Starting contracting - mortgage timings

**stek** · 12 December 2015, 10:36

Three moths is not enough plus you can't live off just moths.

**daugavpils** · 12 December 2015, 10:42

Originally posted by stek View Post

Three moths is not enough plus you can't live off just moths.

This shows how determined I am

**NibblyPig** · 12 December 2015, 11:38

Your options are basically:

- Don't go contracting until you have a mortgage. Once the mortgage is secured and the house is purchased and all done, then going contracting will be ok. However, keep in mind if you do this that you need to make sure you can actually afford to keep up repayments. You need a backup plan and some savings in case you spend 6 months on the bench.

- Don't go contracting until April when they make some changes, because contracting may become more or less viable at that point.

- Go contracting, don't get a mortgage for 3 years (this timespan will vary depending on mortgage broker, but many want 3 years of accounts to prove you have a steady income).

- Go contracting, when you want a mortgage, quit and get a perm job, work there for 3 months and then apply for a mortgage (again, timespan will vary but most brokers will want 3 months of payslips). Once you have your mortgage and it is all done and dusted, go back to contracting if you want.

**sociopath** · 12 December 2015, 11:53

Originally posted by daugavpils View Post

Hi All

I have been planing to move over to contracting for some time and I should have enough funds soon to last three months so I can finally make a jump. One thing worries me however is whether I will get a good mortgage deal for my first house if I become a contractor.
Is there really a difference in how good mortgage deals are whether I am a contractor or a permie? Should I get a mortgage first and then make a move?
I also have a permie job offer on a horizon that is very interesting and would offer a greet experience. One option is to take up this job , get a mortgage and move to contracting it two years.

You say you have funds to last three months. Does that include the deposit and all the extras that go with buying a house which are not covered by the mortgage?

It is quite an expensive process and as the others have said its all about timing. If you are planning to buy a house within a year I would suggest staying permie until the mortgage is secured.

By all means go contracting once the house is secured. The flexible income will help getting the house ready.

Good luck.

**BolshieBastard** · 12 December 2015, 12:21

Id strongly advise getting any mortgage offer and house purchase sorted before making the jump.

You'll have a far greater chance of getting an offer when employed than being self employed. You'll also likely need at least a year's accounts, probably 2 or 3 to have a successful application when contracting.

Difficult to say whether a 3 month warchest would be sufficient because in some parts of the country, that would last 2 minutes while in others, if you're careful, it could last anything upto a year.

**daugavpils** · 12 December 2015, 12:52

Thank you all for the advice.

I probably will take safe route and for a time being will change my current permie job for a more interesting and challenging one.I already went through all the interviews but they can't make an offer before new year starts ( due to the hiring budget freeze).
I will need however persuade them to wait till April as my bonus will come through in March and I can't lose it - it is a pretty big one and can help with all the charges for the house hunting. Deposit is already in place.
When I sort out the mortgage and have enough savings I will do the move to contracting in two years if I still feel like it.
I work in the City and contract job market there is probably one of the best in the country.

**northernladuk** · 12 December 2015, 14:18

Very sensible approach. NLUK likey. Keep an eye on what's going on in contracting as it could be a quite a different beast in a year or so. If you are serious about trying it use you permie time to get yourself ready with the required skills and training.

**NibblyPig** · 13 December 2015, 02:09

sociopath has a good point with the extras as well.

I had to spend £2,000 on a new boiler a few months after moving in as well as various furniture purchases, new kitchen cabinets, a new sofa, blind/curtain installation, paint, various DIY tools etc. which came to a few more thousand quid.

I would recommend serious savings before going into contracting, or just getting your house etc. all set up first and when you're comfortable and have some savings, make the switch - will give you chance to see what happens in april as well regarding the legislation changes.

**Emma Power Mortgages** · 22 January 2016, 13:04

Originally posted by daugavpils View Post

Hi All

I have been planing to move over to contracting for some time and I should have enough funds soon to last three months so I can finally make a jump. One thing worries me however is whether I will get a good mortgage deal for my first house if I become a contractor.
Is there really a difference in how good mortgage deals are whether I am a contractor or a permie? Should I get a mortgage first and then make a move?
I also have a permie job offer on a horizon that is very interesting and would offer a greet experience. One option is to take up this job , get a mortgage and move to contracting it two years.

There are mortgage deals available to contractors from the first day they start their contract. These are available from the mainstream lending banks and are competitive with regards to mortgage rates. Maybe discuss with a broker to get an indication of these products, if you meet the criteria and compare with what you have access to now. You will probably find you can borrow a lot more based on your contract income as well

Starting contracting - mortgage timings