Here are five suggestions from SJD that can make a real difference to the success of your mortgage application:
Use a contractor mortgage specialist
It’s very easy to assume that you can get out there and find the right mortgage deal single-handedly. 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 of speaking to specialise mortgage brokers, that understand your status, through CMME – you can make sure that your mortgage application is fast and hassle-free.
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.
You may also find our other contractor mortgage guides and calculators helpful:
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.
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.
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.
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 email@example.com or fill out the below form: