If you are a day-rate contractor on a fixed or short-term contract working in IT, finance or construction. You will probably already know that it is more difficult to get a mortgage than it is for employees on fixed incomes. Many high-street lenders don’t really understand contractor mortgages, with many assessing contractors as self-employed applicants, basing income on salary and dividends rather than the day-rate model.
Traditional high-street lenders have often struggled with applications from those with varied income sources. Either offering relatively limited loan options as they don’t take all of the contract income into account, or not lending to such borrowers at all. This means many borrowers end up with a smaller mortgage than they would otherwise. If indeed they can get a mortgage at all.
However, the good news is that the situation is improving. Perhaps as lenders realize that many people no longer aspire to a single job for life. But are seeking a better work/life balance with more flexibility. Subsequently, more lenders are prepared to offer mortgages to contractors or are enhancing their affordability and considering contractors with a minimum track record of one year’s employment within the same line of work, down from two years. For example, Vida Home loans will consider applications from contractors with only three months left on their contracts. And allowing them to borrow up to 48 times their weekly rate.
Other lenders, such as Kent Reliance, are opening up their range of contractor mortgages with loan-to-values of up to 90 per cent with no maximum loan amount across selected products, with fixed and percentage fee options.
It is also good to see some of the larger high-street lenders getting in on the act. Barclays is another bank which would not lend to contractors for years. But has changed its stance, offering competitive terms to contractors.
How AWS Private Finance can help
If you are a contractor, the best way of enhancing your chances of getting the mortgage you need is to consult a whole-of-market broker such as AWS Private Finance. We have particular experience in arranging large loans for contractors. Knowing which lenders offer preferential terms and will take your day rate into account rather than average figure.
We will find the right deal for your circumstances, whether you are taking out a new mortgage or refinancing; please get in touch for more information.