28 August 2017

Here’s how to get a mortgage if you’re a contractor.

Many self-employed professionals believe that it’s almost impossible to get a mortgage as a contractor and would therefore rather continue renting than attempt to buy their own home. But are contractor mortgages really that hard to come by?

As a contractor, it can certainly look like a tough proposition to secure a mortgage but there are many things you can do to position yourself favourably in the eyes of potential lenders.

We’ve put together a list of handy tips to help you secure a contractor mortgage below:

Ensure your contract is up to date

Make sure you have a copy of your most recent contract to hand when putting together your mortgage application. It’s 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 lengthy breaks between contracts

There are many perks to working as a contractor, not least being able to take breaks between contracts should you wish to. This is great for holidays or similar. However, you should try and avoid taking breaks of anything more than 6-8 weeks. This is because lenders want to see consistent income and contracts stretching back 12-24 months prior to your mortgage application – long gaps between income are not viewed favourably.

Be realistic about your repayments

A common mistake many professionals make when searching for a contractor mortgage is being unrealistic when it comes to estimating their repayments. It’s really important when putting your mortgage application together that you make sure the repayments you commit to are going to be affordable for you.

Have at least a 10% deposit

Most lenders will require you to have a good-sized deposit when you apply for a contractor mortgage. Not so long ago it was possible to secure a mortgage with just a 5% deposit, but those days are gone now. Ideally, you should aim to have at least a 10% deposit ready to pay upfront.

If suitable, look for mortgages that allow additional payments

Some contractors may find themselves with more money than they need on a regular basis thanks to high-value or frequent 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 quicker.

Give the high-street lenders a miss

Securing a mortgage from a high-street lender is where the difficulties start for many contractors. You may find that your initial application is accepted in principle due to their very light and superficial credit checks. However, once you’ve placed an offer on a property, high-street lenders will often do a more in-depth review of your finances, and then withdraw at a later stage.

Instead, we suggest that you do your homework and look for specialist lenders. Companies that are experienced specialists when it comes to contractor mortgages are much more likely to produce favourable results. Also, using a professional mortgage broker within this field can prove invaluable.

How CMME can help.

Why should CMME be your first port of call if you’re looking to secure a mortgage as a contractor?

Their Senior Mortgage Consultants have the expert knowledge to deal with your situation as a contractor, whilst ensuring you get the best deal from the whole of the market.

With CMME, you’ll be able to borrow up to 5.49 times your annualised contract rate, with no company accounts needed.

For more information, contact us here at Source Accounting and we'll give you an introduction.