Getting a mortgage - take the umbrella or the bench?

[Thunder]

Hello,

I was due to move house in a few days, but just before Christmas my buyer pulled out and then not long after Christmas the seller lost his work due to COVID and so pulled out as well.

My LTD company will have been running for 2 years in April. For the move mentioned above I had a mortgage arranged with Halifax based on 1 year books and some other bits and bobs.

We’ve decided to postpone the move now until things settle down with COVID, unless an amazing house comes up and we get tempted. We lost about 1k and a lot of time on this move falling through.

My current outside IR35 contract ends in March, with a company that is then going to blanket apply IR35 from April.

The company is offering me a higher paid role that would put me inside of IR35 from April running to November.

I have a few months reserve £ in the pot.

My question is, on the basis that I will likely be trying to get a mortgage again in the next 12 months....

Would I be able to get a mortgage on the short term umbrella role, or

should I go on the bench and wait for the next outside IR35 role to come up?

Cheers

Thunder

[Lance]

Would I be able to get a mortgage on the short term umbrella role, or

should I go on the bench and wait for the next outside IR35 role to come up?

you mean your job?
Yes you will be able to. It's a job. The lender will want to see payslips.

However they will ask if you expect to see a change in your income in the near future. You need to answer that honestly and say no.

[ladymuck]

So you're asking for a crystal ball!

I'd be inclined to keep working but the outside to inside bit could be a concern.

Are you sure the company are blanket assessing everyone as inside or have you heard "we are not engaging with PSCs anymore" and interpreted that as a blanket determination. The two are very different. One of them is against the rules, the other isn't.

[Thunder]

you mean your job?
Yes you will be able to. It's a job. The lender will want to see payslips.

However they will ask if you expect to see a change in your income in the near future. You need to answer that honestly and say no.

Thanks, appreciated

[Thunder]

So you're asking for a crystal ball!

I'd be inclined to keep working but the outside to inside bit could be a concern.

Are you sure the company are blanket assessing everyone as inside or have you heard "we are not engaging with PSCs anymore" and interpreted that as a blanket determination. The two are very different. One of them is against the rules, the other isn't.

Was only asking for an opinion, which you gave, thank you.

The company of course haven’t said they will blanket determine, because as you say that is against the rules. What they have done is said that they won’t engage with PSCs for inside IR35 roles, terminate all relationships with PSCs at the end of March, and replaced the PSC roles with inside roles from April. They have said that they will maintain a relationship with PSCs for very specific roles, but there is no evidence that these specific roles exist. What is the correct shorthand term for that please?

[northernladuk]

Speak to John Yerou at Freelance Financials. He wrote an article around April last year about some lenders still offering morgages based on rate even though you were via umbrella. I don't know if it took in to account the reduced take home but if it was on rate you'd think not. I did think that would really screw some people over on affordability with a mortgage based on contractor rates but 40% lower take home. Give them a ring and see if those deals are still on the table. If they are then you've a ton of breathing space. That said. If you are going perm then getting a morgage based on rate is gonna leave you in tulip when you lose so much income so becareful.

As soon as you hit perm they are gonna take it on your perm rate regardless of what you've done last two years.

[northernladuk]

Was only asking for an opinion, which you gave, thank you.

The company of course haven’t said they will blanket determine, because as you say that is against the rules. What they have done is said that they won’t engage with PSCs for inside IR35 roles, terminate all relationships with PSCs at the end of March, and replaced the PSC roles with inside roles from April. They have said that they will maintain a relationship with PSCs for very specific roles, but there is no evidence that these specific roles exist. What is the correct shorthand term for that please?

EDITTED. I think my answer was wrong. LM's below is right although if the number of roles they deem as outside are a tiny percentage which isn't representative of the general outside/inside mix then that's closer to a blanket ban than SDS determinations of inside. No way can all but a single percent of people be inside. That's closer to a blanket assessment which I believe is illegal. Don't think they've done their diligence properly there.

[ladymuck]

Was only asking for an opinion, which you gave, thank you.

The company of course haven’t said they will blanket determine, because as you say that is against the rules. What they have done is said that they won’t engage with PSCs for inside IR35 roles, terminate all relationships with PSCs at the end of March, and replaced the PSC roles with inside roles from April. They have said that they will maintain a relationship with PSCs for very specific roles, but there is no evidence that these specific roles exist. What is the correct shorthand term for that please?

You've said they won't engage with PSCs "for inside IR35 roles". This implies the company has done a role based assesment, not a blanket assessment. All roles have been found to be inside and appropriate contracts will be offered. You should expect to receive a SDS detailing how your role has been assessed and the reason for the outcome.

You then say that if they discover a role that isn't inside they will offer a contract appropriate to that role. The fact they haven't found one yet isn't the point.

Obviously this is going off topic but it's the exact wording that's important, not your interpretation of it. You've gone from blanket assessment to role based assessment. Which is it?