What problems do Contractors have getting Mortgages?
If a contractor walked into a High Street bank and tried to get a contractor mortgage he or she would have all sorts of problems. As everyone knows a Limited company contractor tries to pay him or herself as little as possible so they can pay themselves in dividends. However, the bank would simply take the contractors actual salary paid by the company and multiply it by 3 or 4 or 5 depending on what they normally offer as a multiple.
It means that the offer would be even less than they would have got as a permanent worker. Also the contractor would also have to provide three years accounts and so would have to have been contracting for at least three years.
What is a Specialist Contractor Mortgage?
Specialist Contractor Mortgage providers have sprung up over the last few years which can get contractors much higher mortgage offers and they don’t have to show three years of accounts.
Because of the reputation they have built up they have credibility with mortgage providers and can get contractors mortgages based on their gross pay, i.e. a multiple of all they earn and not just what they pay themselves from their limited company. Contractors can get their mortgage quotes in just a few days too through these specialist contractor mortgage providers.
Who are ContractorFinancials?
ContractorFinancials are one of those specialised contractor mortgage companies They have spent many years overcoming the objections of High Street lenders and they can now offer unique mortgage underwriting based on a simple multiple of your contract rate alone. In this way you can get the same competitive deals that a permie would get – but as you earn a lot more you would get a much higher offer.
Whether you want to climb the property ladder or release capital to pay off other commitments or just treat yourself to a new car, lenders are simply falling over themselves to grab market share.
The ContractorFinancials Contractor Mortgage Service
They are an Independent Financial Advisers (IFAs), regulated and authorised by the Financial Services Authority (207478).
Using our unique contract based underwriting we are able to source
- competitive mortgage schemes with High Street lenders
- mortgages available in the the first week of your first contract
- with or without a deposit even including a scheme that allows you to borrow 125% of the property value
- offsets, cheque-book mortgages, fixed and discounted schemes
- credit repair schemes for those with poor financial histories
- buy to lets
- let to buys
- overseas mortgages
- commercial mortgages
We pride ourselves on offering what is known as ‘full advice’ based on your needs and circumstances, whereas many intermediaries and institutions will now only provide you with ‘information only’ on mortgage schemes. We are also pleased to provide what is referred to as a ‘whole of market’ service, which means we can advise you on and arrange a suitable mortgage from all the lenders and from all of their product range.
We are happy to point out that, unlike many brokers, we do not charge you for our services. Instead we rely solely on an introducer’s fee from whichever lender we use. As part of new Financial Services Authority regulation however, we do offer you the option of being charged a fee instead, which would be 0.6% of the loan.
What makes us different from less specialised brokers:
- You may ask yourself why you would ever need to enlist the help of a contractor specialist mortgage adviser. There are over 160 mortgage lenders in the UK and many appear to be falling over themselves to lend to you, you can log onto a mortgage sourcing website and seemingly obtain an agreement in principle in seconds for any number of schemes and the financial advisers in every bank and estate agent in the country seem only too happy to help. Unfortunately the experience of the majority of contractors proves that it just ain’t that easy.
- Many lenders backtrack when a live application hits their underwriters, online agreements in principle prove worthless as they are not sufficiently flexible to reflect the reality of short term contractor work and less specialist brokers run for cover when they hit the first hurdle, give up completely or try to push you down the uncompetitive ‘non-status’ mortgage route. All this uncertainty represents wasted time that you may not have in today’s hectic housing market.
- We have put a lot of work in over the years to transform the house buying process for contractors from a lottery into something as close to a certainty as possible. Our rejection rate is less than 1% on applications. We achieve this by carefully presenting an application in such a way as to emphasis your employability, sustainable high income and future prospects (we uniquely ask for your CV so that our contacts at the lenders are assured that they are dealing with a professional in the field). We carry out the entire liaison with the lender on your behalf from initial calculation of your monthly mortgage payments through to your moving date, ensuring that you have one less thing to worry about at, what can be very stressful stage of your life. This leaves you free to concentrate on the contract.
- We try to use generous multiples of up to 4 times your contract rate rather than use projections of your accounts. Higher loan sizes are therefore far more likely to be achievable, with reduced supporting paperwork and no delay whilst your accountant is contacted for current years projection etc.
- We avoid schemes that feature extended loyalty periods that lock a borrower into uncompetitive rates. We similarly try to offer options that avoid the usual mortgage indemnity premiums charged by most lenders where borrowers can find less than 10% deposit. We are able to secure finance for contractors with little or no deposit on this basis. Where a contractor is interested in a re-mortgage we can often ensure that all legal and admin costs are met by the new lender.
- We do not believe that, as a contractor, you should pay a premium on your mortgage rate because of the manner that you work. Unlike many less specialised mortgage brokers, we always try to avoid the inflated mortgage rates charged by so called ‘self certification’, ‘sub prime’ or ‘non status’ lenders who many advisers suggest are the only sure way of getting the finance you need as a contractor.
- We do not pressurise you to take any insurance’s out with us. Many advisers will charge you additional admin fees for placing your mortgage that can be as high as 1-2% of the loan size – this is in addition to introducers commission that they also receive from the lenders. Our overheads are very low and so we have always been able to offer this service without any additional financial burden to our clients (we are conscious of the fact that you’ll already have more than enough to cope with finding stamp duty, valuations fees, admin fees to the lenders, solicitors bills, removals costs etc etc without us piling on more grief). We will be happy to help if you need additional advice on areas such as life cover to protect your loan but you are under no obligation whatsoever to use us for this.
- We avoid the mortgage lenders poorly trained ‘branch’ staff wherever possible. We work very closely with key underwriters at the centralised admin units of many institutions so that they now fully understand and view positively your status as a contractor. These close relationships with the actual decision makers enable us to dramatically reduce the time taken to secure your mortgage. Each week we even resubmit cases to our contacts where a client has been turned down by the same mortgage companies High Street outlets! Unfortunately the branch staff will have wasted crucial weeks before declining a client and we must then try hard to make up for lost time. It is clearly far better to deal with our key relationships at outset.
- We will only approach those lenders who have proven by their actions to be flexible enough to make certain that your house purchase actually happens. There are a huge number of mortgage providers, seemingly falling over themselves to lend you money but most will suggest that they are contractor friendly only to then backtrack once it is too late and your house is in jeopardy.
- We fully vet the individual lending criteria of the institutions to ensure that we only place applications where we know for certain the case will be successful. In this way the most important one of the many ‘variables’ involved in the house buying process is removed. At the same time as making sure the finance can be arranged we will always ensure that rates are competitive with those available for permanent employees. In an increasingly complex mortgage market we believe we add real value to the house buying, process leaving you to concentrate on what you do best – your contract.
- Please complete the following ‘mortgage finder‘ and we will e-mail you with a range of the type of options that are available to you. We will wait for your feedback and can then tailor our advice specifically to your exact needs and circumstances.
The value of investments may fall as well as rise and past performance is not a guide to future returns.
Your home may be repossessed if you do not keep up repayments on your mortgage
Financial advice is given by Contractor Financials, which is a trading name of Contractor Financials Ltd and is regulated and authorised by the Financial Conduct Authority.
Complete a ‘Mortgage Finder’ with your requirements and we will be in touch shortly.