Contractor MortgagesMortgage & Protection advice
Contractor Mortgages & Independent Professionals
Top Mortgage Solutions are dedicated to supporting Britain’s fast growing community of Contractors, and Independent Professionals, such as – Doctors, Lawyers, Pilots, Locums, Sea Farers, Accountants, IT Professionals and many other industries where the income structure simply doesn’t fit the norm.
We know that being independent makes you different and too often that means that government and conventional service providers end up leaving you in the lurch. We think that’s wrong and, since we launched in 2006, we’ve made it a huge part of our policy to ensure you get the mortgage you deserve.
Mortgage issues for contractors
Using traditional criteria lending criteria for contractor mortgages in many cases simply does not fit.
For those contractors using umbrella companies, many of your expenses are not included in your income calculation and therefore can lead to a shortfall in what you can borrow.
Likewise, for contractors using limited companies, or acting as sole traders, the same situation arises if you retain monies within your company. With the added requirement of two to three years accounts, problems may be caused if you do not have this information available.
Our solution for Contractor Mortgages
Every Contractor or independent professional is different, and every mortgage is different. That’s why our Mortgages are always made to measure – handmade by our expert advisors, based on a deep understanding of your unique circumstances and needs. For us it’s all about listening carefully, asking the right questions and being ready to work hard on your behalf.
The main issue has been that as contractors you are not considered an employee in the traditional sense, and if you’re a sole trader or a limited company you do not run a business with huge overheads, thus a need for bespoke underwriting criteria for contractor mortgages was required.
Over time lenders have realised that more and more professionals, like you, are moving to becoming independent. Mortgage lenders have now finally understood this and have created various underwriting procedures allowing them to offer contractor mortgages in a more appropriate way. Unfortunately, and to complicate the matter, mortgage lenders that now offer contractor mortgages all underwrite in differing ways.
At Top Mortgage Solutions, for contractor mortgage applications we can annualise your contract rate, liaise directly with many different mortgage lenders, and leverage this as an income figure for your mortgage funding.
What we do depends on our experience, our expertise and the relationships we build. Our advisers are specialists in contractor mortgages and are dedicated to serving independent professionals – it takes time to learn how the market works and develop the skills required to find solutions that unlock real value.
Here at Top Mortgage Solutions our advice is not only specifically tailored to your circumstances as a contractor or independent professional, but as part of one of the largest Mortgage Networks in the market the advice we give is completely impartial. Not every lender out there is ‘contractor-friendly’ but we are constantly liaising with lenders to review their lending policies.
As we work with a comprehensive, and continually evolving, range of mortgage lenders, at Top Mortgage Solutions we constantly review your mortgage before, during and after your application to discuss your options. Our advisor’s priority is to ensure that you pay as little as possible on your mortgage. Our tailored advice is paramount, as your current lender is unlikely to contact you and make you aware of better financial options. It is well noted within the industry that many clients could save by simply reviewing the mortgage options at the appropriate time. Because of this, we will contact you at the right time and initiate a review with you.
Our aim is to look after your immediate and ongoing mortgage needs and provide you with an outstanding level of service!
What happens when contractors get a mortgage?
When lenders assess a contractor mortgage without specialist underwriting, they will want to verify income by seeing two to three years’ worth of accounts or tax returns. As lenders have not kept up with changes in the labour market, their criteria will fail to accommodate the growing ranks of independent professionals.
Umbrella company contractors will find that many of their expenses will not be considered when calculating income if the lender understands the concept of an umbrella company at all. Limited company contractors will experience a similar problem, as any money retained in the company, for tax purposes, will also not be considered. Both methods of operating are likely to lead to a shortfall in borrowing.
Generally, banks and building societies only lend to those who are considered a low risk, and contractors are regarded as high risk. The reason being is that lenders worry that these individuals will struggle to afford their monthly payments when their current contract comes to an end.
However, at Top Mortgage Solutions, for contractor mortgage applications we can annualise your contract rate, provide proven a track record of expertise or future contracts and liaise directly with many different mortgage lenders to leverage this as an income figure for your mortgage funding.
How do I obtain the right Contractor mortgage?
Although it might seem impossible, contractors can obtain competitive mortgage funding. It is even possible to secure funding with lender’s that may have previously turned them down; however, these professional needs direction from us.
Presenting the required information correctly is a fundamental aspect when applying for a contractor mortgage, to ensure you can borrow the funding required. The application must be presented in such a way that the lender looks at the borrower and sees them as a good risk.
There are two problems that need to be tackled:
- Proving full income in a suitable way to support the level of funding required.
- Providing proof of long-term experience within an industry to show future employability, demonstrating that the monthly payments will still be paid when the current contract comes to an end.
What do I need to do?
Top Mortgage Solutions can help with the process as we have a thorough understanding of contractors and contractor friendly mortgage lenders. With help from the lenders, we have access to bespoke contractor-based underwriting meaning contractors are able to avoid the traditional frustrations.
This unique underwriting ensures that your income will be assessed using a multiple of your gross annualised contract rate, using this figure to calculate how much you can borrow based on your true earnings.
Essentially this means you will be able to secure a larger mortgage than if traditional underwriting was used as you are no longer penalised for using a tax efficient method of earning. Our Mortgage advisor’s will be able to present your circumstances upfront to the most suitable contractor- friendly lender.
There are two essential pieces of documentation we use to evidence longevity and affordability to the lenders:
- A copy of your current contract
- An up to date copy of your CV
These items will allow us to approach lenders even with an absence of traditionally requested self-employed documents such as trading accounts.
Will I qualify for a Contractor mortgage?
Every application is assessed on an individual basis, but the broad criteria are:
1) You must have a current contract in place.
2) You need to prove continuity in the type of work you do.
3) Borrowers new to independent working are acceptable.
4) Income can be defined via annualised rate.
The only documentation Top Mortgage Solutions requires to support an application is a copy of your current contract, an up-to-date CV, identification and bank statements. We can assess how lenders view your circumstances based on feedback from banking sector decision makers, with no obligation.
What interest rate can I get as a contractor?
Before independent professional mortgages were created, many contractors, freelancers and consultants had to rely on self-certified mortgages with higher rates and higher fees. But today, with our help, there’s no reason why you shouldn’t be able to secure the same mortgage rates as someone on PAYE. We work closely with you to understand exactly the kind of mortgage you need, then we research the market to identify the lender best placed to help.
I Work on a contract abroad, paid in foreign currency can I still get a mortgage?
Most lenders are now adverse against lending to professionals who are in receipt of income other than GBP Stirling. However, this doesn’t mean that you won’t be able to get the funding you need. Our team of experts have access to lenders who will continue to assess your income as if it was in Stirling, using the same methods of bespoke underwriting for Contractors.
What is an independent professional mortgage?
An independent professional mortgage is no different from any other mortgage in terms of pricing. The difference is how the lender assesses your application. Many lenders are now coming to terms with the independent professional lifestyle and have chosen to update their lending criteria. They no longer look at traditional forms of income assessment, but rather channel the application towards bespoke underwriting criteria, specifically designed for the independent professional community. In this way, as an independent professional, you can be assessed on a multiple of your annualised rate, allowing you to borrow in line with your true earnings. By using Top Mortgage Solutions, you can access the same competitive interest rates available to people on PAYE.
How is a contractor mortgage application assessed?
A standard mortgage application is assessed based on salary plus dividends and/or net profit if you run a limited company. If you’re using an umbrella company then it will be your PAYE income. Traditionally, lending criteria have been based on individuals being either employed, or self-employed. The issue with this traditional approach is that contractor mortgages don’t fall into either of these categories, meaning the sum you’re able to borrow falls short of what you should be able to secure.
A contractor mortgage application however, is evaluated based on the gross contract rate, with less emphasis on how you get paid. We use your current contract rate to establish a borrowing figure, and a copy of your CV, to demonstrate your skills and experience.
As a contractor do I need a limited company?
The quick answer is no!
However, as a contractor and/or an independent professional, setting up a limited company could provide a range of tax efficiencies which make it the preferred choice for many. It also means that an Accountant can take care of your income and tax so that you don’t need to spend the time completing frustratingly complex tax returns, freeing you up to concentrate on your business.
We suggest you speak to an Accountant to discover the best for your individual circumstances.
Still have questions?
Contact our expert team on, email us at firstname.lastname@example.org or complete our 30 second enquiry.