Specialist Contractor Mortgage
You should always get a specialist contractor mortgage rather than walking into a high street branch.
Many contractors make the mistake, when looking for a mortgage, of walking into their local High Street bank or building society and asking for a mortgage there.
What happens is that the lender is not used to dealing with contractors and has no specialist contractor mortgages. They then tell the contractor that they need to produce three years worth of accounts. Usually you must be a contractor for at least 4 years to have those.
If the contractor can’t provide those then that is a deal breaker. The contractor goes away believing that he, or she, has to wait a few years before applying for a mortgage.
Based on Director’s Salary
Even if the contractor has more than four years’ experience and can produce the accounts, the next obstacle that they face is that the high street bank or building society only count the amount that the contractor is paid as a director. They then multiply that annual salary by 3 or 4 to work out how much they should loan the contractors.
As we all know, contractors like to pay themselves as little as possible so that they can take more of their money in dividends.
What the contractor should have done is to contact a specialist contractor mortgages broker.
Daily Rate Annualised
They have a good reputation with those who loan money. So, they can get contractors a mortgage without having three years of accounts. This is very useful. That’s because one of the times when contractors want to buy a house is when they first start contracting and have more spare money.
The second way that the specialist contractor mortgages broker can help is that they can get contractors mortgages based on their overall income. It is based on their whole daily rate translated to an annual amount.
The multiple is on that sum and not on their director’s salary. This makes a huge difference on the mortgage offer.
So, it’s always wise to get a specialist contractor mortgage.
Here’s one of those Specialist Contractor Mortgages