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Mortgage options for Contractors

Being a contractor might make your mortgage application slightly different than people who aren’t self-employed. However, this doesn’t mean it has to be more difficult? Read on to find out!

Self-employed mortgages can strike fear into the heart of contractors. But the truth is, they shouldn’t. While there are some procedural changes between self-employed mortgages and more conventional mortgages. The same boxes still need to be ticked for both.

What do you need for your self-employed mortgage? 

So what do we mean by this? Well, like conventional mortgages you’ll still need to prove you have a good credit history and you have a sustainable income. More importantly, you need to show that your expenditure isn’t so extravagant that you can’t afford the repayments on the mortgage that you’re applying for.

When lenders are calculating how much you can borrow they will do this by method complex algorithm, pulling data from the Office of National Statistics as well as your own income & outgoings. The simple 4 to 5 times income ruling of old now can only be used as a loose guide.

When lenders are conducting their affordability checks for self-employed people, they will tend to look at your total salary using your tax returns & tax overviews from the last two to three years. If you are seeking a self-employed mortgage as a contractor, then you may also have to provide proof that you have further work in the future which will help sustain your income. Overall, the key thing to bear in mind when you’re trying to get a self-employed mortgage is that you are able to demonstrate your earnings as a self-employed person. Asking your accountant for your latest three years SA302's & tax overviews is a minimum starting point.

But what if you’re recently self-employed? Don’t worry we’ve got you covered. What happens here is that if you explain your situation to your prospective lender then they may just look at one year of accounts. If you’ve just started up there are options here too. For example, your lender may look into whether you have worked in the same area of business before becoming a contractor.

What self-employed mortgage should I go for?

There are specialist lenders who offer mortgage deal specifically to those with self-employed mortgages. However, there are also mortgage lenders that primarily offer conventional mortgages that can also lend to those who are self-employed. So don’t be afraid to start browsing! After all, the more you look the better chance you’ll have of finding the best deal.

This means that you should have the option of going for a variety of fixed rates or tracker rates. If you’re not sure on the definitions of these or which one to go for then check some of the other articles on our site or contact one of our team at Mortgages.Online. We can give you impartial advice which can help you find a lender that would be willing to take your situation into account as a self-employed person. This means that we can help you find a rate which help suits your current situation as some lenders are more likely to be comfortable lending to self-employed persons.


Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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