Once you have left permanent employment and made the step in to contracting, there will be lots of questions you will want answering. One of these will be ‘how do I get a mortgage as a contractor?’
Our partners, Contractor Mortgages Made Easy, have put together their five top tips to help contractors secure mortgage funding:
1. Approach a specialist broker
Finding a suitable mortgage deal when you are a contractor can be problematic. The reality is that most banks and building societies are not familiar with the contracting sector. This means you will not fit in to their standardised procedures, and as a result there will be a shortfall in the amount you are able to borrow.
CMME have agreed bespoke underwriting terms for contractors with a number of lenders, allowing them to arrange mortgages based on a multiple of your current contract rate.
2. Save a reasonable deposit
The more deposit that you are able to put down on a property, the less risk the lender is taking on. As a result, you will have access to better deals and lower repayments. The minimum deposit you need is 5%, but for the better rates you need to be looking to save in between 10% and 25% of the property value.
3. Clean up your credit history
Even if you have an adequate income and a large deposit, lenders are still likely to be hesitant if your credit rating is poor. Check your rating before applying for a mortgage and make sure you have done everything you can to ensure it is as good as possible.
4. Collate necessary documents
You will need to provide CMME with an up to date CV, and a copy of your current contract. Together these will be used to prove current earnings and your skills and experience. Both of these will ensure you face no problems regarding affordability.
5. Look at your finances
The amount the lender will be willing to lend you, may be much higher to what you can realistically afford. Look at your financial commitments in detail and work out how much you could comfortably repay each month. You should also remember to take in consideration that interest rates can rise and you could end up paying more each month then you plan for.
Mortgages for contractors are becoming increasingly popular and CMME are continuing their work to influence more lenders to become ‘contractor-friendly’. If you would like to speak to an expert about your mortgage needs, contact CMME on 01489 555 080.
