Bespoke Underwriting for Contractors

Lenders traditional income criteria

Lenders have a tendency to pigeon hole people. In simple terms they view individuals as employed or self employed.

When assessing employed individuals for funding, lenders will access PAYE for the purposes to establish what can be borrowed. Some lenders may take into consideration a percentage of additional income such as guaranteed overtime. They will require salary statements to verify your income.

When assessing self employed individual’s lenders will look to verify income via accounts and will either look at salary plus dividend or net profit. Also they want to see evidence of two to three years accounts.

The issue for contractors

Using traditional criteria for contractors in many cases does not fit.

For those of you 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.

For those of using limited companies or acting as sole traders again the same situation arises if you retain monies within your company, added to this might be the problem you do not have the required number of years of accounts.

Solution

We have worked vigorously for a number of years to influence lenders to look at contractors in a different light. Our main issue has been you are not an employee in the traditional sense and if you are a sole trader or a limited company you do not run a business with huge overheads. The conclusion has been bespoke underwriting for terms for contractor mortgages.  In essence we can annualise your contract rate and utilise this as an income figure for mortgage funding.