Contractors Renting Property
If you are one of those contractors renting property then you may be tossing good money down the train.
You would be far better off buying your own property.
The number of people renting in the age range of 25 to 34 is now 35%. That’s up from 29% previously.
That’s a lot of money going to landlords, therefore, that doesn’t need to.
Contractors of 40 years of age and more who try to get a mortgage to buy a house may find themselves still paying for it in their retirement.
Getting a Mortgage
Many contractors believe that they cannot get a mortgage because:-
- Building Societies and banks have told them that they need to be able to show three years worth of accounts
- They will be offered a multiple of their Director’s salary rather than using their daily rate
- Banks and building societies are asking contractors for large deposits
- They will have to pay higher interest rates because their profession is more risky.
Nothing can be further from the truth.
Banks and Building Societies
It did use to be the truth and it still is in many banks and building societies.
However, there are now specialist contractor mortgage brokers operating getting a number lenders to loan to contractors.
Lenders were sceptical at first but saw that contractors were good customers. They made their payments and, largely, didn’t default on their mortgages.
Mortgage Offers to Contractors
So now contractors can get:-
- A mortgage offer based on their daily rate annualised
- Only their contract needed as proof instead of accounts
- Mortgages with small deposits, often just 5% deposits
- Interest rates often better than the market rates.
Contractor Mortgage Quotes
Moreover, they can get quotes in the same day as they apply and can usually move into their dream house in a month or under.
According to Shelter, those renting will pay, on average, £41,000 in rent over the next 5 years. That’s 41% of the value of a first time buyers home.
In London it is even worse. Those renting there will pay a whopping £89,000 in rent over the next 5 years. That’s 23% of the value of the average first home.
So, if they took out a mortgage it would only cost them £66,000 in mortgage repayments over the next 5 years. That’s with a 95% mortgage with a 5 year fixed rate.
So, renters will lose out to the tune of £23,000 over 5 years – and they won’t have anything to show for it at the end.
There is no minimum number of years you have to be a contractor before you get a mortgage.
Specialist Mortgage Brokers for Contractors
Specialist mortgage brokers can get first time contractors mortgage quotes on the very first day of their first ever contract.
If a contractor earns £400 a day their mortgage offer would be not too far off £500,000. That’s even if they have just started contracting.
Contractors renting property must be mad.
If you want to find out more and see how much you could get just fill in the form below and someone will be in touch.