To mortgage specialists -5 years fixed term

[7of9]

We are looking for 5 years fix term mortgage for
Mortgage: £335, 000
Property Valuation: £500,000
Deposit: £165,000 (33%)

We had a meeting with the local mortgage adviser this morning. The rate offered by contractor friendly banks e.g. Halifx is 0.7% higher.
So he recommended to go as self-employed applicants (use annual income instead of daily rate. company accounts, accountant certificate required).

The best rate he can offer is 2.99%. If you can find a better offer, please PM me. Thank you.

[TheCyclingProgrammer]

I'm no expert but I'd have thought you'd always get a better rate if you can apply for a mortgage on normal "self-employed" terms (lenders usually treat company directors of close companies as "self-employed") as its based on a more accurate reflection of your earnings, averaged over multiple years with accounts to back it up. Whereas a "contract mortgage" based on daily rate is potentially more risky - a £600/day rate means nothing if you're contract gets binned tomorrow.

Some lenders use different criteria for company directors - some will look at salary + dividends, some will look at salary + (company net profit * shareholding) - and over different years. When I got a (now expired) MIP from Virgin Money, I think they just used my salary + company net profit for the last year (my company shares are split 75/25 between my wife and I but as its a joint application they considered 100% of net profit) but they needed at least 2 years of accounts to check that profit was increasing.

I highly recommend Ben @ Power Mortgages if you want a second opinion - he's been incredibly helpful for me and is currently in the process of getting our second MIP (we are still house hunting).

FWIW, 2.99% fixed for 5 years sounds like a pretty good deal to me. For comparison, the best deal Ben has found me (and I haven't found any better) for a mortgage in the region of £200-230k at 80% LTV is 2.49% on a 2 year fix.

[Mark McBurney@CMME]

You can often find better rates by using 'self employed' criteria (not always), but the thing you need to be aware of is that affordability will then be assessed on the 'lower' (i.e. salary and dividends) figure rather than your day rate, so just double check that this is affordable as, worst case, if a lender was to assess you on company accounts and decline you; you could find yourself blackballed with any lender for a little while.

And yes, 2.99% fixed for 5 years is a very good deal indeed. 5yrs is also helpful with the affordability issue I mentioned above as lenders are only required to 'stress test' applications that are on deals of less than 5yrs - by stress test I mean that, even if you were applying for a 2% 2yr fixed rate as an example, lenders would still stress test this for affordability at probably 2% higher, and if this doesn't fit, your application is declined.

Good luck. Glad to hear you have things in hand TCP, as much as I'd have loved to help it was not in your best interests for me to charge a fee when you could do it with a fee-free broker.

[TheCyclingProgrammer]

Glad to hear you have things in hand TCP, as much as I'd have loved to help it was not in your best interests for me to charge a fee when you could do it with a fee-free broker.

Thanks - now if only we could find a bloody house that fits our criteria in budget. 5 months of looking, 50+ houses viewed and still no joy.

[Mark McBurney@CMME]

Thanks - now if only we could find a bloody house that fits our criteria in budget. 5 months of looking, 50+ houses viewed and still no joy.

It'll happen, these things always happen when we least expect it!

[slice16]

2.99% fixed for 5 years is amazing in comparison!

I have been going through the process via a contractor mortgage broker that is coming in at 4.49% for two years.. Thats for a 275k house with 30k deposit! (Although its a joint based on the misses Perm and my day rate), that might have an effect on things.

[7of9]

2.99% fixed for 5 years is amazing in comparison!

I have been going through the process via a contractor mortgage broker that is coming in at 4.49% for two years.. Thats for a 275k house with 30k deposit! (Although its a joint based on the misses Perm and my day rate), that might have an effect on things.

One of my contractor friends who recently bought a house had only 10% deposit but his rate is not as high as 4.49%. He went to Halifax directly.

[7of9]

Thanks - now if only we could find a bloody house that fits our criteria in budget. 5 months of looking, 50+ houses viewed and still no joy.

We are still looking too. Good luck! Hope you find something soon.

[NickNick]

Thanks - now if only we could find a bloody house that fits our criteria in budget. 5 months of looking, 50+ houses viewed and still no joy.

Hah, tell me about it. It took us a year to the day from initially selling our house to actually moving into a new one. Most of that time was taken up with trying to find that new house. We did widen the criteria but that only brought in more expensive places.

Good luck.

[Mark McBurney@CMME]

One of my contractor friends who recently bought a house had only 10% deposit but his rate is not as high as 4.49%. He went to Halifax directly.

There could be any number of reasons why that's the case, in fairness - Halifax like to change their rates frequently.

For comparison - their lowest 90% LTV rate at present is 4.24%, however there's an exclusive that we can access at 4.19%. There is a better rate with another contractor friendly lender at 3.79% however.