Much like with self employed clients contractors often approach us being more concerned than we tend to expect, because in fact there are some fantastic mortgage products available for contractors, some of which actually boost the borrowing capacity above their permanently employed or traditionally self employed counterparts! Here are just a few examples:
Day rate contractors – This is most common, certainly in our experience, in the IT industry but can be seen in several sectors. There are more and more lenders who would be happy to consider a multiplication of your date rate rather than assessing the personal tax returns and limited company accounts you likely complete each year. An example of this could be Day Rate x Days worked per week x 48 weeks of the year – or £350 x 5 x 48 = £84,000pa. However, lenders do assess this differently as this example is not a blanket option, and some even have minimum day rate or annual income figures to be willing to proceed on this basis. Call us to discuss more!
Construction Industry Scheme – This ever popular scheme requires the “employer” to deduct a flat rate of tax at source, and then for a personal tax return to be submitted each year by the contractor where they will either be due a tax rebate, or be required to pay more. The great news is that some lenders will allow CIS payslips to be used rather than the tax return. Some lenders will assess as few as 3 months worth, whereas others may want 12 or 24 months, but either way it presents a great option to increase your mortgage choices.
Fixed term / temporary contractors – Not having a permanent contract by no means restricts you from exploring your options to secure a mortgage, the key here is history and consistency. If you have worked in the industry for a long time, or have 12 months as a temporary / fixed term contractor you will likely have far more options because you can demonstrate a track record of demand and your personal earning potential, but it is always worth a conversation with one of our team to secure your options now or to help plan ahead and get you mortgage ready!
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £495.
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