Mortgage Tips for Contractors

Here are five suggestions from SJD that can make a real difference to the success of your mortgage application:

1. Use a Contractor mortgage specialist
It’s very easy to assume that you can get out there and find the right mortgage deal single handed. The problem is that most bank staff or call centre agents are not familiar with the contracting world. This means that you tend to fall outside of their ‘standard script’ when it comes to asking for things like employer’s details, proof of time employed and so on.

Our recommendation therefore is to find a mortgage broker that specialises in working with contractors, freelancers and the self-employed. This is why we have developed a relationship with our chosen broker, CMME. This approach will save you hours of making calls or wandering around the high street trying to find a lender that will lend to independent professionals.

CMME has negotiated specialist mortgage underwriting terms with a number of large High Street lenders, enabling them to arrange a mortgage based on your income, rather than on the number of years you have been working as a contractor, freelancer or self-employed professional. You will need some documents to support your application such as a copy of your contract, some ID and your bank statements.

By avoiding branch or call centre staff who are not trained to deal with your specific situation - and instead speaking to specialise mortgage brokers, that understand your status, through CMME – you can make sure that your mortgage application is fast and hassle free.

2) Aim for at least a 10% deposit
The 100% mortgage is sadly just a distant memory, and the best rates now available go to those people who have managed to save a deposit. 10% to 25% is ideal. If you have not managed to do this, or if you don’t have an existing property which is worth more than you paid for it, then there are still mortgages out there - but you will pay a higher rate. The more ‘equity’ that you can put into a new property, a deposit, the less risk the lender is taking on, and so they are able to offer lower rates, and hence lower repayments on a month to month basis.

3) Keep your credit rating as shiny as possible!
Despite a good income and a sizeable deposit, you could still have a mortgage application refused if your credit rating is poor. Lenders are being far stricter, so it’s best to avoid anything which may give them a reason to say no. Which means it’s vital to keep your credit rating as ‘clean’ as possible. Even things like not updating the electoral roll when you move to a new house, or missing a single credit card payment, can make all the difference when applying for a mortgage.

4) Make sure your contract is up to date
You will need to have a copy of your signed contract to hand which is totally up to date. This must clearly state the length of your contract, and your current contract rate. CMME use this information to support your mortgage application, and to save you the stress of having to produce references and three years of accounts.

5) Know your limits
It’s vital that you are realistic about what mortgage repayment you can afford to pay each month.  The figure that a lender is willing to offer you, based on a multiple of your contract rate, could result in higher repayment figures than you can actually afford, based on other financial commitments you have. So be sensible. It’s also important to realise that interest rates can go up, and if you’re on a variable rate then repayments could cease to be affordable, especially if you’ve pushed it to the limit already. The expert advisers at CMME can help you to find a mortgage that suits your needs now, but also taking the future into account.

 

You may also find our other contractor mortgage guides and calculators helpful:

If you are looking to take that first step on the ladder, or to remortgage an existing property, then CMME will help you find a solution to suit your needs. Whether you want to find out the best rates available or help calculating how much you can borrow, call 01489 555080, email CMME on sjd@cmme.co.uk or fill out the below form:

SJD are not authorised to offer regulated mortgage advice. SJD are introducers to CMME. 
Your home may be repossessed if you do not keep up repayments on your mortgage.
CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: Albany House, 5 Omega Park, Alton, Hampshire, GU34 2QE. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.

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SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's Largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
  • Money back service guarantee. All your Emails received by 4pm on any normal working day will be answered the same day. Should it be necessary to leave a telephone message it will be answered same day/following day latest or we will make a full refund of that months fee.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new client services helpdesk on 01442 275789 or email: janice@sjdaccountancy.com. Our new client services helpdesk is open Monday to Friday (8am to 6pm).

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own Limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.