Soaring inflation suggests that another interest rates rise is on the cards – if not at the Bank of England’s meeting this month, then before too long. With some lenders raising mortgage rates in readiness, and property prices continuing to rise, anyone looking for a contractor mortgages, a large mortgage or professional mortgage might be wise to seek advice and make their move sooner rather than later.
Even if you don’t need a new mortgage immediately. It is possible to book a rate between three and six months before you need it, depending on the lender. This enables you to secure a competitive deal, particularly useful if rates rise, and avoid moving onto your lender’s more expensive standard variable rate as you will have everything in order well before you need it.
Day-rate contractor mortgages
Day-rate contractors on fixed or short-term contracts who are paid a daily rate. Often working in IT, finance and construction, can find it even more difficult to get a mortgage. As not all lenders will take all of their contract income into account. 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. This means many borrowers end up with a smaller mortgage than they would otherwise.
However, some lenders offer preferential terms for contractors, taking your day rate into account, rather than an average figure. These lenders will look the type of contractor you are, how long you have been contracting for and how long left on your contract. The longer you have been contracting and the stronger your track record, the better. Some lenders offer professional contractor mortgages so if you work in IT, accountancy or as a solicitor, there may be increased choice available to you at more competitive rates.
Professional mortgages
Lenders are often prepared to offer professional mortgages to applicants because they understand how the income of doctors, lawyers and accountants etc. is structured, and appreciate their future income potential. Some professions can access higher income multiples of up to six times income. As opposed to the standard four or 4.5 times for non-professionals. While lenders will take 100 per cent of variable income into account when working out how much you can borrow.
Large mortgages
Rising property prices mean borrowers may have to stretch themselves to take on a bigger mortgage. While borrowers are also turning to banks as it not make sense for them to cash in investments. Which are earning more interest rates than they would pay on a mortgage. As well as high-street lenders, it is worth considering whether the private banks offer a more suitable product.
Get in touch
The best way to find a new mortgage deal is to seek advice from a whole-of-market broker such as AWS Private Finance. We look at all the deals on the market to find the right one for your particular circumstances.
AWS have experience of arranging contractor mortgages and professional mortgages, knowing which lenders offer more favorable terms to these borrowers. We also have close relationships with the private banks so if you require a large mortgage. We can explore this option too. Get in touch for more information.
