Although the UK employment market is changing, and the number of contractors is increasing, lending criteria applied by many providers is lagging behind. If you approach a lender for a mortgage directly you may experience the ‘computer says no response’ when a lender assesses an application. Contractor mortgages can be hard to secure directly from typical ‘High Street Lenders’ simply due to how they assess and verify income, which is why many turn to a specialist provider who tailor their services to suit the needs of the contractor.
A contractor can often experience a bad deal or be turned down when applying for a mortgage. This is despite the fact that their earnings can often be higher than their permanent employee equivalent. Most lenders do not assess the value of the contract but assess you as self-employed, so as a result you can end up worse off. The main obstacles can be the lack of accounting figures you have or drawing low salary and dividends form your limited company.
So how do contractors ensure they are getting the best mortgage deal? Here are my top 5 tips to consider:
- Keep on top of your credit file – simply making sure you are aware of your credit score and ensuring you are registered at the correct address can help. However, be aware when dealing with the bank as they are likely to run a credit check which could negatively impact your chances of securing a mortgage.
- Manage your bank statements – ensure your living within your means and your bank statements can demonstrate this to a lender.
- Be aware of the Government schemes available, or speak to an advisor to understand these further as you may be able to get help towards your deposit and also need a lower deposit than you think.
- Locate a mortgage advisor with expertise in UK contractor mortgage lending who also has an understanding of this industry and how you operate your finances.
- Make sure your advisor can consider all mortgage lenders and are not restricted to a shortened panel.
If you have any mortgage questions, then feel free to get in touch with the Brookson Financial team:
01925 382 318
Brookson Financial have development relationships with lenders over many years and as a result can bypass the typical criteria applied by lenders and in many circumstances, can use your contract value to assess your income. Even if it’s your first time contracting, they can help secure the same competitively priced mortgages that are available to permanent employees – and often better rates too.
The team at Brookson Financial provide a free initial consultation with no obligation so you can be confident that their advice is honest, independent and specific for your needs. Working together with your accountant provides you with an all-round holistic service to ensure you get the best deal.
Blog Written by: Jo Elwell – Brookson Financial, Mortgage Services Manager