As a contractor, the most important starting point when choosing a mortgage is ensuring that you contact a ‘contractor friendly’ mortgage broker. It may seem self-explanatory, but many professionals entering the contracting world fall at this hurdle, attempting to use high-street banks and traditional lenders for such a specialist market.
The reason that this is so important is that the majority of the banks and financiers are not familiar or aware of the ins-and-outs of the contracting profession. Usually, if a mortgage provider is approached by a contractor, they do not get much further past “Who is your employer?” or “What is your annual salary?”
By using a contractor mortgage specialist, self-employed professionals can get competitive rates based around their contract rate, not having to rely on years of service in fixed positions. A good contractor mortgage provider will have experience of dealing with big lenders, and will know exactly how to present an application from a contractor.
*When choosing a contractor mortgage, use a contractor mortgage specialist.*
Despite a contractor mortgage being something that a professional can obtain without the proof of an annual salary, they would however be required to have a copy of an up-to-date, signed contract available. Keeping on top of your contract, by ensuring that the length of service and daily rate is clear to see can be vital in securing a mortgage loan. Contractor mortgage lenders require this as evidence, saving the contractor masses of administrative and clerical hassle.
*Ensure that you have an up to date contract at hand.*
This may seem like a rather obvious point to make, but when applying for a mortgage, make sure that you can actually afford it. It is always advised that self-employed individuals who are thinking of buying a house should shop around for the best deal for them. The tendency for first time buyers is to simply jump for the first proposal they encounter, but by shopping around, you will get to see a wide array of deals out there on the market.
*Contractors are notoriously taken for a ride when applying for mortgages. Make sure you shop around for a deal right for you.*
Although contractors are traditionally on high income and may have high ‘take home pay’, when applying for a mortgage, it is what your finances demonstrate that is key. Despite an impressive income and a sizeable deposit, a contractor could still have a mortgage application declined if they have a bad credit rating, or poor financial organisation. Mortgage providers and money lenders have been understandably stricter in recent years when it comes to accepting applications, therefore displaying strong financial management is key.
*Having strong financial management, from a good contractor accountant to a strong credit rating is very effective when applying for a mortgage.*
Many contractors should be wary of mortgage lenders that include insurance clauses within their services. Some lenders will insist that part of the process of taking out a mortgage requires certain insurances to be adopted as additional amenities. These unnecessary add-ons are more often than not an attempt for a mortgage provider to tie the buyer into paying more for very little.
*Ensure that you are fully aware of any hidden insurances when choosing a mortgage provider.*