First-Time Buyer Mortgages for Contractors
- Common-sense underwriting
- 95% mortgages available
- Only 1 year’s accounts needed
- 5-star service
How do I find the right Mortgage?
A few years ago, it used to be a lot trickier to find a mortgage deal as a contractor than it is now. With self-employed people representing a significant, and growing, portion of the UK workforce–and with many of them wanting to own their own home–contractors, freelancers, sole traders and limited company directors are a market that lenders cannot ignore.
Some mainstream lenders have started to take a more flexible approach to assessing applications from contractors, but it’s really the specialist lenders who have led the way in catering to those with non-conventional incomes. The smaller, niche-market lenders will take a more open-minded and creative approach to your application than the high street brands, understanding where you are coming from in terms of your earnings and how your income is structured, and offering mortgage products that you won’t find widely advertised.Read More
It’s always best to talk to a specialist mortgage broker who will be able to show you the best options in your circumstances. Our team at The Mortgage Centres has a huge amount of experience in helping contractors find the right mortgage with the right lender–feel free to get in touch today.
First-Time Buyer Mortgages For Contractors Information
Will being a Contractor work against me?
Being a contractor will not have the same impact now on your chances of successfully obtaining a mortgage than it might have done a few years ago. While most mainstream lenders still take a highly cautious approach to their borrowers, and prefer to deal with salaried employees where income and references are easily verifiable, there are specialist lenders who take a more open-minded approach.
With a common-sense approach to assessing your annual income, and an understanding of how contractors can actually be earning far more than their salaried cousins, their affordability assessments will take a wider picture into consideration. Once you have verified your income and credit rating, you’ll find you have access to mortgages on the same terms as any other first-time buyers, and in fact might get a better deal.
What Documentation will I need?
There is no definite one-size-fits-all answer to this question. There are a wide range of lenders now in the market, each with their own policies and criteria they apply to mortgage applications from first-time buyers, and their approach will also depend on the nature of your business – whether you fulfil contracts on a self-employed basis or under your own limited company structure.
There are a few things lenders might ask for, but it would be worth being ready with the following:
- Your business accounts (potentially up to three years’ worth, but there are now many lenders who will be satisfied with just one year’s accounts);
- Your SA302 year-end tax calculation from HM Revenue & Customs (from the last one to three years’ worth – you can obtain up to 4 years of forms);
- A signed copy of your current work contract, showing the contract rate;
- Bank statements showing your income (typically three months’ worth);
- Proof of ID and address (for example, a passport or other photo ID, and latest utility bills).
What about my Credit History?
A big part of a mortgage application is an assessment of the applicant’s creditworthiness. This is measured according to two factors:
- Credit scoring – each element of the applicant’s personal information is given a score – this could include age, job type, length of time at current address, etc.
- Credit checks – a credit check on the applicant’s borrowing history made with one or more of the credit reference agencies.
The three main credit reference agencies in the UK are Experian, Equifax and TransUnion (until recently known as Callcredit). They hold details of all your credit arrangements and your history of repayment, good or bad–any issues from missed payments on store cards through to serious problems like County Court Judgements (CCJs) and bankruptcy will be mentioned.
Adverse credit items can include something as day-to-day as mobile phone bills or utility items–anything where you have a contract in place that requires you to pay monthly amounts. It’s a good idea to obtain copies of your reports from all three companies to make sure the information they are holding is accurate (including your current address!) and to promptly take steps to correct them if anything is wrong (e.g. any outstanding debt that you have since settled).