Mortgages and deposits

[PurpleGorilla]

Is 2 years signed off accounts and a 15% deposit still realistic terms to secure a contract mortgage, or is it now a min of 3years and 20% deposits? Any idea on current lending multiples too would be appreciated (x day rate, or x contract rate). I appreciate a broker can answer these, but I'm a few months a way from this formal dialogue, or another year away lol!

[northernladuk]

Not a clue as contractor mortgages can bebquite different. Am not sure 15% is enough for one either. I know you say you don't think you need to yet but I'd say 5 mins on the phone to someone like Freelancer Financials would certainly be time we'll spent.

I wonder if there will even be contractor mortgages available when ir35 hits.

[PurpleGorilla]

Not a clue as contractor mortgages can bebquite different. Am not sure 15% is enough for one either. I know you say you don't think you need to yet but I'd say 5 mins on the phone to someone like Freelancer Financials would certainly be time we'll spent.

I wonder if there will even be contractor mortgages available when ir35 hits.

That's my fear, the lending tide may be turning.

[pr1]

I've been speaking CMME recently and been approved in principle for 4.5*46*5*dayrate with 10% deposit (not that I'll borrow that much...)

edit - after credit check, contract check & CV check (it wasn't just the "we can offer you XXX!" on the website)

[centurian]

I wonder if there will even be contractor mortgages available when ir35 hits.

Don't see why not - they will just assume you are within IR35 (a chunk of their clients were anyway) and calculate you have 15-20% less disposable income than if you were outside. They would lend as much, but they should still lend as before.

Even if the doomsday scenario hits were clientco's refuse to engage LtdCo contractors, then PAYE contractor will still be an option.

[PurpleGorilla]

I've been speaking CMME recently and been approved in principle for 4.5*46*5*dayrate with 10% deposit (not that I'll borrow that much...)

edit - after credit check, contract check & CV check (it wasn't just the "we can offer you XXX!" on the website)

Thanks for the info. I guess there is a *5 in there somewhere?

What sort of interest rate are you looking at?

[pr1]

Thanks for the info. I guess there is a *5 in there somewhere?

What sort of interest rate are you looking at?

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

[PurpleGorilla]

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

Ah I read it wrong. Thanks once again.

[ChimpMaster]

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

I'm surprised that lenders are willing to lend at 4.5 x annual contract value, because that is a large amount and risky when you consider that contracting is not guaranteed work.

So someone with an annual contract value of say £200k could borrow £900k - that's a large debt to take on and will very soon become unmanageable once out of contract for a short while.

[northernladuk]

Don't see why not - they will just assume you are within IR35 (a chunk of their clients were anyway) and calculate you have 15-20% less disposable income than if you were outside. They would lend as much, but they should still lend as before.

Even if the doomsday scenario hits were clientco's refuse to engage LtdCo contractors, then PAYE contractor will still be an option.

Yeah but the whole model if lending could change if we are considered perms. They could rethink the lending criteria and go back to the same models as the rest rather than by contract value etc. It could be much easier to calculate income for them now so may not need the contract rate products etc.