Reasons to be Joyful
As the nights start drawing in and the winter chills bite, we have some warm news to cheer-up contractors seeking a mortgage.
Many contractors seeking to secure their first property purchase will have experienced firsthand how tough it can be to get on the property ladder. If you’re a self-employed contractor working through your own Ltd Company, it can be challenging trying to prove your earnings are mortgage-worthy. The majority of high street lenders that you talk to will require at least two to three years accounts.
However, contractors will be delighted to hear that they can now apply for a mortgage that will assess heir borrowing affordability based on their contract rate alone.
A number of important factors need to be satisfied for contractors to be assessed in this way:
1. Be able to provide a contract with assignment schedule
2. Be on a minimum 3 month contract
3. Have a minimum of 4 weeks remaining on the contract
“Contract Based Underwriting” enables contractors to borrow substantially more than if they were being underwritten using lenders standard affordability criteria. If you need to calculate how much you can potentially borrow based on your contract rate, multiply your daily contract rate by the number of days you contract for per week and then by 46 weeks. As a guide line, you can potentially secure a mortgage of up to 4.5 times this total sum. Therefore, a contractor on £375 per day could potentially borrow £388,125 to purchase their dream home.
We recommend that contractors approach a Contractor Mortgage Specialist to arrange this type of mortgage. It is not worth the risk going to standard mortgage broker that doesn’t have the knowledge or experience in securing mortgages for contractors.