News, insights and advice for contractors
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Working as a contractor can offer you great flexibility and a work/life balance but it can also mean that it can be harder to buy a home.
Applying for a mortgage as a contractor can be tricky and often frustrating as lenders are used to conventional ways of lending to people who have a regular and static income. When it comes to contractors who have fluctuating income every month, it is harder to assess - and as such are seen as a higher risk applicant. Lenders often try to pigeon hole independent workers, meaning that a large part of their income is ignored, seeming on paper like they do not earn enough to get a mortgage.
However, do not despair, many lenders are beginning to realise the rise of contractors and the way that they work, utilising different methods to calculate income and understand the contract market. Plus, there are specialist lenders who work with contractors and independent workers who really understand how contractors work with a bespoke approach for each application.
CMME MortgagesHere at NWM we recommend a mortgage company called CMME - Mortgages for independent professionals.
They offer calculations designed for your circumstance where you can look at:• How much you can borrow• Monthly Payments• Remortgage Savings• Buy to LetGood news - there are now more options than ever for contractor mortgages!
With CMME there is a step by step process and they will work with you to get the best deal for you personally.
Here’s what you need to do first:
Get in touchContact CMME who have bespoke underwriters’ agreements with a comprehensive range of lenders enabling them to secure mortgage funding based on a multiple of your contract rate alone.
Know your minimum depositThe minimum deposit required for a mortgage is 5%, although it is favoured for more than 5%. You will be able to obtain a better deal if you are able to provide between 10 - 25%, so this is something that you should aim for. There are options available for less than 10% but these will be at a higher rate.
Maintain a spotless credit ratingLenders are still cautious to lend and having a satisfactory income and good deposit is not enough, you will need to prove a good credit rating history.
Have up to date documentsYou will need to prove your current contract status plus skills and experience. With this in mind, ensure that your CV is up to date along with all relevant experience, skills, work history etc. You will also need to have a copy of your current contract to prove your current earnings. These documents will help with showing how much you can afford on a monthly basis.
Once you have been through all the stages, you will be presented with an Agreement in Principle. You can use this to advise estate agents that you have a mortgage ready.
Once you have found a property that you would like to buy get in touch with us and allow us to amend all the paperwork to reflect the offer price, and then you’re good to go.
If you’re a contractor looking to apply for a mortgage, get in touch (through our sister company 2020 Accountancy) and let us recommend you to CMME - it’s a decision you won’t regret and could be the start of a great future in a new home.