Contractor Mortgages
The sensible, effective alternative to High Street lenders for contractors who need competitive mortgages.
Why lenders often reject contractors without a second glance
Trading accounts and umbrella payslips are often the main causes of contractors having their mortgage applications declined.
For limited company contractors, accounts and SA302s don’t highlight retained profit. For umbrella contractors, it’s the additions and deductions on their payslips that confuse advisors and call centre operatives.
So, here’s a heads up: if you’re either type of contractor, don’t waste your time going directly to a High Street lender!
At best, the mortgage loan they’ll offer you they’ll likely base on just the taxable element of your income. And we know you’re worth way more than that!
Worst-case scenario, they’ll reject your application. This will leave a black mark on your credit file that may deter other lenders from helping you.
A specialist mortgage broker with a direct line to underwriters
Clarity and Freelancer Financials have partnered to help Clarity umbrella contractors optimise their income when looking to buy a home. That means no accounts, payslips or SA302s.
Freelancer Financials is a family-owned firm of specialist financial advisers. Headed by founder and CEO John Yerou, the team has spent the past two decades helping independent professionals secure competitive contractor mortgages.
That team is now ready to help you secure a mortgage based on:
• an ‘annualised’ multiple of your day rate;
• a copy of your current contract;
• sport, driving license, utility bills, etc.);
• your credit history.
Contractor Mortgage Calculator
Find out at a glance how much you could potentially borrow* with Freelancer Financials’ quick and easy calculator:
How much can I borrow on my daily rate?
Use the slider to work out how much you can borrow using your existing day rate:
*This calculator provides you with a guide only. It uses an ‘average’ multiplier of your daily rate to work out how much you can borrow.
It’s not a mortgage offer. To get a precise quote, fill in the form and an advisor will be in touch with you shortly.
Or, call the team at Freelancer Financials on 0208 421 7999.
Important: Your home/property may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
Financial advice is given by Freelancer Financials, a trading name of Mortgage Quest Ltd, which is authorised and regulated by the Financial Conduct Authority under firm reference number 312484. Mortgage Quest Ltd is a whole of market independent mortgage broker, registered in England No. 5013239. Registered office address Avondale House, 262 Uxbridge Road, Hatch End, Pinner, Middlesex, HA5 4HS. Mortgage Quest Ltd is a credit broker, not a lender. The FCA does not regulate some investment mortgage contracts.
How do contractor mortgages and traditional mortgages differ?
In terms of the actual mortgage deal, there’s no difference whatsoever. Contractors can access the same mortgage deals available to PAYE-employed applicants.
The differences lie in the underwriting process and the assessment criteria. They make a huge difference to umbrella contractors, and that’s where Freelancer Financials can help.
n.b. this type of underwriting is completely different to the self-certification mortgages available in the past. The FSA (as was) outlawed those following the 2007/08 financial crises.
The danger of relying on a High Street lender
If you approach a generic high street lender, they’ll typically assess your affordability on salary and dividends drawn. Most contractors operate in a tax-efficient manner. In other words, they draw a minimum salary and restrict dividend drawings to avoid higher rate tax.
This tactic is great from a tax planning perspective. But, it has an adverse effect when applying for a mortgage. It drastically reduces your potential borrowing because of the standard criteria high street lenders use.
When you go through a specialist broker like John and his team, it cuts that nonsense out. They’ll speak to their network of underwriters who’ll base your contractor mortgage affordability on your gross annual contract earnings. This enables you to borrow much more than if you applied using trading accounts.
Next steps to getting a mortgage that reflects your contract income
To get a free, no-obligation quote from Freelancer Financials, complete our Online Mortgage Quotation form. An experienced advisor will be in touch by return, and they’ll look after your enquiry from initial consultation to completion.
Contractor mortgages should cost you no more than mortgages secured by permanent employees. Get advice from a contractor mortgage broker experienced in working with independent professionals first and you’ll be fine.
Freelancer Financials’ team has strong relationships with the underwriters who’ll be assessing your mortgage application. Make touching base with them your first move to ensure you get the offer your income deserves!
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