Getting a mortgage when you work as a contractor

As the notion of a job for life is fast becoming defunct, and contract working, freelance, second jobs and self-employment are rising, some specialist lenders have woken up to the changed lending landscape and have evolved their product portfolio to offer mortgages for contractors.

We work with specialist lenders who provide mortgage solutions for IT, engineering and construction contractors as well as doctors, nurses and teaching staff who are employed on non standard or temporary contracts.

By not being tied to any financial institution, as a broker we search the whole market to find the best mortgage for you.

Contract workers often experience difficulty getting a mortgage from a high street lender for one of the following reasons:

  • You are unable to provide evidence of contract renewals over a one or two-year period.
  • As a freelancer / contractor it can be difficult to prove your income and quite often your income will vary from month to month.
  • Maybe you have income from more than one source and have more than one contract.
  • As a contractor if you are trading under a limited company your accounts don't often reflect your up-to-date company position.
  • Most high street lenders will ask for two or three years accounts which you may not be able to provide.
  • A good accountant will construct your accounts in order to minimise tax liability by showing the least amount of taxable net profit.
  • So what mortgage options are there for contractors?

    Whether a lender will give you a mortgage can depend on much more than having enough cash in the bank. All lenders use a process called underwriting to decide who they lend to. This process looks at how risky a client is based on their financial history, deposit size, type of property they want to mortgage and its location in the country.

    Many big banks tend to use pre-determined criteria to give an immediate decision. This is quicker than looking at each case individually but can leave potential borrowers struggling to obtain a mortgage. There are many reasons a borrower could fail to match exactly what a lender wants, including something as simple as a being employed on short term contracts or freelancing.

    Other lenders will take a case-by-case approach, judging each mortgage application on its own merits This is known as individual underwriting and involved a member of a lender's team looking at the case before making any decision.

    In recent times things have begun to improve with a few more lenders now prepared to offer mortgages to freelancers and contract workers at standard interest rates. The majority of these lenders are only available via the intermediary channel which means you'll need to go through a broker or independent financial adviser.

    Getting advice

    As specialist mortgage advisers, we can help you determine which lender best fits your needs. As professionally trained advisers, we will look at the whole market to find the best deal available. Our extensive experience with banks and building societies who are contractor friendly means we understand which mortgage cases are likely to be accepted by each lender.

    To see how a specialist broker can help you, simply complete the no obligation quote request form.


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