Which is better for mortgages, umbrella or company director?

[bherbert]

Hi

I was a contractor for a number of years and managed to get a mortgage whilst I was working through my own Limited company. I suspended my company about 2 years ago as I have spent a few years working as a permie.

I have been offered a contract and I wonder if it would be better for me to use an Umbrella company rather than restarting my old company. I seem to remember that 2 years of accounts were required for a mortgage application. As I was hoping to buy a property soon, I wonder if I might be better off going through an umbrella company, normally 3 months of pay slips are enough for a mortgage application.

Many thanks
Brian

[northernladuk]

Things have gotten better for contractors since with many of the big lenders either having contractor specific products or have just gotten better at understanding how we are and the risks. This idea of needing x number of years of payslips is no longer the case.

There is a slight difference in criteria from the different lenders though. Some want more than half the contract left, others don't like to see gaps in contracts etc.

Freelance Financials have done a number of mortgages for me, contractor and BTL's and not only was a smooth, the rates were equal if not better to most 'normal mortgages'.

[smalldog]

I found Halifax to be very good. They base your borrowing potential on your day rate, or at least they did when I got one 3 years ago. No 3 years trading accounts nonsense, as long as your contract has at least 3 months left to run.

[Lance]

There are no hard and fast rules.
It depends on many factors.
* Your income (salary and bonus)
* Loan to value
* credit history
* single or married (and whether Mrs. Herbert works)

Why not ring a few and ask?

I'd be surprised if whether you were LTD rather than umbrella makes much difference other than if you're through an umbrella you can simply omit to tell them you're a contractor and just say full-time employed.

[simes]

Definitely stay Ltd.

As above, a contract with three months to run etc. should be enough for a broker to play with.

[CMMEgroup]

Hi Brian, - That is a very good question. From a mortgage perspective, as you are returning to contracting, the payment mechanism you choose to move forward with has little impact as the borrowing could be based upon the strength of your contract rate alone.

A contractor mortgage specialist like CMME, would be able to look at your industry experience coupled with the strength of you new contract rate to determine the level of borrowing available to you and therefore your decision over Ltd company or umbrella can be made based on what works best for you. Hope that helps.

[northernladuk]

Re the post above...

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