Specialist Knowledge in the Contractor Mortgage Arena
A large number of companies who serve the professional IT and Engineering community have partnered with us. Examples include SJD Accountancy who serve over 10,000 contractors Crystal Umbrella one of the largest umbrella companies in the UK.
Why?
They were finding that a number of their clients we failing to secure competitive mortgage funding on a frequent basis.
Many contractors prior to the credit crunch relied on self-certified mortgages where little or no checks were conducted by lenders on income verification, however you paid a higher rate of interest. Since the onset of the credit crunch these types of mortgages have been removed from the market.
Lenders have increasingly become risk adverse. They are all looking to lend to those that they perceive as low risk. In the eyes of the lender contractors do not fit this criteria. The reason for this is two fold:
Firstly, contractors are unlikely to be able to prove the right level of income to support the level of funding using the lenders standard criteria of income assessment. For example, if your daily rate is £500 per day and you are looking to purchase a property at £350,000 and you run a limited company but only salary and dividends of say £45,000 this is likely to restrict your lending to a maximum of £225,000.
Secondly, lenders are concerned what if your current contact comes to an end and how will you continue to afford the mortgage?
We have managed to overcome both these issues with a number of lenders by utilising bespoke underwriting terms for contractors.
One of the main reasons behind the companies’ philosophy was to ensure that contractors were not penalised for being more entrepreneurial than employees when it came to securing their mortgage funding. As an organisation we are proud of the fact that we have campaigned for a more flexible approach by lenders when looking at mortgages for contractors. In fact, we have always felt is hugely unfair that contractors had to rely on self certified option and this option is something we have never advocated and fought hard to establish more cost effective options.
