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  1. #1
    D15
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    Default Contractor mortgage help!

    I am a IT contractor going via an umbrella company.

    No big breaks in between contracts for last 2 years
    Over 3 months remaining on contract
    Have current and previous contracts for up to last 2 years

    I have a mortgage in I principle based on my contract rate (showed my invoices to Halifax advisor). Later this week I have another appointment to finalise my mortgage application which I assume will be submitted to the underwriters.

    My issue is will they ask for payslips? Majority of umbrella contractors’ payslips and accounts are geared for tax-planning. The net result is that the “salary” appears low compared to their actual income.

    I am worried about the chance they will ask me to provide payslips (which will not show my full income). Should I go via a broker instead? There are a few which state all they need is CV, contract and bank statements to find a suitable lender.

    I don't want the application to get rejected because I assume it will leave a note on my credit rating?

    Any advice would be appreciated.

  2. #2

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    northernladuk is a fount of knowledge

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    Eh? I thought you were PAYE so we're just employed like any permie. I didn't know the pay slips were 'low for tax planning'. Shouldn't your pay slip show what you were paid. How can the provider prove what your income is if your payslips aren't 'the truth'?
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    Ask your accountant adviser. Really. They'll tell you.

    It's my understanding with non-standard income mortgages that you have to submit everything+kitchen sink to them about 3 times before they finally get it. Once they have proof of your money in triplicate it doesn't matter how you're generating it as long as they have solid proof that you have it.

    What NLUK said is right though, if you're working for a brolly you should be PAYE, so your payslips should be straightforward.
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    D15
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    Issue is that the payslips show a min wage and the rest is made from "bonuses"

    If my mortgage gets submitted to underwriter I am worried it may get turned down once they see the slips - they will only take into account actual wage, no OT or bonuses.

    Would a refused application at underwriter level cause issues applying for a mortgage else where?

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    There are mortgage companies that are quite used to dealing with contractors and will understand the min wage/bonus split on the payslip. Otherwise, your umbrella company can write to your mortgage provider detailing your working arrangements. It shouldn't be a problem
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    I found in the past that if you have a bonus and you can demonstrate that it is regular, then there is no issue.

    When I applied I had a £5000 'bonus' (more like an addition to my permie salary at the time upon completing 12 months) and they wouldn't factor it in as I had no historical evidence it wasn't a one-off. So if you have a decent number of accounts then you should be fine, but I bet specialists would know more and YMMV depending on the lender
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    Quote Originally Posted by D15 View Post
    I am a IT contractor going via an umbrella company.

    No big breaks in between contracts for last 2 years
    Over 3 months remaining on contract
    Have current and previous contracts for up to last 2 years

    I have a mortgage in I principle based on my contract rate (showed my invoices to Halifax advisor). Later this week I have another appointment to finalise my mortgage application which I assume will be submitted to the underwriters.

    My issue is will they ask for payslips? Majority of umbrella contractors’ payslips and accounts are geared for tax-planning. The net result is that the “salary” appears low compared to their actual income.

    I am worried about the chance they will ask me to provide payslips (which will not show my full income). Should I go via a broker instead? There are a few which state all they need is CV, contract and bank statements to find a suitable lender.

    I don't want the application to get rejected because I assume it will leave a note on my credit rating?

    Any advice would be appreciated.
    If the mortgage has been agreed on your daily rate, then it will be the contract that the underwriter works off regardless of whether you are an umbrella or limited company.

    Have you approached Halifax directly? If so, you need to shout from the rooftops that you are to be treated as a contractor who works on a fixed term contract with a daily rate. If payslips are being asked for then the adviser / underwriter has got the wrong end of the stick.

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    I used to work for the Nationwide, initially a branch, then IT. A mainstream mortgage lender at a regular high street bank would not be very open to an application from a short term contract. I would instead go to a broker who specialises in contractor mortgages.

    Off topic, but, why are you with an umbrella? You may want to check out firms like Paystream who manages things as though you were still through an umbrella but create a company name etc for you making the progression from umbrella to ltd company a lot easier, and very possibly a lot more money in your pocket at the end of the day.

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    Quote Originally Posted by D15 View Post
    I am a IT contractor going via an umbrella company.

    No big breaks in between contracts for last 2 years
    Over 3 months remaining on contract
    Have current and previous contracts for up to last 2 years

    I have a mortgage in I principle based on my contract rate (showed my invoices to Halifax advisor). Later this week I have another appointment to finalise my mortgage application which I assume will be submitted to the underwriters.

    My issue is will they ask for payslips? Majority of umbrella contractors’ payslips and accounts are geared for tax-planning. The net result is that the “salary” appears low compared to their actual income.

    I am worried about the chance they will ask me to provide payslips (which will not show my full income). Should I go via a broker instead? There are a few which state all they need is CV, contract and bank statements to find a suitable lender.

    I don't want the application to get rejected because I assume it will leave a note on my credit rating?

    Any advice would be appreciated.

    If your advisor knows what they are doing they will not ask for payslips they should ask for your contract. I'm surprised they agreed you in principle based on invoices alone as there are specifics required on the contract to allow them to lend.

    As mentioned in one of the earlier responses you need to be very clear that you are a contractor and you should be treated as one by the underwriters. There are hundreds of cases we come across where we (the brokers) understand the lenders policy better than they do themselves and manage to overturn decline decisions where an underwriter has made an uninformed decision.

    Good Luck, if you come across problems just post again

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