Contractor Mortgages

Looking for a new mortgage? Work as a contractor and cannot find a new home loan? You’re not alone. Thousands of independent workers find it difficult to find and secure contractor mortgages.

We can help. Integrity Mortgages are impartial mortgage advisors who appreciate that not everyone is a 9-5 employee and that some people like to go their own way.

Our team of mortgage experts know the unique challenges contractors face and have developed relationships with lenders who appreciate we aren’t all the same.

If you’re looking for a contractor mortgage, contact us today to find out more!

Contractors and mortgages

There are many benefits to being a contractor. You have more freedom to work when and where you like. You can work outside the traditional company environment and have the ability to operate completely independently.

There are downsides though. Especially when it comes to financial matters such as borrowing.

Even though people have been contracting and self-employed for decades, many traditional lenders are still not flexible enough to make their standard mortgage and loan products work. Most lenders cannot even agree a firm definition of what a contractor actually is let alone make a mortgage work for you!

That’s where Integrity Mortgages comes in. We offer advice in mortgages for the self-employed, contractors and limited company directors. If you’re looking for a contractor mortgage, we can help.

Why work with Integrity Mortgages?

Mortgages are what we do. It’s in our name and in our DNA.

As well as traditional first-time buyer and buy to let mortgages, we also advise in self-employed mortgages, contractor mortgages and mortgages for company directors.

• We have the experience, the industry contacts and access to specialist lenders who appreciate we aren’t all from the same mould.
• We can walk you through the entire process from beginning to end.
• We can help you prepare your mortgage application so it stands the highest chance of success.
• We can offer advice and practical tips to help you get a contractor mortgage.
• We can be with you every step of the way before, during and after your mortgage application.

To help you on your journey to finding a suitable mortgage, we have compiled some of the most frequent questions we hear around contractor mortgages.

If you have a specific question or would like us to help, contact Integrity Mortgages today.

What is a contractor mortgage?

A contractor mortgage is designed to work for people who don’t have a permanent position within a traditional company setting. They provide competitively priced lending for those outside the normal employee framework and take into account the differences in how a contractor works.

Contractors can be freelancers, self-employed, agency workers, fixed term contractors, zero-hour contractors or something else entirely.

Typical products we can provide include:

• IT contractor mortgages
• Trade contractor mortgages
• Agency contractor mortgages
• Zero hour contractor mortgages
• And many more!

Where traditional mortgage products fail you, contractor mortgages help.

Who can qualify for a contractor’s mortgage?

Remember we said that many lenders cannot even agree on the definition of what a contractor is? That’s where things get tricky with traditional lenders.

Typically, a contractor will be someone who is self-employed and working on a fixed term, day rate or flexible contract. You will have a defined job role and a formal offer or work but may have flexible work hours and place of employment.

Contractors are also responsible for their own business and have complete control over who they work for and when.

Aren’t contractors the same as self-employed?

In many cases, contractors are regarded as self-employed. You will likely pay your own tax and National Insurance and be classed as self-employed by HMRC. But not all contractors work in the same way.

One key difference is the day rate. Some contractors are paid on a day rate and self-employed people are often paid by the hour, week or by the project. We can use the day rate when applying for a contractor mortgage.

This means your earnings are calculated on current day rates rather than how long you have been a contractor.

Do I need to compile three years of accounts for a contractor mortgage?

You don’t need to provide three years of accounts to apply for a contractor mortgage. You will require proof of income and the further that goes back the better, but it is not necessary to have 36 months of evidence.

Integrity Mortgages work with select mortgage providers that can assess your eligibility for a mortgage based on your day rate alone, which can work in your favour.

Can I borrow the same amount as an employee?

Yes you can. Gone are the days when contractors and the self-employed were regarded as riskier to lend to. There are now so many contractors out there that lenders have realised you are no more or less likely to default as an employee.

As long as you can afford repayments and pass the affordability criteria, you can borrow as much as you need to live the life you want.

Do contractors pay higher mortgage interest than employees?

No you don’t. Contractors will pay interest rates dependent on the mortgage, the perceived risk and lender criteria. Your method of employment has nothing to do with it.

Some mortgage lenders will actually offer lower interest rates to contractors as you can often be in a better position financially.

How long do I need on my contract?

Contractors with a contract will find it easier to qualify for a mortgage the longer you have left on that contract. However, as some contractors are paid on day rates, we can use that as qualifying criteria for a mortgage.

We have a range of lenders on hand that will work with us to provide competitive mortgages in a wide range of situations.

What income is used when calculating a contractor mortgage?

Your income depends on how you have set yourself up as a contractor. If you’re a sole trader or partnership, your net profit is used as income. If you’re a limited company, your salary and dividend are used to calculate your income.

If you run a limited company and don’t take a salary or take a low salary, this may cause some issues with affordability. We have ways around that, so if this is you, contact us to see how we can help.

How much of a deposit will I need for a contractor mortgage?

The practical minimum deposit for any mortgage is 5%. However, the more you can put down as a deposit, the better.

Not only will this lower the overall mortgage and monthly payment for your benefit, it will also help lower your perceived risk with the lender.

Can contractors get buy to let mortgages?

Yes you can. While affordability and income are still important criteria for borrowing, buy to let mortgages are more about business. Lenders assess the viability of the business, i.e., the chances of you making a profit from your property than your personal income.

You will still have to pass affordability assessments, prove your income and have a decent deposit of at least 25-30% to qualify for a buy to let mortgage though.

I’m a contractor but my partner works full-time can we still get a mortgage?

Yes you can. In fact, you may find it easier than if you were applying alone. As long as your partner has been in work consistently over their working life and earns enough to pass the affordability test for the amount you want to borrow, you should be fine.

Do I apply as an individual or as part of my company?

If the mortgage is for your home, you apply for a contractor mortgage as an individual. If you’re applying for a commercial property or a buy to let mortgage to run as part of your business, you apply as your company.

What paperwork will I need for my contractor mortgage application?

We can help with most things but we cannot save you from paperwork!

A mortgage application will require proof of identity, address and previous addresses. You will also require proof of income.

That proof of income can be in the form of a contract offer as long as it has your rate and beginning and end date. It can also be in the form of company accounts. We will need the signed copies to be able to use them in your application.

We have sought to answer the most common questions you’re likely to have around contractor mortgages but we are sure you have more. Contact the team here at Integrity Mortgages to discuss your needs. We would be happy to help!

 

Important Information

You should be aware that the Financial Conduct Authority does not regulate some forms of buy to let mortgages.

About us

A fee is payable for arranging the mortgage once your mortgage has agreed. This will be a fixed fee of £399.

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