Mortgages for contractors are set to become more popular
A recent study found that half of the UK working population will be engaging in some sort of freelance career by 2020.
The study, titled “The Evolution of the On-Demand Economy”, reported that the official growth of the self-employed segment of the labour market is 3.5%, faster than any other sector. If this rate of growth continues for the next 5 years it is predicted that 1 in 2 individuals will be working in a freelance capacity by the end of the decade.
The business landscape has changed in such a way over the past 10 years that contracting and freelancing is now a practical option for many people. With such a huge number of individuals choosing to become their own boss, an increasing number of banks and building societies are looking to accommodate the borrowing needs of this sector.
There are now more lenders than ever before offering mortgages for contractors.
You may recall the days prior to 2008 when applying for a mainstream mortgage was near on impossible as banks tried to pigeon-hole contractors into the ‘self-employed’ or ‘employed’ category, meaning a large part of the income was ignored.
The fact is that in 2008 there was not much choice for those looking for a contractor mortgage, with only 3 lenders with core contractor policy. Most were forced down the more expensive, self-certified, route where income evidence was not required, and higher rates and fees were charged as a result. Now in 2015, there are 12 mainstream lenders who have put in place proper contractor lending policy. These lenders are able to use full contract rate as the basis of their calculations, allowing maximum lending, and painting a better affordability picture for the lender.
Even more cautious banks and building societies have begun to relax traditional criteria, and will now accept 1 year trading history and will use retained profit for limited companies, instead of salary and dividends only.
CMME can help you secure a mortgage as a contractor
Contractor Mortgages Made Easy has worked hard to influence a number of lenders to rethink their lending criteria and become contractor-friendly. They continue this dialogue to further increase the number of mortgage options open to the contractor community.