Mortgages for contractors
There are many advantages to working on a contract basis and choosing to become a contractor, however it can cause some issues when it comes to mortgages.
Getting mortgages for contractors can often be simple and straight forward, but can also be more complicated, depending on your circumstances. There are lots of options that are available in most cases and contractor mortgage specialist will help you to find the best deals.
The biggest challenge and difference between a contractor mortgage and employed persons mortgage is being able to provide evidence of income.
Contractor stats UK
There are significant numbers of contract workers in the UK and this is increasing consistently over time.
- Number of self employed workers (UK): 4.56 million
- Over a third of all self employed are contract workers
- Number of contract workers UK: 1.9 million
- London and South East accounts for nearly half of all contract workers
The number of contract workers in significant in the UK and it’s important to get the very best expert mortgage advice. You will find that certain mortgage lenders are more flexible towards contract workers than others.
We understand that it can be more difficult at times to access mortgages for contractors and are able to offer advice to simplify this process.
Contractor applying for a mortgage
There are a number of options and routes available to you when applying for a mortgages for contractors.
Most of the normal channels would work to get a mortgage for a contractor as long as there are no complications. You might find that it is easier and better to speak to a contractor mortgage specialist to save time, and often get a better rate.
When you apply for a mortgage as a contractor, you have several options:
- Specialist contractor mortgage broker would often have lots of experience and expertise in this area. This should help you to save time searching for the right mortgage lenders and should save you money on mortgage deals and rates
- Bank or building society may be able to offer you a contractor mortgage if they are flexible in their lending criteria towards your circumstances. Some high street lenders might not be suitable depending on their lending criteria
- Online mortgage broker might also be an option for you and could save you on mortgage broker fees. This route is generally more work for you as you’ll need to process the application yourself and gather any income evidence etc.
Remember, there are also several mortgage types you can consider such as standard mortgages, buy to let, equity release etc. This means it is worth considering what type of loan you need before seeking further advice.
Can contractors get a mortgage?
In most cases you should be able to get a mortgage for contractors and often the rates will be the same as any standard loan.
There will be several key areas where your mortgage application will be assessed to make sure that the loan is affordable and suitable. To ensure that you get the best deal for your circumstances, here are some things to think about:
- Length of time working as a contractor (years)
- Proof of income (SA302 etc)
- Type of income (e.g. salary, dividend, profit etc.)
- Accountant reference or certificate
- Type of contract (e.g. short term, long term, or fixed term)
- Business structure
- Amount of deposit
One of the most important bits about getting a mortgage for contractors is being able to provide proof of earnings. There are lots of potential challenges for this and it can make things extremely difficult if not done correctly.
As a contractor you might have difficulty being able to provide sufficient evidence to some lenders, depending their lending criteria.
Find out more about evidencing self employed income using SA302s in our guide on the topic.
Mortgage broker for contractors
We’re extremely proud of our long history of helping and supporting self employed and contractors to get the best mortgage deals.—
Getting mortgage advice for contractors can be different to standard mortgage applicants, mainly because of how your income works. There are several reasons why a mortgage broker for contractors might be better suited to you than a normal mortgage broker.
Some of the reasons why a mortgage broker for contractors might be more suitable:
- Experience packaging contractor mortgages
- Access to lenders and deals for contractors
- Less chance of being refused or declined a loan
- Quicker and less hassle
- Potentially better mortgage rates for contractors
Think very carefully about which company is best to process your mortgage application and do your research.
Mortgages for self employed contractors
If you’re a self employed contractor then there are a number of different mortgage options depending on how your company is set up.
The most common business structures for self employed contractors are:
- Limited company
- Partnership
- Sole trader
Each of these types of companies will have its own challenges when it comes to getting a mortgage for self employed contractors. The most important factor will be how to provide evidence of your income to lenders and the lender criteria.
Most of the mortgages for self employed contractors that we deal with are for limited companies or sole traders. Most lenders are happy to accept applications for self employed contractor mortgages with:
- Three years accounts (less with some lenders)
- Bank statements as evidence of income
- Dividend and salary
- SA302s
- Annual income and tax returns
The best mortgage lenders for self employed mortgages for contractors will be based on your own circumstances and income. There can be various things that could affect your income month on month such as gaps between contracts.
If you need help or advice on how to get your mortgage set up and the best deals then you can contact our team of experts. We have access to over 50 lenders including high street banks and thousands of mortgage deals to help find the right one for you.
For information on self employed mortgages CLICK HERE.
For our blog on self employed mortgages for contractors CLICK HERE.
Best mortgage for contractors
There are literally thousands of potential mortgage deals at any one time and the options can seem endless. Finding the best mortgage deal for a contractor can seem mind blowing for most people, especially without the right advice.
Some mortgage lenders are certainly better than others when it comes to mortgages for contractors.
The best mortgage deal will be based on:
- Credit score
- Income and expenditure
- Contract type
- Liabilities and assets
- Credit history
You will often be able to get a mortgage from a normal high street lender in most cases, unless there are problems with credit issues or income.
Mortgage rates and lender incentives can vary dramatically so it’s worth shopping around to find a good deal. Some lenders will have a better track record than others when it comes to getting the best mortgage for contractors.
Mortgage advisors for contractors
Getting good mortgage advice from a qualified advisor can make a big difference when applying for a mortgage for contractors.
There are several different routes to consider to get your mortgage for contractors, but a specialist mortgage advisor can offer:
- Higher chance of success (experience in dealing with contractors specifically)
- Better deals and rates for contractors
- Less hassle and time for you
- Able to deal with any issues more effectively
- Will understand which lenders are best for contractors
Mortgages for contractors with bad credit
In the current economic climate, it is becoming increasingly common that people have issues with various levels of bad credit.
Getting a mortgage with bad credit is often possible and lenders are becoming more and more flexible towards lower credit scores and credit files. The level of credit problems will have a direct impact on how complicated your mortgage application will be and the rate you will pay.
The most common credit problems are:
- Missed credit payments
- Defaults
- County Court Judgements (CCJs)
- Individual Voluntary Arrangements (IVAs)
- Bankruptcy
- Mortgage arrears
For you to get the best mortgage deal with bad credit, you may need to speak to a mortgage specialist in this field. There are usually a number of options that we will look at for you and ultimately aim to find the best deal for your circumstances.
For information on securing a mortgage with poor credit CLICK HERE.
Mortgage specialists for contractors
The construction industry is hard work and as a contractor, we appreciate that your time is precious and that you will often be extremely busy.
There are many challenges to finding a mortgage as a contractor, which is an area that we specialise in. There’s nothing worse than paying more than you should or wasting your time on bad advice and service.
You will need someone that understands exactly what you need and how mortgages work for contractors.
essential MORTGAGES is authorised and regulated by the Financial Conduct Authority.
Useful resources
Gov.uk – Self-employed: detailed information