shown house prices in the capital falling faster than anywhere else. While there was an overall drop in the rest of the country by 1.2%, London’s house prices have seen a steeper fall of 2.6% equating to a £16,301 reduction in the prices vendors are seeking[2]

In addition to the usual summer slump you can add post Brexit uncertainty. This is marked by the further average fall to 3.6% (£29,188) in prime central areas where overseas buyers are more prevalent.[3] Investment giant JP Morgan has also forecasted a whopping 10% fall in value by the end of 2017 for London’s property market. Forget the rural hideout – city slickers could save on super dwellings!

To give you a snapshot, average house prices in Camden fell 6% to £1,082,224 in July 2016 from £1,153,801 in June 2016. Check out the average house prices in each London Borough with The Average Property Price in Each London Borough Following Brexit on Landlord News.

Beware Fees!

There’s a number of fees to consider and generally the larger the mortgage, the larger they’ll be. The Stamp Duty Land Tax[4] rate on freehold sales is calculated in price bands with a related (rising) percentage in increments of 2, 5,10 and 12%. On a residential freehold property, a million-pound mortgage will incur tax of £43,750[5] – which could stick in the craw a little once the estate agent takes his cut of the property you’re selling.  Then on top of that some other mortgage broker wants to charge you a fee! Er, no thanks I think I’ll engage a fee free broker instead – hello Broker Boy.

UK interest rates at a record low of 0.25

I previously reported on remortgaging that timing is everything. Well Holy, Even More Lowly Rates Batman! That was when the rate was 0.50% and now it’s hit a super small 0.25%. A current lower rate provides some relief from the kryptonite of Stamp Duty Land Tax. What’s more, if you’ve got a large deposit of at least 35 per cent, you could have a “once-in-a-lifetime opportunity” to get a 10 year fixed-rate mortgage at a very low rate.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

We do not charge a fee for our services, we receive the commission from the provider.

Registered in Scotland No. SC465654. Registered office is 1st Floor, 207 Bath Street, Glasgow, G2 4HZ.

Super Contractors is a trading style of Contract Mortgages Ltd which is an appointed representative of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority. The guidance and/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK.

[1] Intouch Accounting, Can I get a mortgage as a contractor?, Dec 2015

[2] Evening Standard, London house prices down 2.6% as Brexit and summer slowdown hit, Aug 2016

[3] Evening Standard, London house prices down 2.6% as Brexit and summer slowdown hit, Aug 2016

[4] Stamp Duty Land Tax (SDLT) in England, Wales & Northern Ireland.  In Scotland you pay a Land & Buildings Transaction Tax.

[5] HM Revenue & Customs Calculate Stamp Duty Land Tax (SDLT), Aug 2016

Calculate Your Contractor Borrowing Power

In my line of work, everything is calculated. When developing, realising then executing engineering projects nothing is left to chance. An infallible eye for the smallest detail and a brain built to assess problems and find solutions are minimum requirements. I don’t mentally calculate everything however. Just as Batman can’t swoop up a building without his grapple hook – I use the right tools for the job.

Step 1 – What’s Your Batcave Budget?

But before my batcave is even a blueprint, I want to know it’s true potential. Building or buying big and bold – what’s your property budget? Smaller and more secretive – what can you secure? The first step to gain finance power?  Access the contractor mortgage calculator. A tried and trusted tool, this device will help you find out how much you can borrow as a contractor in the UK.

Step 2 – Calculate Your Borrowing Power

‘Where Does He Get Those Wonderful Toys’* The Joker, after he was foiled again.

Like saving the world sometimes, engineering can be a complex process. It’s never easy or straightforward, so keep what you’re working with simple to use. Batman’s gadgets do what they say on the tin; smoke bomb, grapple hook, utility belt. The contractor mortgage calculator is similarly descriptive. Could your lending be Luthor like or do you have the Peter Parkers pennies? Just enter your contractor day rate and it will give you a blast of your borrowing power.

Calculate Your Borrowing Power

This calculator provides a guide to monthly payments based on daily rate and does not guarantee eligibility for a mortgage. Speak to us for your personalised Key Facts Illustration.

Step 3 – Understand how the Contractor Mortgage Calculator Works

I always look under the hood. Contractor mortgages are based on your current contract’s daily rate. Lenders use that to assess the affordability of an application through reaching a ‘targetable’ annual income.

A common formula used by lenders to project your day rate to annual earnings is as follows; multiply your daily rate (minus VAT) by 5 to give a weekly rate. When projecting annually, there needs to be some compensation for potential employment gaps, holiday breaks (and in the case of Super Contractor’s – various hero duties) Therefore, that weekly rate is then multiplied between 46 and 48 to give a view of yearly earnings. [1]

The resulting annual income will then be multiplied by 4.5 to give a figure for a mortgage offer. This means a contractor on a day rate of £400 has the potential to raise £432,000 to buy or remortgage his HQ. Go on, swoop over to the contractor mortgage calculator now and harness your day rate power!

Step 4 – Deposit Impact

Borrowing is also powered up by the deposit you’ll have available. While a lender may not cackle like The Joker if you don’t have a deposit, he’ll be about as warm to your application as Mr Freeze. There is false intel doing the rounds regarding this; such as a contractor may need to have at least 30% deposit to secure a mortgage. Contractors however, given they meet criteria, have access to the same competitive rates as permanent employees.[2]

At present, you could secure a mortgage with at least 5% of the property’s value. Of course, the larger the deposit the less of a risk you are to a lender. This means they will generally offer better contractor mortgage deals for those who can provide 10% upwards. If you don’t have the capital, don’t think bank heist however – stay Super, not villian!

Step 5 – Boost Borrowing Power

It is another myth that contractors will always pay more than permanent staff. The rate will be set as for any type of employee. Well paid contractors may even have an advantage here for lower rates as permanent staff, as they may have had more disposable income available to put aside for a deposit.

The higher the deposit, the lower the potential interest rate and monthly payments may be (subject to credit rating.) So get super saving – I held off on a new rocket for the Super Mike Mobile to boost my borrowing power instead.

Step 6 – Signal Super Contractors

Picture the contractor mortgage calculator as your first intel gathering.  While it will shape the vision and scope of your planned HQ (skyline penthouse or underground lair?) it does not guarantee eligibility for a mortgage. Knowledge is power and where contractor mortgage advice is concerned don’t ask a Joker – call the broker.  Super Contractors will give you a personalised Key Facts Illustration.

Watch out though! Use this handy mortgage broker matrix  to see which brokers charge fees.  Send your signal to Super Contractors. Our mission is to free you from the tyranny of broker mortgage fees.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

We do not charge a fee for our services, we receive commission from the provider.

Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice.

[1] IPSE, Self-Employed, Contractors and the Mortgage Market Review September 2014, The Telegraph, Finally: lifeline for self-employed on mortgages, October 2014

[2] Gordon Hunter, Pulse Article on LinkedIn, 7 Contractor Mortgage Myths – BUSTED, April 2016

7 Tech Items That Are Obsolete… Just Like Our Broker Fee

Technology comes and goes. It becomes smaller, faster and more powerful. These days it seems crazy to carry around a camera, video camera, MP3 player, laptop, paper maps, etc when it can all be done from your single smartphone.

Read on for our list of 7 Tech Items That Are Obsolete… Just Like Our Broker Fee.

  1. Dial-Up Internet

Aah the good ol’ days. Back when it took a lot of effort (and time) to connect to the internet. The excitement begun when you could hear the horrible screeching noise of a 56K modem trying to dial in. Then wait a good few minutes while Ask Jeeves loaded and you were ready to surf the web…slowly.

  1. Stylus PDA’s

The personal digital assistant. A palmtop. A handheld device that combines computing, telephone, internet and networking features. These are the future, we won’t need anything else… Wait, what’s this Blackberry… oh a touch-screen smartphone with everything I need. See ya Stylus PDA.

  1.  Backing Up Your Data On Floppy Disk or CDs

No need for those physical devices anymore now that our heads are in the Cloud. If you’re not backing up or working online, you’re doing it wrong.

  1. Fax Machine

Who needs fax machines when we can do more things in a quicker and easier manner? Email an agreement with an electronic signature, share a file through WhatsApp or even upload documents to Dropbox. Fax machines, fax off.

  1. Buttons on Phones

Remember when your screen took up less than 50% of your screen. Then there was those bumpy things at the bottom of your device, called buttons. You used them to dial, you used them to text and you even used them to play Snake. They were simpler times – but would you go back?

  1. Dedicated MP3 Players

This isn’t so obsolete but just evolved and integrated within other technologies. The MP3 player is now a standard on any mobile device. Even having individual MP3 files are now becoming less common, with albums and playlists now available to be streamed from Spotify or Google Play.

  1. Pagers

Also referred to as a beepers. The text messaging of the past, that had an inability to reply to a page. Receiving a page came with a total panic of “OMG IT’S BEEPING! Quick where’s the nearest phone so I can call them?!” Thanks to mobile phones, pagers are dying off.

What have we missed? Can you think of tech items that have become irrelevant or unneeded? Comment below.

 

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At Super Contractors, we specialise in contractor mortgages. We understand the financial status of contractors and work alongside head office underwriters who are contractor friendly to get our clients the mortgage they need.

We treat contractors like first class citizens and have a strong belief in justice, starting with not charging a broker fee.

We do not charge a fee for our services, we receive commission from the provider.

For more information about getting a mortgage as a contractor, join us – call  0800 211 8700 or fill out our online enquiry form

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice.

 

Contractor Remortgages – When & Why to Remortgage

I’m a high flying contractor in the finance & banking sector, armed with super insight into the markets and an ear finely tuned to detect the slightest rumblings in the financial world. But even I need some help on the ground sometimes. I trust a sidekick, Broker Boy, when securing a contractor remortgage for my City HQ. He’s the more industrial War Machine to my suave Iron Man. An expert in this sector I team up with, noble enough to not charge contractors a broker fee. With him, I could fully realise my super dwelling vision – penthouse cocktail bar and all.

While my skyline HQ is perfect for pow-wow’s with fellow Super Contractors, plans are afoot for an upgrade and titanium ain’t cheap. Broker Boy advised five reasons when and why Super Contractors like myself should be seeking to remortgage:

1.    When forces align

Remortgage when the situation is at its most advantageous. While you don’t have to stay with the same lender for the duration of your contractor mortgage, don’t just switch to free up extra cash for Christmas or to acquire that new spandex suit you’ve been admiring. Instead, make an informed decision when there is a distinct advantage, such as the following…

2. When you have equity power

How much of your headquarters have you paid for? While a maniacal moneybag like Lex Luthor may have paid in cash for his lair, it’s more than likely that you have paid up some of it (your equity) and the bank own the rest. This proportion is known as the ‘Loan to Value’ ratio (LTV) The lower the LTV and the higher your equity, then the better your updated contractor mortgage deal is likely to be. So, engage with equity on your side.

3. When fixed term end is fast approaching

My Financial Forecasting power keeps me one step ahead. So should you be of your current mortgage terms. If you have an introductory deal on your contractor mortgage, then know when it is coming to an end. Will your lenders move you to a standard variable rate of interest (SVR)? You’ll want to consider a remortgage if the commencing SVR is more than you’re paying right now. Be vigilant and aware of what’s happening to interest rates at the end of your fixed rate period.

Also, take into account what the repayment charges might be if you want to exit before your fixed rate ends. Remember! You don’t have to stick with the same lender. Instead, engage your trusted sidekick, Broker Boy, to recce the mission of getting you the most suitable offer going. He’ll recommend cost effective remortgage deals suited to your circumstances that may have lower, or even no fees (eg. arrangement fees, booking fees or valuation fees) or charges at all if switching lenders.



4. Legendary low interest rates

The base rate remained on hold for July at 0.5% after a vote from the Bank of England’s MPC.[1] This surprised many economists and forecasters who predicted a cut soon after Brexit. Chief UK and European Economist at IHS Global Insight Howard Archer stated ‘We expect the Bank of England to cut interest rates from 0.50% to 0.25% in August’ adding ‘We have serious doubts that the Bank of England will take interest rates any lower than 0.25%, although it is possible they could take them down to 0.10%’  [2]

Holy Lowly Rates Batman!

Lenders are already competing with each other for attractive mortgage deals. Get your timing right and you could lock into a super low rate for a contractor remortgage on your current property.

5. Your contractor mortgage application is bulletproof

All that’s fair and well, but the rules of engagement differ in the contractor sector. Broker Boy points out there are lenders who are only allies if you have been contracting for at least 12 months.

However, he can search for contractor remortgage deals on your behalf with a major high street lender who will consider (subject to terms) a Day One contractor. He also advised that any remortgage application should be submitted at least four weeks before the end of your current contract as the lender will want to know what your next contract is going to be. If you don’t get a new contract at least four weeks out, it can still be done, but it’s going to be a trickier task.

So, many of my admirers in the office think (naturally) that I wrangle the best deals for contractors myself. They are mostly right. But, when it comes to contractor mortgages & remortgages, I let them know that you can’t mission solo all the time – then pass on Broker Boy’s calling card with a knowing wink…

Want to speak to Broker Boy? Here’s his calling card….

Broker boy calling card

 

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

We do not charge a fee for our services, we receive commission from the provider.

Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice.

[1] http://www.independent.co.uk/voices/brexit-interest-rates-fall-what-does-that-mean-for-you-housing-a7134376.html

[2] http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html

5 Secret Weapons To Getting A Contractor Mortgage

Getting a contractor mortgage doesn’t have to be as difficult as you think. The mortgage application and approval processes for larger lenders has, in the main, been created for regular employees not contractors. Though, with the right specialist knowledge and secret weapons you could be on your way to getting a contractor mortgage. Read on for our 5 Secret Weapons to Getting a Contractor Mortgage.

  1. Get A Specialist Sidekick

We know the very one…

While it may seem biased that we suggest using a contractor mortgage specialist, it is a benefit.  It is important that you get advice from a broker that is familiar with the contracting world so you can be sure the advice you receive is suitable.

For a contractor, working with contractor specialist provides two key benefits; potentially access to more mortgage products and a dedicated adviser who deals directly with head office which can help to speed the up the mortgage process. We have built relationships with contractor friendly lenders who provide mortgages based on day rate and current contract. Rather than the number of years you have been working as a contractor.

  1.  Save the Day and Save Money

Generally, you won’t get anywhere with a mortgage without a deposit. At the moment, you can secure a mortgage with at least 5% of the property’s value. Having a larger deposit will make you less risky for mortgage lenders and as a result they’ll generally offer you more competitive mortgage deals with lower interest rates.

  1.  Keep Your Credit Rating Super Clean

A super clean credit rating is key to getting your mortgage application accepted. You could have a good income and a good sized deposit, but your mortgage application could still be refused if you have a poor credit rating. Missing credit card payments or not being on the electoral roll at your current address can make all the difference.



  1.  Make Sure Your Contract Is Fighting Fit

A copy of a completely up-to-date, signed contract is a must. Ensuring that the length of service and day rate is clearly visible can be vital in securing a contractor mortgage. Lenders require this information as support for your application for a mortgage. It can save you masses of admin and the stress of having to supply three years worth of accounts.

  1.  Documents… ASSEMBLE

Make sure you have all the correct documents in order and to hand, these can include:

  • Suitable ID
  • Copy of Current Contract
  • Copy of Last Three Years P60s
  • Last Six Months Bank Statements
  • Copy of CV

If you’re new to contracting check out what documents you need here.

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At Super Contractors, we specialise in contractor mortgages. We understand the financial status of contractors and work alongside head office underwriters who are contractor friendly to get our clients the mortgage they need.

For more information about getting a mortgage as a contractor, join us – call  0800 211 8700 or fill out our online enquiry form

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

We do not charge a fee for our services, we receive commission from the provider.

Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice.

5 Ways Brexit Won’t Impact Contractor Mortgages

A Super Contractor should be prepared for every eventuality. While many in the city may not have backed Brexit or even anticipated the result – I was busy calculating what a leave vote would mean for contractors like myself. No, my powers are not psychic in nature, but simply those I put into operation every day in my role as a (Super) IT contractor – foresight and planning.

Here are my five reasons why Brexit won’t impact negatively on UK contractor mortgages.

1. The BOE Contingency Plan

Like any super contractor worth his cape and day rate – Bank of England Governor Mark Carney, was quick (as The Flash) to announce that the Bank had prepared for every eventuality; duly unveiling a cunning contingency master-plan designed to protect the economy from negative effects in the the outcome of leaving the EU. In fact, since the last crash of 2008, the Banks have been simulating and stress testing far more severe scenarios than those we currently face to shape the battle plan. Are they ready? It’s worth noting that the money held by the biggest British banks is ten times what it was before the crisis of 2008; some £130 billion of capital and £600 billion of high quality liquid assets; something Carney says ‘gives banks the flexibility they need to continue to lend to UK businesses and households, even during challenging times.¹ In short, the UK banks are more stable – while ‘Fred The Shred’ could only lend from his piggy bank to close friends and family, Mark Carney has the resources of Lex Luthor, and a better head of hair besides.

2. Even Lower Interest Rates for Contractor Mortgages

Whatever way you voted, the fact is ‘we are where we are’. So, while the banks navigate a foreseen period of uncertainty and adjustment, the BOE is widely tipped to slash UK base interest rates from a record low of 0.5% to 0.25% by the end of 2016.² Gadzooks! If Interest rates stay this low, we’ll all be forming an orderly queue at our banks for (almost) free loans. Take that, Payday Loan Lenders!

So what does that mean for contractor mortgages? Well, with lower BOE interest rates in place, mortgage lenders could take a hatchet to mortgage rates to lure customers with new, cheaper deals. In short, not only could this mean lower contractor mortgage rates, but also lower asking prices for available property, while uncertainty abounds.

3. Carpe Diem (I knew learning Latin in school would finally come in handy)

As Contractors, we have the ability to speculate and act fast. On 16th September 1992 George Soros made an estimated £1 Billion from short selling the GB Pound on Black Wednesday. Granted, he almost collapsed the UK economy in the process, at an estimated cost of £3.3 Billion³, but the point is, know your onions, be agile, and the opportunities are there.

UK Pound Devalued
Today, the value of Sterling is at a 30 year low against the USD, and other currencies. This is a positive for exported UK products and services who are currently enjoying renewed international demand as a result of buyers gaining more value for money.

Lower UK Corporation Tax Rates
With George Osborne proposing the lowering of UK Corporation Tax (CT) to 15%, the UK is being cited as a potential Tax Haven for Corporations.

Booming FinTech Market for Contractors
Despite all the uncertainty, what is certain is the fact that Financial Technology Contractors are in demand. Here’s a quick list of the highest-paid contract IT jobs in UK FinTech companies (figures refer to average daily rates):

Project Management: £425
System Administration: £450
Software Engineer: £464
Database Administration: £491
Database Developer: £495
Programme Management: £503
Unix Administration: £544
Technical Architect: £625
ERP: £700
IT Security: £700

Source: Sonovate 4

4. Brexit – Great for contractors

Ahead of the Brexit vote, many head honchos were putting big appointments on hold. According to a poll by Randstad, around a quarter of the professional firms surveyed were using contractors due to the uncertainty. The result is that many companies may continue to hire ‘contractors’ or temporary staff in the short term.5 So make hay while the sun shines!

5. Upheaval Means Transformation Projects

You heard it here first. I predict an increased demand for Super Contractors (like me) as the UK starts getting its own shiny new systems in place. Speaking with many recruitment agencies, they sense the UK leaving the EU could mean many high level transformation projects will be required, triggering substantial demand for fellow skilled contractors and freelancers in IT, Finance, Business Analysis, etc.

A key strength of being a Contractor is our flexibility. Employers and recruiters know this, and we’ll be the first workers called upon when the work requirements come in. So, if David Cameron, BOJO and Farage are considering their next moves – potentially retraining as Contractor Systems Analysts could be the smartest thing they’ve done this year!

In summary, despite all the uncertainty of the UK Brexit, I believe it will bring many opportunities for Super Contractors. What are your thoughts?

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Sources:

  1. Statement From The Governor Of The Bank Of England Following The EU Referendum Result | Bank Of England. Bankofengland.co.uk. N.p., 2016. Web. 1 July 2016.
  2. London South East News, Bank Of England Chief Hints At Interest Rate Cut After Brexit Shock
    Thu, 30th Jun 2016 18:04
  3. UK Government Papers released under 2005 Freedom of Information Act show that if the government had maintained $24 billion foreign currency reserves and the pound had fallen by the same amount, the UK would have made a £2.4 billion profit on sterling’s devaluation.
  4. Sourced by recruitment finance provider Sonovate, Q1, May 2016
  5. IQ Contracts, Brexit ‘may benefit contractors‘, 29 June 2016

7 Contractor Mortgage Myths – BUSTED

“Everyone’s an expert…”

Wrong

Everyone seems to be an expert on the contractor mortgage market. Jump on the forums and you’ll find people commenting on everything from “self-certification” to “sub-prime” mortgages. This information can be confusing and may not be accurate. We heard too many contractors retell their colleague’s mortgage horror stories.

Don’t always believe what you read on the internet. Speak to a specialist with experience in the contractor mortgage market. Read on for our top 7 contractor mortgage myths – BUSTED.

  1. Contractors need to have at least 3 years of accounts to get a mortgage
    Wrong. Contractors can get a mortgage based on their day rate. You don’t necessary need those elusive 3 years accounts that you’ve heard. Working with contractor friendly lenders means we may be able to arrange a mortgage based on your current contract, rather than the number of years you have been working as contractor.
  2. Contractors must have been contracting for at least six months
    False. Contractor friendly lenders can help if you’ve just taken the jump from a permanent position and have only been contracting for as little as one day.
  3. Contractors are labelled as high risk by the banks and building societies when it comes to getting a mortgage
    Untrue. Mortgage lenders who understand contractors and freelancers will not necessary see you as any more high risk than a full time employee. You may be able to borrow around 5 times your day rate. If you have a poor credit rating and no deposit, then absolutely – you could be a liability to them. But that would be the exact same for a permie.
  4. Contractors need a mortgage deposit of at least 50%
    Nonsense. At the moment you would need at least 5% of a property’s value to get a mortgage. Obviously having a larger deposit will make you less risky for mortgage lenders and as result they’ll generally offer you more competitive mortgage deals with lower interest rates – but it’s definitely not mandatory to have at least 50% deposit.
  5. Lenders will always charge contractors a higher mortgage rate than permies
    Rubbish. Contractors will receive generally the same interest rates as permanent staff. With higher daily rates compared to employed colleagues, you may even receive lower mortgage rates, as you may be in a better position to put more savings aside providing a larger deposit.
  6. Contractor must have self-certification to get a mortgage
    No, no, no! Self-certification mortgages are something of the past. They were originally aimed at self-employed and contractors who had trouble proving their income to secure mortgage borrowing with their bank. The FCA put an end to these type of mortgages back in 20091. Now, with many contractor friendly lenders and specialists available who understand your financial status – there is no need for these “self-certification” mortgages.
  7. Contractors need to jump through more referencing loops for a mortgage
    Garbage. You do not necessarily need references to get a mortgage. As long as you have the 5 essential documents you need to get a contractor mortgage and you speak to a contractor specialist who knows the criteria of contractor friendly lenders, your mortgage can be processed at a significant speed.

At Super Contractors, we specialise in contractor mortgages. My team understand the financial status of contractors and work alongside head office underwriters who are contractor friendly to get our clients the mortgage they need.

For more information about getting a mortgage as a contractor, join us – call 0800 211 8700 or fill out our online enquiry form

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

References:
1. Last major seller of self-certification mortgages pulls out, Nov 2009 http://www.theguardian.com/money/2009/nov/04/platform-ends-self-cert-loans

 

We do not charge a fee for our services, we receive commission from the provider.

Super Contractors is a trading style of Contract Mortgages Ltd which is an appointed representative of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.

5 Documents For Your Contractor Mortgage

“How can I get a mortgage, now I don’t get a payslip every month?

You’ve made the decision to leave the relative safety of a permanent position to become a contractor, but are wondering how it will effect your mortgage. It all comes down to your financial status as a contractor.

It’s not personal. The mortgage application and approval processes for larger lenders has, in the main, been created for regular employees not contractors.

Many mortgage lenders are happy to work with specialist brokers who understand the financial status of their contractor clients. For a contractor, working with contractor specialist provides two key benefits; potentially access to more mortgage products and a dedicated adviser who deals directly with head office which can help to speed the up the mortgage process.

Here is the low down on the 5 essential documents you will probably need to provide to secure a contractor mortgage based on how long you have been contracting.

New to contracting

At least one day trading as contractor

  1. Suitable ID
  2. Copy of current contract
  3. Copy of last year or last two years P60s
  4. Last three months personal bank statements
  5. Copy of CV

Long term contractor

  1. Suitable ID
  2. Copy of current and previous contract
  3. Copy of CV
  4. Last three months bank statements
  5. If accounts are ready then two years books showing three years figures (not essential but advantageous)

New to contracting and need high Loan to Value (LTV) i.e. 90%

  1. Suitable ID
  2. Copy of contract
  3. Copy of last three years P60s
  4. Last six months bank statements
  5. Copy of CV

At Super Contractors, we specialise in contractor mortgages. Our advisers understand contractors financial status and work with head office underwriters who are contractor friendly. This includes presenting the limited company contractor remuneration model of low salary high dividend to the lender.

For more information about getting a mortgage as a contractor, call 0800 211 8700 or fill out our online enquiry form

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

 

We do not charge a fee for our services, we receive commission from the provider.

Super Contractors is a trading name of Contract Mortgages Ltd, registered in Scotland at 1st floor, 207 Bath Street, Glasgow, G2 4HZ SC465654. Contract Mortgages Ltd is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and non-investment insurance advice.