Moving home, contractor

How to get a mortgage as a contractor

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Home Mover, Contractor

At CLS Money, we have many years’ experience in securing competitive mortgage deals for contractors, freelancers, and other self-employed individuals.

We understand there are certain challenges to applying for a mortgage as a contractor – even if you’ve owned a property before and you’ve made all previous repayments on time. It’s our job to guide you through the process and make sure you have everything you need to maximise your chances of getting your application accepted by a lender who is offering the right rates and terms for your circumstances.

Things to consider when moving between properties

A home mover is someone who already has a mortgaged or owned home and is moving into a new property. As a home mover, you can choose to ‘port’ your mortgage with your existing lender or apply for a mortgage with a different provider. Your mortgage broker will be able to advise you on the best option, based on your repayment history and the terms of your current agreement.

As a home mover, you are likely to have some general knowledge when it comes to finding the right mortgage and dealing with brokers. Whilst costs are important to you, you’re focusing on other factors for your move, such as achieving new lifestyle goals; upsizing to meet the demands of your growing family; or changing location due to work or family commitments.

You’re in a much stronger position than a first time buyer, because you have evidence of your ability to pay your mortgage repayments in full and on time, every month. This will put you in a favourable position when it comes to getting a good interest rate. You’re also likely to have built up some equity in your existing property, meaning you’ll be entering into a new agreement with a better loan-to-value (LTV) than before.

One of the most common problems that home movers experience is being stuck in a chain. This is the term used for a sequence of linked home purchases who are reliant on each other for the preceding and succeeding purchases; for example, those buying your house are reliant on you completing on your new home in order to move into your old one.

It’s important to stay in contact with your solicitor throughout the moving process to ensure everyone is kept up to date with potential move dates and any delays are communicated up and down the chain.

How will being a contractor affect your chances of getting a mortgage?

If you’re a contractor and you want to qualify for a mortgage, you may find that lenders will ask you for around three years of accounts. This can cause big issues if you haven’t been contracting for this amount of time, or if you draw out your income via company dividends, as this will make your net income average look low.

Lenders can sometimes be hesitant to offer credit to contractors, even if they have a strong history of meeting their repayment schedule. Many companies believe that a contractor’s employment status is not completely secure, and steady income is not guaranteed. And while your earnings aren’t factored into your credit score, your debt-to-ratio income will have a huge bearing on your rating, so your overall financial health needs to be taken into consideration, too.

While the mortgage landscape has changed a lot over recent years, many High Street lenders are still not making it easy for contractors to get a mortgage. That said, there are specialists in the market who are more than happy to take a view on your circumstances and provide solutions, not barriers.

At CLS Money, we work with a range of brokers who are dedicated to helping contractors like you find the right mortgage for their circumstances. Depending on how well you meet our specialist lenders’ eligibility criteria, we may even be able to source a deal that is just as competitively priced as an agreement that’s available to permanent employees.

Why use a mortgage broker?

Having one of our specialist mortgage brokers by your side throughout your move will ensure the process is as smooth and stress-free as possible. After scouring the whole of the market for the best possible contractor mortgage deal, your adviser will help you collect all the information for your application and liaise with the provider to get your deal over the line ASAP.

As a customer with CLS Money, you can enjoy flexible appointment times with straight-talking experts who only have your best interests at heart. You can even access your very own CLS portal to upload important documents and get real-time updates on your application.

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Gemma May

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