We understand that your circumstances as an umbrella employee, contractor, or switching between the two may be more complex than a ‘typical’ mortgage client and getting a mortgage could prove challenging.
Don't panic, we have provided the following five tips on securing a contractor mortgage.
1. Use a contractor mortgage specialist
It’s very easy to assume that you can get out there and find the right mortgage deal without any help. However, the market in general has tightened, and now there is plenty you need to do before you can be approved for a mortgage. This is especially the case if you are a contractor working through an umbrella company or your own limited company and don’t neatly fit within any of the high street lenders’ standard box ticking criteria.
Therefore, we recommend CMME, a mortgage adviser that specialises in working with umbrella employees, contractors, freelancers and the self-employed.
2. Save, save, save for a deposit
The average deposit requirement for a property is usually in the region of 10%-25%. The more deposit that you can put into a new property, the lower the interest rates, and the lower the repayments on a monthly basis.
From 19th April 2021 however, first-time buyers are able to benefit from various help-to-buy schemes. The government’s mortgage guarantee scheme, which is accessible to both first-time buyers and existing homeowners is set to run until December 2022, making saving a deposit much more accessible during this period.
3. Keep your credit rating as good as possible
Your credit score is key to helping you secure a mortgage. Even if you have a good income and a sizeable deposit, you could still have a mortgage application refused if your credit rating is poor. Lenders are being far stricter, so it’s best to avoid anything which may give them a reason to refuse your mortgage. Which means it’s vital to keep your credit rating as good as possible.
4. Be ready to provide your paperwork
Whether you are currently working as an umbrella employee, your limited company or switching between the two, you will be required to show proof of income.
Some lenders may ask to see your payslips, however, a specialist mortgage broker will always work with them to make the contract on an annualised basis the core focus.
5. Stick within your limits – work out what you can afford to pay
It’s important that you are realistic about what you can afford to pay each month. You might find you can borrow more from a lender, but this may result in higher monthly payments than you can actually afford.
It’s also important to consider that interest rates can go up, and if you’re on a variable rate then your monthly payments may no longer be affordable, especially if you’ve pushed yourself to your limit already.
Our partner CMME specialises in providing mortgage advice for independent professionals and umbrella employees, with access to some of the most competitive rates on the market. So however you choose to work, CMME will fight your corner and ensure the right mortgage deal is available to you.
