Contractor Mortgages
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What is a contractor mortgage?
A contractor mortgage is a standard mortgage that someone who works as a contractor applies for. There isn’t a unique type of mortgage specifically for contractors.
Am I classed as a contractor?
Lenders don’t have a single definition for a contractor, making it hard to know if you’re classed as one.
Typically, a contractor is someone who provides skills or services to a company for a fixed period of time. Companies often hire contractors for specific projects or tasks, outlining the work expectations and duration in a contractual agreement.
If you are a cards-in construction worker on the Construction Industry Scheme (CIS), you should read our page on CIS mortgages instead.
Can I get a mortgage as a contractor?
Yes, you can get a mortgage as a contractor.
However, it might be more challenging than for someone who is employed because your income might not be consistent.
Therefore it’s important to work with a mortgage broker and a lender who understands how you make your money.
You can still be considered for special schemes, too, like Shared Ownership.
How will my income be assessed?
Lenders assess your income in various ways, depending on how you’re paid and how much you make.
Some lenders calculate your income based on your day rate, assuming a five-day workweek over a 46-week year to account for holidays and gaps between contracts.
Alternatively, others assess your income based on your annual earnings over the past two or three years, looking at your tax calculations.
Another lender might work off your payslips or invoices!
Consequently, speaking to an experienced mortgage advisor, like us, can be very useful. We can look at the different ways lenders assess your income to find the right one for you.
How long do I need to have been a contractor before I can get a mortgage?
While some lenders need a two-year track record, others need much less.
Additionally, some lenders also want a set period of time remaining on your current contract, or evidence that your contract has been renewed previously.
Ultimately, the more experience you have, both in your relevant industry and as a contractor, the better.
If you are a self-employed contractor, meaning your tax isn’t deducted at source and you have to submit a tax return, you will typically need at least two full years’ tax calculations and overviews before lenders can consider you.
Why The Mortgage Store Chorley?
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Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
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I’m on a zero hours contract, can I get a mortgage?
Workers on zero hours contracts typically aren’t contractors; they’re employees.
In short, it is possible to get a mortgage while on a zero hours contract, but it depends on how long you have been working on that basis.
How much can I borrow?
There isn’t a set calculation that can tell you how much you can borrow. Every lender works things out differently.
First, it’s important to check whether an individual lender can consider lending to you at all before looking at borrowing potential. Some may have specific criteria around contracting that you don’t meet, such as how long you have been a contractor or the maximum length of time allowed between contracts.
After that, every lender does an affordability assessment as part of the application. This includes looking at your income, financial commitments, and credit history, among other things.
This isn’t unique to contractors – employed applicants go through the same process.
Book an appointment with us if you want an expert opinion on what you’re likely to be able to borrow. We’ll find out all about you and your finances, then we can research suitable lenders and borrowing potential.
What deposit do I need?
That depends on your personal situation. Generally you need at least 5% of the purchase price. You might need more, for example if you have bad credit.
We can help you determine what level of deposit is likely to be needed.
Can I get a contractor mortgage with bad credit?
Potentially, yes. It depends on what exactly the bad credit is. We’re happy to take a look at your credit report to see if we can help you.
How can The Mortgage Store Chorley help with a contractor mortgage?
Looking for a mortgage as a contractor? Look no further than The Mortgage Store Chorley!
Although we’re based in Lancashire, we can help anyone looking to buy or remortgage anywhere in the UK. We understand complex income arrangements, know which lenders can be more flexible with their criteria for contractors, and can help you determine what you can borrow and what deposit you’re likely to need.
We’ll guide you through the process, finding mortgage options tailored to your needs and income.
Contact us today and let’s get started on finding the right mortgage solution for you!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
