Contractors Mortgages – Here are three things you need to know about getting a mortgage!
More than ever, workers are choosing to shun the constraints of a 9 to 5 job and instead, seek the freedom of running their own business.
Whilst there are many benefits to being self-employed, some people are still concerned about what this could mean for getting a mortgage.
But how much more difficult is it to secure a mortgage deal when you’re not on a payroll? And are there ways to show lenders that they can trust you?
Why Choose Us
- All industries considered
- No minimum contract value required
- CIS (Construction Industry Scheme) accepted
- Up to 95% LTV
- One years accounts accepted
- Day rate can be used
We’ll concentrate on comparing mortgage rates with the following in mind:
- Fixed, tracker, discount and variable rate mortgages
- Repayment and interest only mortgages
- Free survey and cash back deals
- Early repayment charges
We’ve put together 3 things we believe every self-employed worker should know when they’re looking to secure a mortgage:
It / Is Possible
In the past, if you were self-employed you would very likely have to rely on a ‘self-certification’ mortgage. However these are now banned, due to both borrowers and lenders abusing deals formed on loose affordability checks.
Today, self-employed property owners have access to the same mortgage deals as everyone else. The only difference being that lenders will ask for – on average – two years’ worth of your accounts or tax return history. If you’re a contractor, you may also be asked to provide proof of any ongoing or future work you have in the pipeline, as an assurance that you’ll be able to cover your future repayments.
Start Creating a Paper Trail
So once it’s time to provide evidence of your past 2 to 3 years’ work history, what will you need to show lenders?
You should aim to present at least some of the following:
– Your yearly accounts from a qualified account.
– An SA302 form, showing the amount of income you have declared to the tax man. Your accountant can send off for this, or you can apply for it yourself directly from HMRC.
– Knowledge and receipts of your monthly outgoings, such as food, telephone and car bills. This will help both yourself and lenders to gain a better assessment of what you can afford on mortgage repayments. Better yet, try reducing these costs in the year before you apply for your mortgage.
– Strive to improve your current credit rating. This includes paying off any debts and credit cards, as well as making sure that you’re on the electoral register, as this too can help to improve your credit score.
The best thing you can do is start to create a paper or electronic trail of your earnings and forecasted projects, starting today. The earlier you start to collect proof of your earnings, the easier it will be for you when it’s time to find a good mortgage deal.
You / Will Need Insurance
When you’re self-employed, you have only yourself to rely on. You may even have a family who are also reliant on you. Therefore, when you are self-employed it is crucial that you have some kind of insurance in place, to protect your family and yourself financially, for if the unthinkable ever did happen.
If you run your own business and are the sole employee, then in the event you were unable to work, you’d become vulnerable to earning little to no income, putting you at risk of missing your repayments. That is why for many self-employed workers, income protection is a must, as a form of insurance that can provide regular ‘pay outs’ to help cover your monthly costs – including mortgage repayments – should you become too ill to work.
Are you self-employed? In desperate need of professional advice? Looking to secure a mortgage? Contact Amber Mortgage Solutions today. Call us on 01702 619221.