Contractor Mortgages
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Best Self Employed Mortgage Lenders

Best Self Employed Mortgage Lenders | Contractor Mortgages | Scoop.it
It seems crazy, but there are no set rules that tell lenders how to work out self-employed mortgage affordability. Some will use net profits before deductions, others after. Some want two years' accounts, others three or one. It's so confusing! First stop, then? Real self-employed friendly mortgage lenders:
John Yerou's insight:
Here's the thing. There is no overarching rulebook that tells mortgage lenders how to assess self-employed workers' affordability.

Generic "Responsible Lending" guidelines, yes. Lenders have those.

But when it comes to lending criteria for freelancers, sole traders, company directors and contractors?

They're left pretty much to their own devices.

So how do YOU know which lenders are going to accommodate your payment structure, your particular way of working and your income status, current and projected?

Our guide to self-employed friendly #mortgage lenders gives you six of the best (and a couple not-so friendly to watch out for, too) » https://www.selfemployedmortgages.com/mortgage-tips-and-advise/self-employed-mortgage-lenders/
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Mortgages for Sellf- Employed Workers

Mortgages for Sellf- Employed Workers | Contractor Mortgages | Scoop.it
So often, untrained mortgage advisors get it wrong. They see all self employed people as equal, tarring all who work for themselves with the same brush. Our mix of mortgages for self-employed workers work with their business model.
John Yerou's insight:
The problem with generic #mortgage lenders? They see "self-employed" on an application and pigeonhole you.

Advisors input your "income" into their one and only formula and the home you know you can afford?

It suddenly becomes off limits. The truth, we know, is very different.

The term #SelfEmployed covers a range of payment structures, all apt to fail you unless your mortgage advisor is clued up.

Our mortgages for self-employed workers unveil your true #affordability and cover all definitions:
 • IT Contractors;
 • Ltd Company Contractors;
 • Freelancers;
 • Company Directors;
 • Sole Traders and Partners.

The next rung on your property ladder is this way: http://ow.ly/WoMe30ithLP
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Mortgages - Contractor Guides

Mortgages - Contractor Guides | Contractor Mortgages | Scoop.it

Mortgages for Contractors

While there are many upsides of limited company contracting, there’s a downside…

…and it’s a big, fat unexpected one: getting a mortgage as a contractor.


Why do High Street lenders make it sooooo tough?


Here’s how the story goes (some of you will be familiar with this scenario).

John Yerou's insight:
If you're a specialist contractor, you're well on the road to understanding the relationship between time and money.

You know the benefits of calling upon someone who has a certain speciality in which you're not proficient. You've even got a list of them in your Contacts.

You also know that delegation allows you to earn more in your specialist field. 

Why waste time trying to learn a skill with a deadline pressing, when you can engage a professional in next to no time?

In short, you've transcended the state of labelling everything with a literal cost.

Your skill lies in seeing the advantage of freeing up your own time. It allows you to earn more, thus enjoy more of the luxuries your income garners in the long run.

Many contractors are awesome at applying this scenario to their business.

But when it comes to extracurricular activities? This mindset disappears out the window.

Why?

Yes, you could spend hours traipsing the High Street for the best mortgage deal.

But few mainstream lenders are receptive to limited company payment structures at branch level. Even fewer can access the retained income you keep tied up in said limited company.

And what about your time?

How much will this fruitless exercise cost you in lost earnings in pounds, shillings and pence?

Like you, specialist mortgage brokers have honed certain skills over time. They've worked hard at developing relationships with underwriters direct.

There's none of this gatekeeper mentality you'll find at your local branch or call centre.

Brokers are now offering you, in your quest for a mortgage, the opportunity to leverage their skillsets.

If you're looking for a mortgage that reflects your income (not your accounts), you know what to do.

Delegating this responsibility is one of the smartest moves you'll ever make.
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The insider's guide to contractor mortgage lending criteria - Contractor Guides

The insider's guide to contractor mortgage lending criteria - Contractor Guides | Contractor Mortgages | Scoop.it
There are now a number of new specialist mortgage products on the market but they are still few and far between. And some of the larger banks offer a type of contractor mortgage but in turn make the criteria for approval ridiculously difficult. Here at Contractor Guides we have a regularly updated page dedicated to the latest contractor mortgage products to come onto the market and comparing the interest rates, charges and types of mortgage on offer.
John Yerou's insight:
After the housing bubble burst, the mortgage market needed a boost. No, it needed paramedics and defibrillators. 

Confidence was low across the board, which killed mainstream mortgage lending, taking the construction industry with it. 

Self-employment became the way forward and the amount of burgeoning new business owners supported the labour figures for months on end. 

The problem? Mortgage lenders had no way of optimising the retained profit that most of the new professionals stashed in their company for tax-planning purposes. 

They needed a new way to appraise IT contractors, professionals working in the NHS and in the Oil and Gas sector. 

That's when the market took a turn. Halifax developed contract-based underwriting and, over time, more lenders followed suit. 

Whilst the Halifax will deal direct with contractors in branch, they're perhaps the only ones that will with any degree of confidence. 

Most contractor-friendly mortgage lenders us intermediaries - or brokers - only. 

That's where we come in. 

To help you get ahead, we've put together all UK contractor-friendly mortgage lenders' lending criteria on one page, with many more to come. 

For now, you can have a peep at what mortgage lenders look for in a contractor, information you won't get on the High Street. 

It also includes a brief history of contractor mortgages, along with definitive lists of lenders who do and don't have contractor policies. 

Whether your preferred lender is in the list or not, give us a call. 

We're not tied to any one bank or building society. And we love fresh challenges!

We've helped many lenders develop pilot contractor mortgage programmes, which is just one reason we can open more doors than most. 

Next, we'd love to help you get the key to your new front door. Here's the right path for that destination: http://contractorguides.uk/mortgages/lenders/
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Contractor finance: essential knowhow for all professional contractors

Contractor finance: essential knowhow for all professional contractors | Contractor Mortgages | Scoop.it
A specialist accountant can ease the burden of running a business for a contractor. But, for those intent on DIY finances, here are the basics:
John Yerou's insight:
What's the difference between a harried contractor who never seems to have time sneeze and one who can relax, safe in the knowledge they can enjoy the fruits of their labour?

Simple: an accountant who specialises in limited company contracting.

Now, I know that when you're first starting out contracting, you want to cut down costs.

But it's easy to fall into the trap of focusing only on the short term.  
For one, you've probably got to lay out for all your own equipment and gear. Depending on your chosen career path, that could easily run into four figures. 

You may also have travel and subsistence expenses (that you can no longer claim against tax) to find. You're going to have to pay that up front to get you to site before you've entered anything into the 'income' column. 

Add to that the cost of your insurances and incorporating your PSC, your limited company…
 …in short, the last thing you need is to splash out on an accountant, right?

I mean, anyway: how hard can it be to log a few receipts? You've seen the articles about optimal salary, so you know how much you can draw as cash and what's best to draw as dividends.

You may even know how to work out your income tax and NICs to the penny.

• But what about retained profit and corporation tax?
• What about paying your pension through your company?
• Yeah, what about holidays?
» » Don't agency workers qualify for paid leave after a certain amount of time these days? 

Well, yes. But that's if they want their client to treat them as an employee.

And this is where it can get messy. You **DO NOT** want to look like an employee. At any cost!

IR35 could undermine your operation at a minute's notice. That's when HMRC investigates whether you're nothing more than a disguised employee or a genuine contractor. 

During that time, they'll put you straight onto PAYE.

Forget about claiming expenses. The only thing you'll be able to claim against tax is your pension. And in that, you're invariably no better off than your employed counterparts.

An experienced contractor accountant can help you on all these matters.

Like you, they:
• specialise in a manageable handful of industry sectors;
• keep up to date with best practises in their field.

So unless you've got hours to set aside every week keeping up with changes to laws that impact limited company payment structures, you're better off engaging an accountant's services. 

Even then, I know some of you reading this are determined to go your own way. Guaranteed!

So for you, we've put together a guide that covers the basics of contractor finance. 

It covers everything from invoices to pensions, holidays to mortgages and a darn site more in between: https://www.freelancerfinancials.uk.com/related-services/contractor-finances/

For the ten minutes it takes to digest this information, you'll be rewarded over and over. Enjoy! 

psst! If you are a contractor who's hired an accountant but wants to be sure that they're earning their crust, it might be worth you cross-checking everything in the guide against what you're getting for buck. Just sayin' ☺
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High St mortgage lenders and limited company payment structures: D'oh!

High St mortgage lenders and limited company payment structures: D'oh! | Contractor Mortgages | Scoop.it
Why haven’t High Street mortgage lenders embraced high-earning contractors yet? Just what is their beef with limited company payment structures?
John Yerou's insight:
In our enlightened world of FinTech and transparency, you'd think, as a contractor, that the best place to go for a mortgage was the lender you bank with. 

In the vast majority of cases, this is just not so. Here's the problem. In-branch and generic mortgage advisors are, for the most, not accountants. 

Yet you and I know that your accountant works magic on your books to help you retain as much of your income as profit as the law allows.

On the High Street, this sorcery is lost. Most lenders have but one figure they can use to work out how much you can afford: salary. 

Even their self-employed mortgage products (which you’ll invariably be offered) revolve around this same single number. The bottom line is this: your retained profit is off limits to them. That low salary you draw to stop your tax bill escalating out of control? 

Yep, that's the figure they'll try and use. There's a better way for contractors to get a mortgage: contract-based underwriting. 

Specialist brokers have brokered deals with mortgage lenders to use your contract rate to work out how much you can afford to borrow for a mortgage.

Post-tax accounts? You’ll be pleased to know that they don't even get a look in, surplus to demand. 

So while intuition might say you're better off with the bank you bank with, on this occasion, your gut feeling is off. 

Talk to someone who understands you, the way you work and those with the power to offer you a mortgage that reflects your status!
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Contractors' most tax efficient salary and dividend levels, 2017/18

Contractors' most tax efficient salary and dividend levels, 2017/18 | Contractor Mortgages | Scoop.it
How much tax do you pay as a contractor? Too much? What IS the optimal amount of salary and dividends for a limited company business this year?
John Yerou's insight:
We know that contractors charge a lot more for their services than their PAYE counterparts. 

There's a reason for that: the accountant's fees, business expenses, NICs and insurances are aspects of working life that employees never have to worry about. 

Once you set off as a limited company contractor, you incur all of that additional expense. 

The question is, therefore, "Why bother going to all that trouble?" 

True. The extra income alone wouldn't warrant such a venture…
…but the way tax works for a limited company director? That makes the difference.

There are #SMART ways contractors can extract their income, the mains ones being: 
• Pension contributions; 
• Buy-To-Let; 
• Dividend distribution; 
• Optimal Salary and Dividend split. 

At first glance, those terms may seem scary. I'm certain they give employees the heebie-jeebies. But as you begin dealing with your accountant, you'll get used to those terms. 

As a contractor, you may never have to action these yourself. Your accountant has a pretty good idea of how they can optimise income for contractors (we hope). 

But it doesn't hurt to know a few of the basics yourself, especially if you're doing your books yourself. 

Our guide looks at the best way you can split your income into dividends and salary for the 2017/18 tax year without giving the tax man a bonus. Enjoy:
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NatWest Contractor Mortgage Lending Criteria

NatWest Contractor Mortgage Lending Criteria | Contractor Mortgages | Scoop.it
NatWest is another of the High Street's "Big Four" to develop a contractor-friendly mortgage policy. The bank's full lending criteria is here:
John Yerou's insight:
My job is rewarding. My staff and I secure mortgages for contractors in the most trying circumstances. 

Now, we've added NatWest to our growing portfolio of contractor-friendly mortgage lenders. 

Hurrah!, right? Not always. 

Here's the thing: limited company contractors know that they earn good money…
…but struggle to understand why High Street banks and building societies fail to see the potential amount they can comfortably borrow for a mortgage. 

Contractors have a point. Their income is in the highest bracket for the job they do in the country, so why don't High Street mortgage lenders "get it"? 

Well, here's the good news/bad new bit. If you take your accounts to a NatWest branch, you'll probably still get the same bum's rush that the Big Four lender gave you before they developed a contractor-friendly policy. 

That's the bad news. The good news is so straightforward and timesaving, you'll never want to waste A4 paper and printer ink printing out your limited company accounts again. 

The best way for contractors to get a mortgage with NatWest is through a specialist contractor mortgage broker. End of. 

Why? Because although NatWest is offering access to mortgage lending for limited company contractors, they have specialist underwriting teams themselves processing those applications. 

Forget accounts. All you need is a day rate of £326 or more, 12 month contracting history/contract cover and a good credit score and you're potentially the exact type of contractor borrower to whom NatWest is looking to lend. 

Told you there was good news. Here's the full NatWest contractor mortgage lending criteria in a nifty guide: http://ow.ly/rwBQ30bFcuO
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New Build Mortgages for Contractors

New Build Mortgages for Contractors | Contractor Mortgages | Scoop.it
Contradicting views on new build mortgages coupled with dodgy mortgage advice for contractors can get messy. Quickly. Let's clean it up for you:
John Yerou's insight:
Here's the thing about lenders and developers selling new build properties.

They assume anyone willing to get in first is also willing to stump up a huge deposit.

This assumption - via some clever market analysis, it has to be said - has seen deposits for new builds continually creep up.

In a strange turn of events, new build flats command a higher deposit than new build homes.

For a flat or apartment, expect to have to put down around 25% deposit; for a home, lenders are asking for at least 20% up front. 

That is, until now!

We're decimating the deposits contractors need to find to buy a new-build property.

We fully understand the hoops contractors have to jump through to get any sort of mortgage.

We've spent years lowering that particular barrier to entry.

Now, we're taking that philosophy to the new build developers through one of the most established contractor mortgage lenders out there.

We're not sacrificing anything by way of evidencing income. Your gross contract income - your annualised day rate - is still what we use to work out how much you can afford.

None of that accounts or payslips malarkey High Street lenders ask for. And given that powerful top-line income, we can access mortgages for new build properties for contractors with just 10% deposit.

The government kick-started the UK's floundering construction with their mortgage schemes.

We're giving it a post-Brexit boost to help maintain that impetus. 

You deserve to be a part of that movement without having to pay through the nose to sign up. And now, you can. Enjoy:
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Saffron BS Contractor Mortgage Lending Criteria

Saffron BS Contractor Mortgage Lending Criteria | Contractor Mortgages | Scoop.it
Saffron BS is a truly Ab Fab mortgage lender for contractors. Here's the criteria for their extensive range of self-employed niche mortgages:
John Yerou's insight:
Saffron Building Society was one of the first lenders to open its doors to the contracting community. Certainly one of the first to look beyond the IT sector and minimum earnings, at any rate.

Despite this, certain other stipulations prevented those newer to contracting accessing their mortgages:
• time served as a contractor;
• duration of contract remaining;
• and minimum age.

Don't get the wrong idea. We know why the building society put those criteria in place. 

ALL lenders had to interpret the FCA's responsible lending guidelines that followed the credit crunch in a way that matched their ethos. Some lenders followed those guidelines to the letter, while others adopted a more cavalier approach.

But now, we're beginning to see recovery; even in a post-Brexit UK, signs are positive that we'll return to pre-2007 spending power and house prices will recover in tandem.

In alignment with these signs, Saffron has removed some of the barriers contractors faced accessing their mortgages before.

We've updated our guide page accordingly. If you're contracting in a sector that lenders don't class as mainstream or you don't make the £300+ per day that lenders like Halifax demand of contractors, Saffron may well be the contractor-friendly lender you've been looking for.

Check out their revamped lending criteria for yourself and see if your earnings and status qualify for a mortgage based on your contract rate rather than the payslips and accounts so often demanded on the High Street's:
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It's a prime time for contractors to remortgage off their SVR

It's a prime time for contractors to remortgage off their SVR | Contractor Mortgages | Scoop.it
Worried that your mortgage lender's variable rate's costing more than it should? Now's the time for contractors to remortgage to a better deal »
John Yerou's insight:
Here's the deal. The Bank of England's low lending rate to other institutions is going to stay at its historic low of 0.5% for some time yet. 

Why should this affect you as a contractor?

It means that mortgage lenders can continue to offer amazing fixed-rate deals at competitive rates.

If you're a contractor who's introductory rate is about to come to an end (or already has) and you don't fancy slipping onto your lender's variable rate you can do something about it. 

In our latest post, we consider the two major benefits of remortgaging for contractors:

► saving a bundle on your monthly repayments, especially if you've never secured a mortgage using your day rate before;

► cut down the term of your mortgage with the saving you can make today by switching to a new introductory rate. 

There was a time when homeowners had one or two mortgages over the course of their life. 

In a consumer-oriented world, that concept's been flipped on its head. 

For a few contractors, switching mortgages may not be the right thing to do. 

But for the vast majority?

There's a potential >£2,000 a year* saving sitting on a table with your name on it.

*based on Legal & General Mortgage Club data
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Brokers reveal how they resolved their toughest cases - Marketwatch - Mortgage Solutions

Brokers reveal how they resolved their toughest cases - Marketwatch - Mortgage Solutions | Contractor Mortgages | Scoop.it
When a case lands on your desk such as a borrower with multiple income streams, short employment history, or a client approaching retirement, the shoulders of even the hardiest broker are bound to sag a little at the thought of the battle which lies ahead.

When a case lands on your desk such as a borrower with multiple income streams, short employment history, or a client approaching retirement, the shoulders of even the hardiest broker are bound to sag a little at the thought of the battle which lies ahead.

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John Yerou's insight:
> "When [our client] came to us, we could see that he could afford the mortgage, but the challenge we faced was communicating that to high street lenders as we typically avoid the private banking route. We approached a number of banks but eventually placed him with Clydesdale who were able to see the wood through the trees " ~ John Yerou
=
What happens when a potential borrower can afford the mortgage for which he's applying, but the High Street lenders can't (or won't) see it?

It's a problem we face time and again. Limited company freelancers and contractors have a lot of their affordability 'tied up' in retained profits. 

A snapshot of their accounts shows little disposable income.

A snapshot of their accounts shows little disposable income. But the lens through which High Street banks and building socities view that affordability, their generic lending model, is skewed.

It doesn't capture the big picture.

It doesn't capture the big picture. The contractor's accountant has streamlined their income for tax planning. Acording to their accounts, most independent professionals have very little income at their disposal to put towards a mortgage.

At Freelancer Financials, we avoid that lending model like a scarecrow avoids Guy Fawkes night. Instead, we use a method called contract-based underwriting to work out a contractor's mortgage affordability.

The method doesn't rely on accounts; rather, it uses a contractor's annualised contract rate to work out how much they can afford.

But there are times when we face sorting out multiple income streams. 

When you add multiple earners into the mix, it gets even tougher.

When you add multiple earners into the mix, how do you possibly sort the wheat from the chaff? 

But there are times when we face sorting out multiple income streams. When you add multiple earners into the mix, how do you possibly sort the wheat from the chaff? How can a broker extract relevant earnings for borrowing purposes AND present them to a mortgage lender prepared to take a risk on that combined income?

In this industry wrap up of how brokers deal with such issues (and more) from Mortgage Solutions, myself, Simon Chalk from Age Partnership and Ross Murphy from Capricorn Financial Consultancy present our trickiest cases, and our solutions to them. Enjoy ►
> "When [our client] came to us, we could see that he could afford the mortgage, but the challenge we faced was communicating that to high street lenders as we typically avoid the private banking route. We approached a number of banks but eventually placed him with Clydesdale who were able to see the wood through the trees…" ~ John Yerou
===
What happens when a potential borrower can afford the mortgage for which he's applying, but the High Street lenders can't (or won't) see it?

It's a problem we face time and again. Limited company freelancers and contractors have much of their affordability 'tied up' in retained profits. 

A snapshot of their accounts shows little disposable income.

But here's thething. The lens through which High Street banks and building socities view that affordability, their generic lending model, is skewed.

It doesn't capture the big picture!

The contractor's accountant has streamlined their income for tax planning. Acording to their accounts, most independent professionals have very little income at their disposal to put towards a mortgage.

At Freelancer Financials, we avoid that lending model like a scarecrow avoids Guy Fawkes night. Instead, we use a method called contract-based underwriting to work out a contractor's mortgage affordability.

The method doesn't rely on accounts; rather, it uses a contractor's annualised contract rate to work out how much they can afford.

But there are times we face sorting out multiple income streams. These can present a challenge. 

When you add multiple earners into the mix, it gets even tougher.

How do you possibly sort the wheat from the chaff? 

How can a broker extract relevant earnings for borrowing purposes AND present them to a mortgage lender prepared to take a risk on that combined income?

In this industry wrap up of how brokers deal with such issues (and more) from Mortgage Solutions, myself, Simon Chalk from Age Partnership and Ross Murphy from Capricorn Financial Consultancy present our trickiest cases, and our solutions to them. Enjoy ►
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IT Contractor Mortgages | Freelancer Financials

IT Contractor Mortgages | Freelancer Financials | Contractor Mortgages | Scoop.it
You're an IT Contractor earning a decent living. So why won't High Street banks give you a mortgage that befits your income? Here's your solution:
John Yerou's insight:

There was a time when contractors only had two choices for getting a mortgage:

1. get a self-employed mortgage based on their accounts;

2. get a self-cert mortgage that circumvented the usual lending criteria banks and building societies insisted upon.

 

Neither played to the contractor's strengths. Self-employed mortgages rely on accounts and we all know how tax-efficient most contractors are.

 

Self-cert mortgages would take on board their income, but the interest rates made your eyes water. It's no wonder they were the first to go after the credit crunch.

 

Things changed when the Halifax recognised the need to offer bespoke underwriting terms to the IT contractors they had working on their own digital banking system.

 

So was born the contractor mortgage and in the early days, it was only IT contractors of whom these bespoke terms were availed.

 

While there are many more lenders offering contractor mortgages today, many of them will still only accept contractors from the IT sector.

 

Despite what you may think having trawled the High Street, these mortgages include your company's retained profits, not exclude them.

 

Our updated guide has all the details for you so that you don't have to settle for a mortgage that uses accounts or payslips - we all know that they don't reflect your top line income.

 

You've worked hard to establish yourself in your field and you shouldn't have to forego tax-planning to secure the mortgage your specialist skills deserve. Now, you don't have to!

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Can I get a mortgage with a bad credit score?

Can I get a mortgage with a bad credit score? | Contractor Mortgages | Scoop.it
Contractors can get a mortgage with poor or adverse credit, but they face a double-edged sword. First, that bad credit score; second, limited company accounts. A specialist broker can help avoid the long-lasting perils of High Street rejection!
John Yerou's insight:
After the credit crunch, you couldn't get a mortgage if you had bad credit for love nor money.

And once the FCA (now FSA) banned self-cert mortgages, it restricted contractor, freelancer and independent professionals' options for buying a home, too.

But almost a decade after the brown stuff hit the fan, attitudes towards high-risk have softened.

We now partner with several lenders who not only offer mortgages based on a contract rate, but who'll also consider adverse credit, too.

There are caveats to subprime lending. There are things you can and should check on your credit file to improve your chances. 

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Tips for Freelancers and Contractors Applying for a Mortgage

Tips for Freelancers and Contractors Applying for a Mortgage | Contractor Mortgages | Scoop.it
The ultimate guide to making sure you have everything in place for apply for your contractor mortgage. This tips will save you time and get it approved.
John Yerou's insight:
Essential Tips for Mortgage-Hunting Contractors and Freelancers  
More and more High Street banks and building societies are offering #contractor mortgages.

The paradox is that, although these lenders may be household names, you probably won't get a mortgage based on your contract on the High Street.

That's because limited company payment structures are complicated, way beyond the pay grade of a generic IFA.

As such, contractor #mortgages remain a niche product.

This updated guide explains why contractors still need brokers with links to #specialist underwriters to get them the competitive mortgage their income deserves: https://contractorguides.uk/mortgages/guide-to-applying-mortgage/
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Unwitting public sector clients threaten contractors' profitability

Unwitting public sector clients threaten contractors' profitability | Contractor Mortgages | Scoop.it
IPSE's Chris Bryce has implored contractors to check their contract status with public sector clients. If it's changed since 6th April, renegotiate!
John Yerou's insight:
So, public sector clients now decide whether a contractor is indeed an independent entity or whether they're on PAYE payroll. 

That this has been allowed to happen at all is - at best - scary.

Why? Well, since HMRC cast the IR35 petronas on the contracting community in 2000, whole tax departments haven't been able to decipher whether or not a contractor is 'inside' IR35. At least not without a full investigation into said contractor's business.

So how can HMRC expect someone in admin in, say, the NHS to be able to work out whether one of their outsourced workers is a bona fide contractor or, technically, an employee? 

It smacks of passing the buck to such an extreme that it warrants an investigation into how switching contractors to payroll was allowed to happen at all. 

Besides this bigger picture, we've got many questions of our own. 

What can contractors do, if anything, to ensure that they don't lose out on this situation? 

Why has the ability to switch contractors to PAYE without notice (or without advising them in hindsight) been given to people who can't possibly have the wherewithal to arrive at such a decision with any confidence?

Can contractors make a complaint to their agency, a complaint that will have a half decent chance of being upheld? 

Can contractors up their rate, renegotiate the specifics of their contract or cancel it altogether? 

How does switching to PAYE affect a contractor's lifestyle, not least their income and ability to uphold existing financial commitments? 

Is it worth contractors offering their services to the Public Sector at all, with the threat of them switching the contractor to payroll ever present?

What will services like the NHS do when contractors decide that contracting with so many elements out of their control threaten their livelihood and are not worth the effort?

IPSE's Chris Bryce proffers his insight and fears after seeing the prototype ESS tool, which public sector paymasters are expected to use. To say that he's less than confident of a fair outcome is a nominee for understatement of the year…
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How Do I Get A Mortgage As A Contractor?

How Do I Get A Mortgage As A Contractor? | Contractor Mortgages | Scoop.it
How do independent professionals get a mortgage as a self-employed contractor? There’s both a hard and an easy way. Which one works for you?
John Yerou's insight:
If. I. Had. A Penny.

*“How do I get a mortgage as a contractor?”*

It’s a question we get asked so often, we’ve put together a complete new eponymous guide.

Even though we’re entering enlightened times, the High Street is yet to noticeably open its doors to contractors. 

Yes, most banks and building societies do offer genuine #contractor mortgages.

By ‘genuine’, I mean affordability calculations that use gross contract income.

Even the ‘Big Four’ have joined the party, albeit through one subsidiary or another. 

So, what’s the problem? Why don’t High Street branches hold the key to homeownership for the contracting community?

Well, I hate to break it to you, but: it’s you!

You, dear contractor, are a niche customer. Despite the growth of self-employment since recession(s), contracting still hasn’t filtered down to front-desk #mortgage advisors. 

Okay. It’s not ONLY you. Other factors play a part; the:
    • amount of resources lenders can throw at specialist borrowing plays a part;
    • complexity of your accounts, an even bigger one;
    • outmoded, employee-biased affordability calculations. 

The only true solution to the contractor mortgage conundrum? 

Find a specialist mortgage #broker who can do two things for you. 

First, your broker must understand limited company contracting. 

Then they must know how to interpret your true affordability to underwriters at head office.

Finally, they must be able to package your application just so. And that’s important.

Underwriters don’t want to have to look too hard to find the bit that shows them you can truly afford the mortgage for which you’ve applied. 

It’s all right these websites claiming to offer contractor mortgages. 

More often than not, the ‘contractors’ to whom they refer are self-employed tradespeople. Brickies, plumbers, sparkies - you know, sub-contractors. 

As valued and skilled as they are, not many subcontractors offer their services through a limited company. And that’s the difference. 

You don’t want a self-employed mortgage, even though, technically, you are. You want a mortgage that leverages ‘contract-based underwriting’. 

**What’s contract-based underwriting?**

Contract-based underwriting is the method contractor-friendly mortgage lenders use for calculating how much a professional contractor can borrow to buy a home. 

It’s a simple formula that works off gross contract rate, annualised over a year. 

No accounts or payslips. Just a copy of your contract, your CV, three months’ bank statements and proof of ID. 

Contractor-friendly lenders may have slight variations on that theme.

Some use different ways to work out your ‘annualised’ rate. Others may call for business bank statements, or none at all.

Some have minimum day rates, or will lend to only specific industries. Yet others set no such requirements. 

There are lenders who’ll consider less than perfect credit or will accept contractors from day one of their first contract.

But, yeah. The premise of contract-based underwriting is the same at all lenders who’ve adopted contractor mortgage lending criteria. 

Our article has more for you if you don’t want to use accounts to secure a mortgage: https://www.selfemployedmortgages.com/high-st-mortgage-lenders-and-limited-company-payment-structures-doh/
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Which mortgage lenders are contractor-friendly?

Which mortgage lenders are contractor-friendly? | Contractor Mortgages | Scoop.it
Contractor-friendly mortgage lenders, a definitive list: lending criteria that gets contractors a mortgage based on their contract rate alone!
John Yerou's insight:
*The contractor mortgage High St trap: how to avoid disappointment* 

"Incorporate a limited company", they said when you told them you were going to provide your service as a professional contractor. 

"You'll be able to claim tons of stuff as tax relief. And you can save on income tax using corporation tax and dividends", they said. 

"You'll maximise your income so much, you'll take home even more!" 

Awesome! But what "they" failed to mention was how difficult it would be to get a mortgage on the High Street as a professional contractor. 

Now, my guess is your accountant has done for you what "they" told you an accountant could. 

So today, I guess you draw a low salary, just enough to cover your NICs. 

The bulk of your income, I guess, you retain as profit within the confines of your limited company. 

How'm I doing so far?

Now, tell me this: how are you going to convince a typical in-branch mortgage advisor, who works to a strict formula, that the low salary you draw makes you in any way able to afford the mortgage you're looking for? 

Look. Streamlining your accounts to maximise your income is a great strategy for tax planning, a point about which your accountant no doubt reminds you. 

But for getting a mortgage based on what you can truly afford?

Limited company accounts suck, with a capital 's'. 

Here's the thing: most High Street banks and building societies have developed contractor-friendly criteria.

Not the 'self-employed' mortgage based on accounts that in-branch advisors offer you. 

I mean they can give contractors a mortgage offer that leverages their pre-tax, gross contract income, annualised over a year.

No accounts. No payslips. Your contract rate. 

Through us, you can access *all* the contractor-friendly mortgage lenders in the UK. Here's a list of them to help both get you started and avoid failure on the High Street »
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Offset mortgages offer a 'golden opportunity for contractors'

Offset mortgages offer a 'golden opportunity for contractors' | Contractor Mortgages | Scoop.it
Offset mortgages are hot. For a contractor with impotent ISAs and frustrating retained profits, there's never been a better time to switch.
John Yerou's insight:
We welcome any new mortgage lenders that allow us to increase our offering to the contractor community. 

We've recently taken Accord Mortgages on board and their portfolio of intermediary-only products underlined a developing trend. 

Many of the newer lenders to our fold are offering offset mortgages to contractors right from the outset. 

There was a time when Virgin Money were working tirelessly to get offset into the mainstream. 

But then 2007 happened, and you know the rest. 

But both Accord and their parent company, Yorkshire Building Society, have backed up their offset philosophy with cold hard facts. 

The truth of the matter is: most contractors haven't got a clue about how offset mortgages work. 

We've taken those facts and figures and wrapped them up in one all-inclusive contractor guide: "Offset Mortgages Offer a Golden Opportunity for Contractors". 

The benefits for all offset mortgagees are there from day one. Let's face it, savings and ISAs are doing diddly-squat in your accounts. 

Why not offset them - up to three accounts - against your mortgage balance?

Got no answer for that, eh? Go, empower yourself. You might even save a packet in the process:
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Accord Mortgages: Contractor Mortgage Lending Criteria

Accord Mortgages: Contractor Mortgage Lending Criteria | Contractor Mortgages | Scoop.it
Accord contractor mortgages target high-earning contractors, but offer consistent, über-competitive interest rates in return. Earn £400/day? Go here »
John Yerou's insight:
Accord Mortgages is another arm of Yorkshire Building Society offering contractor mortgages. 

The lender is running its pilot intermediary-only programme through appointed brokers. 

I’m overjoyed to announce that we’re one of those chosen few. 
Hands up. Accord has set it barrier to entry high.

With a minimum £400/day or £75,000 gross per annum to qualify, contractors who want to use Accord need to be at the top of their industry. 

We’ve put together the new contractor-friendly mortgage lender’s criteria in one on-site guide. 

But here’s an overview of what Accord, part of the Yorkshire Building Society group, is offering. 

To qualify for an Accord contractor mortgage, you must:
• be a limited company contractor, either through a PSC or umbrella;
• earn at least £400 per day or £75,000 a year;
»» umbrella contractors may be exempt from this threshold*;
• have at least 10% deposit;
• have been contracting for at least 12 months as an independent professional;
• have three months left on your current contract *or* show two years' contract income history;
• *have two years' contracted income as an umbrella contractor earning <£400/day threshold.

In return, the lender offers you:
► access to some of the best contractor mortgage interest rates;
► use of 80% of your full, 52-week annualised income as the base of your mortgage affordability;
► a multiplier of 5.49 for mortgages < £500k, one of the highest on offer anywhere;
► a respectable multiplier of 4 for mortgage loans > £500k;
► fast and safe mortgage applications, as intermediaries will have a direct line to Accord's underwriting team.

So, if you’ve got 10% deposit and want the best mortgage interest rates and multiplier for your contract income, Accord might be the lender you’ve been looking for.
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Can I get a mortgage on a fixed term or zero hours contract

Can I get a mortgage on a fixed term or zero hours contract | Contractor Mortgages | Scoop.it
Getting a mortgage as a fixed term contract as an employee isn’t the same as getting a contractor mortgage as an independent professional. Here’s why:
John Yerou's insight:
Mortgages for Fixed Term Contract Employees: a Pipe Dream?  
If only there was a single definition of a 'contractor' in the UK we'd all be happy. 

But, no. There's not. Really.

The government can't even agree on the exact definition of self-employment.

So how we should truly define contract workers seems a pipe dream that'll drive us potty for a while, yet. 

There's good news, though. Banks aren't dragging their feet as much as the government. Or at least a select few contractor-friendly mortgage lenders are showing interest in fixed term contract workers.

With stakeholders pressurising the government to reform zero hours contracts, mortgage providers have moved in tandem, even ahead, of the curve.

Already, regulations are in place that entitle fixed term contract workers to similar rights of employees at their place of work. 

The main one that's allowing mutuals to lend to fixed term contract employees is simple.

Ending a fixed term contract is tantamount to dismissal, so the employer has to justify not renewing a fixed term contract.

This move alone has added an unprecedented level of security for this type of employee.

In the past, mortgage applicants have been lucky if lenders have even acknowledged a fixed term contract worker's income as part of a joint application.

That's no longer the case. Already, the independent professional's champion The Halifax, has taken the lead. 

They'll underwrite fixed term contract workers' mortgages as they would independent contractors.

If you're on a short, fixed contract you needn't play second fiddle any longer.

For sure, there's nothing stopping you applying with another earner in your household.

But your contract is, in the eyes of a mortgage lender, worth the paper it's written on, and some.

Find out more - and if you qualify - here:
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Leeds BS Contractor Mortgage Lending Criteria

Leeds BS Contractor Mortgage Lending Criteria | Contractor Mortgages | Scoop.it
Few lenders offer as wide a range of contractor mortgages as Leeds. Interest-only, buy-to-let, repayment and offset mortgages are just the highlights.
John Yerou's insight:
We spent a while courting Leeds Building Society. So when they asked us to play a role in their contractor mortgage pilot programme, we were thrilled. 

Little did we know at the time how extensive the range of mortgage products Leeds now offers to independent professionals was to become. 

In essence, the building society has offered its entire portfolio of products to the contracting community. 

But, as with all contractor-friendly mortgage lenders there are specialist underwriting criteria to qualify for a mortgage loan using contract rates as the base of affordability. 

Given the extent of the mortgages on offer, we've added Leeds BS to our 'Best Contractor Mortgage Lenders' summary.

We've added a page dedicated solely to their lending criteria, which includes:
• no restriction on profession; Leeds welcomes all contractors; • a comparatively low earning threshold;
• mortgages for older contractors, going well past 'retirement age'; 
• extensive range of mortgage products, including: 
» offset;
» fixed, tracker and variable rate;
» interest only;
» plus commercial mortgages (buy-to-let) and HMOs. 

If you've had little success on the High Street to date, Leeds BS may offer you the step up you've been missing.

The building society's full, flexible lending criteria for contractors is here: https://www.freelancerfinancials.uk.com/guides/leeds-bs-contractor-mortgage-lending-criteria/
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You can get a self-employed mortgage with just one year's accounts

You can get a self-employed mortgage with just one year's accounts | Contractor Mortgages | Scoop.it
It's never been easier to get a mortgage with only one year's self-employed accounts. You just need a broker who knows what they're doing.
John Yerou's insight:
Back way back when, getting a self-employed mortgage even with a solitary year's trading behind you was (almost) a given.

Walk into your local branch. 

You knew them, they knew you.

Self-certify your earnings, et voila. The keys to the door were as good as yours.

But then the housing bubble burst, the credit crunch bit and the Mortgage Market Review gave rise to the more secure 'responsible lending' guidelines to which all mortgage lenders had to adhere.

But here's the thing. Some lenders continue to implement those guidelines to the nth degree.

Other lenders have begun to take a more relaxed view, interpreting those guidelines in a way that gives them access to borrowers with a potentially higher risk factor.

We can deservedly take some of the credit for that.

We've shown some of these lenders how to extract true affordability from certain applications and from all manner of self-employed professionals.

True. Some lenders stick to the minimum 2- or 3-years accounts they demanded from sole traders, freelancers, contractors and company directors before our intervention. 

Others ran with us and said,
"Y'know? We can work with sole proprietors who've only been trading a year. Yep. We'll give it a shot."

The caveat for these innovative lenders is that we vet applicants so that their underwriters can see their true affordability in an instant.

If you're looking for a mortgage, but only have one year's accounts DON'T be put off by High St rejection.

We can help and, in order to prevent your credit score being affected by failed searches, the sooner you come to us the better.

Our FAQ has more for you.
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Budget launches yet another attack on contractors working through personal service companies

Budget launches yet another attack on contractors working through personal service companies | Contractor Mortgages | Scoop.it

"The budget's changed how public sector contractors must work, moving from off to on payroll (PAYE). How does the Chancellor keep getting it so wrong?"

John Yerou's insight:
The fallout from the budget for the Chancellor and Tory party has been horrendous.

The Shadow Chancellor has called into question Mr Osborne's fitness for purpose for the role.

The welfare secretary and former party leader Iain Duncan Smith has resigned from the cabinet. He cited the proposed cuts to disability welfare as 'a compromise too far'.

Ironic, considering IDS's bills saw some of the most damaging effects on society during the coalition…
…even more ironic now that Mr Osborne has since U-turned on those proposals.

Whatever turmoil the government may been is nothing compared to the impact one of the changes in the 2016 budget will effect for next April:

Public Sector engagers (clients) will be responsible for deciding a contractor's tax status.

This decision is wrong on so many levels, we've had to take a stand. 

Our latest 'Contracting Matters' blog post examines the changes to public sector contracting. 

Moreover, it looks at how being 'on payroll' could impact a contractor's mortgage affordability, should a Public Sector client decide that's how they want to pay them.

Accounts will be messy for contractors who work on both Private Sector and Public Sector contracts in the same tax year will face an uphill struggle to prove their status, thus affordability for any type of finance.

And the worse thing? 

These changes could make so much additional work for the taxman that they render themselves useless. Nay, they may yet cost the taxpayer more than the paltry 'savings' the changes will bring in.

It's this more than anything that shows the disconnect the Chancellor - and government as a whole - has with the self-employed community. And that's despite having the results of a study the government itself commissioned at their disposal ahead of the 2016 Budget. 

What a farce. But still, it's no use ignoring these changes. All we can do is abide by them and hope that common sense will one day filter through to the Houses of Parliament.

Why? Because now more than ever, contracting matters!
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How to minimise the incumbent risk of self-employed mortgages

How to minimise the incumbent risk of self-employed mortgages | Contractor Mortgages | Scoop.it
How lenders view your self-employed business will affect which mortgages they offer you, if any. Don't obscure that view; it's not worth the risk!
John Yerou's insight:

 

What's the best way a freelancer can prove their income for a mortgage?

 

A mortgage lender will assess a freelancer's suitability for a mortgage based on what they can glean from their accounts.

 

It's the closest they can get to aligning a self-employed person with their bank's affordability criteria, a calculation which they've probably based on salaried folk.

 

Where it becomes difficult for freelancers is getting the right balance. On one hand they're conscious of the volume of income going through the books for tax purposes.

 

On the other hand, if they record a reduced amount, they know they risk not securing a decent mortgage, either by volume or competitive interest rate.

 

One thing's for certain: if you're not declaring your full income, you're not only doing the taxman out of his dues, but you're sabotaging your chances of getting a mortgage that reflects your true income.

 

But we live in the real world and often, it's how much self-employed let legitimate tax relief affect their net take home that's the real issue.

 

What freelancers need to do is be prepared and expressly clear! A specialist broker can help on both counts, preparing you and your books for scrutiny by the lender.

 

If the broker truly knows their field, they'll take one look at your accounts and either advise your best course of action to start the mortgage process there and then. Or they'll recommend what you need to do to get your application ready in the future.

 

If all lenders assessed the self-employed in the same way, it would be a doddle. But they don't; all have their own bespoke underwriting criteria.

 

Don't ruin your chances of a mortgage or your livelihood for the sake of saving a few quid in task; it's not worth the risk!

 

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