Mortgages for Project Managers
It is a lot easier to get great mortgages for Project Managers, Programme Managers and Interims nowadays than it was back in the day.
There are specialist mortgage brokers for contractors and freelancers nowadays.
They can get freelancers mortgages based on their daily rate and using just their contracts as proof of income.
That wasn’t always the case.
Indeed, it used to be very far from the case.
Mortgages for Project Managers via Banks and Building Societies
If you walk into a high street bank or building society, even today, they would make it very difficult for contractors to get a good offer. That’s if they got an offer at all.
I remember when I first started contracting I was earning more than double what I got as a permanent employee.
So, while I didn’t expect them to roll out the red carpet at the building society when I requested to see the manager, I wasn’t prepared for what he said.
Bank Manager Wanted Three Years of Accounts
He told me that, before the building society could make me a mortgage offer they would have to see three years worth of accounts.
I didn’t even have one set of accounts.
I was astonished that they rejected me out of hand when I was earning so much money.
It seems I would have to wait more than three years before I could get a mortgage.
And that was not all. No, that was not all.
Mortgage Offer Based on Director’s Salary
Even when I brought them three years worth of accounts, the offer they would make me would be solely based on my Director’ Salary.
As Limited Company contractors know, we try to keep our Director’s Salaries to a minimum.
It is financially much better to take as much of our ‘profits’ as dividends rather than as income.
This was a crushing blow.
It was many years before I attempted to enter the market again.
Property prices were 5 to 10 times the price they were when I first attempted to buy.
I would have become the proud owner of a house in Maida Vale for £18,000 prior to it being gentrified.
They are now worth over a million each.
So, what’s the situation now?
Is it all changed from those days?
Actually, mostly it hasn’t.
But there is a difference.
Better Mortgages for Project Managers, Programme Managers and Interims
If you walked into your local high street bank or building society, nowadays, you would probably get the same answer as I got all those years ago.
So, don’t do that!
You are more likely to be unlucky than lucky.
Specialist Contractor Mortgage Brokers
Many years later, it was another contractor who told me about specialist contractor mortgage brokers and recommended one to me.
One guy contacted a couple of banks and building societies and asked them to try mortgages for Project Managers, Programme Manager, Interim Manage and other contractors.
One or two dipped their toes in the water.
Contractors Paid Off Their Mortgages
What they found was that contractors made their regular monthly payments and didn’t default on their mortgages.
Those early contractors doing this paved the way for the rest of us.
So now these specialist contractor mortgage brokers can get contractors offers based on their daily rate annualised.
Their weekly rate is multiplied by 48 to get their annual salary.
This is used to determine their offer.
The offer will be up to 5 times their annual salary.
So, a contractor earning £400 a day could get a mortgage of up to £500,000.
This would be on a deposit of as little as £25,000.
Contract as Proof of Income
They wouldn’t have produce three years’ worth of accounts either.
All they have to do is produce their contract as proof of earnings.
So, someone who is in their first day of their first ever contract could get a mortgage offer on his or her very first day.
They could be in their dream home as a little as two weeks afterwards.
That’s a big difference from when I walked into the building society soon after starting my first contract.
Nowadays, there are some banks who will loan to contractors.
However, still the vast majority won’t.
That’s why it is best to use a specialist contractor mortgage broker.
Even if you are lucky with the bank or building society that you contact, the specialist contractor mortgage broker knows which mortgage lenders currently have the best offers.
Some of those are only for contractors introduced by the broker.
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