One of the UK’s largest and most recognised mortgage lenders to IT contractors has opened its ‘Contract Based Income Criteria’ to now allow ANY professional contractor to access a mortgage. This major development means that, regardless of the sector that you specialise in, you can now be assessed simply on a multiple of your contract rate for lending purposes.
This is a major milestone for the UK’s freelancing community as it unbolts the contract based mortgage market to any professional contractor. In order to qualify for a professional contractor mortgage, you must be on a minimum daily contract rate of £300 or £75K per annum. The best part is that you can still apply even if you are just starting out on your first contract.
Ian Wilson, Head of Sales at Halifax Intermediaries, said “We are pleased to be able to extend our existing IT contractor policy. This is a natural step forward in supporting self employed customers in their aspirations to get on the property ladder. We hope that in widening our policy we will be able to help more customers benefit from our range of products and services.”
Other lenders offering contractor mortgages to non IT professionals include Clydesdale Bank, Northern Rock, Skipton and Furness Building Society. However Halifax will consider contractors on their first contract, whilst other lenders typically require a minimum contracting history of 2 years.
Contractor mortgages allow you to borrow substantially more than traditional affordability criteria offered by banks and building societies. You can calculate how much you can potentially borrow by multiplying your daily contract rate by the number of days contracted to work in a week and then by 48 weeks in a year. Professional contractors can secure borrowing of up to 5 times this total. A contractor on a daily rate of £300 can generally secure borrowing of £360,000 to purchase or remortgage a house.
John Yerou, MD of Freelancer Financials said “This is a major milestone for the UK’s freelance community as it unbolts the contract based mortgage market to any professional freelancer. After years of promoting how contractors operate and the low risk they present to lenders this is a major breakthrough.
We have worked hard over the past few years building strategic relationships with key decision makers with leading high street lenders in relation to simplifying what qualifies as relevant earnings for lending purposes for contractors and freelancers. We will continue to raise this issue with major financial institutions in order to ensure contractors can access a wide selection of mortgages without having to settle for reduced borrowing.”