Tip 1 – Use a Contractor Mortgage Specialist
Most popular mortgage lenders, bank staff and call centre agents are unfamiliar with the world of contracting, self-employed people and freelancers. So if, for example, you are an IT Contractor looking for the best mortgage deal or trying to get the maximum loan to suit your income and needs, you tend to fall outside of the ‘standard borrower criteria’ when it comes to providing things like employer’s details, proof of time employed, proof of earnings and so on. Not only do you not fit their standard profile but because these lenders may not understand your earnings profile and potential, you can be considered to be a higher risk!
Our recommendation therefore is simple – find a mortgage broker that specialises in working with contractors – come and talk to us. We provide specialist mortgage advice and practical help to contractors and self-employed professionals across a wide range of industry sectors.
Come and talk to us and save yourself hours of making calls, searching the web or trawling through the high street lenders trying to find someone who understands your employment status and doesn’t consider you a high risk just because your don’t fit the standard employment mould.
Tip 2 – Aim To Provide a Decent Deposit Amount
Trying to secure a 100% mortgage is generally not sensible or achievable these days – not just for contractors but for anyone! The best borrowing rates tend to go to those people who have managed to save or pull together a good deposit amount – 10% to 25% of the purchase price (or more) is ideal. If you have not managed this, or if you don’t have an existing property which has some equity to release, then there may still be mortgages available – but you will pay a higher rate or have to comply to other conditions to be able to manage the risk. The more equity that you can put towards a property as a deposit, the less risk the lender is taking on, and so they are able to offer lower rates, and lower repayments. The risk for you as a borrower is also reduced. So get saving or find other ways to get that deposit together!
Tip 3 – Try To Protect Your Credit Rating
Regardless of your employment status or the deposit level being provided, a mortgage application could be refused if your credit rating is not good. Many lenders are pretty strict when assessing risk because of the current economic climate, so it’s a good tactic to avoid anything which may give them a valid reason to decline. Do whatever you can to protect your credit rating – make sure credit card payments are always made on time, keep to the terms of any finance agreements or loans you might have, and even things like updating the electoral roll when you move house and keeping all your records straight can have a good impact.
There are many other things you can do to help yourself when it comes to getting the best mortgage deal especially if you are a contractor or freelancer – up to date current contracts to help prove your earning power, good record keeping to help demonstrate historical earnings, good clean tax accounting, etc.
If you are struggling to meet these aims or have been declined by the high street lenders, don’t worry – pick up the phone and get some sound independent mortgage advice – phone: 0330 088 1260