A Guide to Remortgaging for Umbrella Workers

As the UK continues to battle inflation and rising interest rates, many people are looking to secure more favourable mortgages on their properties.

Umbrella workers and contractors are no different, but there’s a misconception that being a temporary worker makes it harder to find a mortgage or remortgage provider. This isn’t necessarily the case.

In this guide, we answer the key questions that umbrella company employees often have about remortgaging.

What is remortgaging?

To remortgage is the process of moving your current mortgage to a new deal with your existing lender or a different provider.

There are a few reasons you may want to remortgage: take advantage of better interest rates, free up cash – for home improvements, for example – or reduce your monthly repayments.

How does remortgaging work?

It’s fundamentally the same process as your initial mortgage application. First, you’ll need to get an Agreement in Principle from a lender.

Next, you’ll need to consider whether you’re liable for an exit fee (or similar) for leaving your current mortgage provider. At this stage, it’s also worth considering any costs a new lender might charge, and any solicitors fees.

When can you remortgage?

You can remortgage at any time, but mortgage providers offer a period of fixed-rate payments. Remortgage before this ends and you may be charged an exit fee.

At the end of the fixed-rate period, you’ll likely be moved on to a variable rate, which can make your repayments more expensive.

Many people start looking at remortgaging around six months before the end of any fixed-rate period. This gives you enough time to assess the available options and apply.

How long does it take to remortgage?

Generally, the remortgaging process takes between four to eight weeks from the date of your application, but this may be quicker or slower depending on your finances and the lender you choose.

Is remortgaging a good idea?

A mortgage is a financial product, generally repaid over long periods, and you may lose your home if you fail to make repayments.

As such, it’s not a decision to be taken lightly and will depend on your personal circumstances. So, it’s best to speak with your mortgage provider or an independent financial adviser for an informed opinion from a qualified professional.

Is it hard for umbrella employees to remortgage?

Being an umbrella worker shouldn’t be an issue. Any lender will scrutinise your finances during your application, and provided that they’re in good health – and that they can see you’re earning a regular income – you should be considered a low-risk borrower.

In fact, operating via an umbrella company can be beneficial, as you’ll have an employment contract and be paid via PAYE, which demonstrates regular income.

A final thought

Remortgaging as an umbrella employee is reasonably straightforward, and it can be an effective way to reduce your monthly repayments while securing a more attractive rate. And as an umbrella worker, you’ll have evidence of regular income that a lender can use to assess your remortgage application.

However, getting a Mortgage as a contractor isn’t always easy. It often means additional paperwork and jumping through hoops to get the Mortgage you deserve. As an umbrella employee at Parasol, you get access to an initial free mortgage appointment with partner CMME. CMME are experts in dealing with complex income and understand how you work and how you get paid.

For more information on our partnership with CMME and what Parasol can do for you, please get in touch.