Mortgage Question

[marius123]

Hi all,

A slightly different mortgage question to usual that I couldn't find the answer to...

In the past as a contractor with a Limited company I've gone down two different routes with mortgages:
1) Had a (not great) contractor broker who found something based on my day rate at the time
2) Went direct to Nationwide with my Self Assessments for the last two years and a reference from my accountant.

Both worked out in the end but things are a little different now.

I don't have a single contract any more - I work for maybe 6 different clients a month, some I have contracts with specifying call of days or days per month, others I might just have a PO for a one off piece of work. It's a pipeline of work. It's been pretty stable doing this the last couple of years.

I'm looking for a much bigger mortgage than previously. Considering moving house later this year into something much nicer and likely to be a £500k ish mortgage needed rather than the 150k and 250k mortgages previous times that were very easy to evidence my income for.

I've left a lot of cash in the company over the last few years (some of which I will likely need to extract when we move - that's another issue!) so my income the last two years is I think just under £50k. That rules out SAs and accountants methinks.

I've been looking and there do seem to be brokers for directors who will help you look at things like retained profit and whatnot but I had what might be a simpler idea and wondered what people thought....

The difference between dividends and paying a salary continues to decline and frankly it might be easier if the company just paid me a decent salary - at least in the medium term. It could support a salary of say £120k indefinitely and I suspect that for a traditional mortgage provider that might just about do it. I'm happy enough to put this in place several months before applying and frankly keep it in place a fair while afterwards if it massively simplifies matters. Could have payslips and bank statements demonstrating this is really my salary. It would still be _my_ company though and I wonder if payslips/bank statements would be enough evidence in this case or if they'd still then want to dig into the company finances.

If anyone has any thoughts about this / has tried it I'd be happy to hear fully accepting you're not financial advisors, etc etc.

[Lance]

Find the most flexible mortgage you can, with the best interest rate. And apply for it. Different lenders have different methods to ascertain the ability to pay.

Barclays are doing 1.72% with complete flexibility. And want to see evidence of the deposit, 3 months bank statements (company and personal) and two years of CT600. They are willing to lend me the c. £450k I asked for.
When I sell the current property I simply throw that money straight into the new mortgage to reduce the monthly payments.

A broker/adviser will save you the effort of finding the deal, but they won't actually do the deal. I don't mind paying them £500 as the situation is bit more complex. But I am realistic that all they are doing is finding the best deal.

[northernladuk]

You've a pretty unique situation there so very much doubt any anecdotal evidence is going to help you. I don't think inflating your income in the short term is going to help as they go back two, maybe three years. Also loans from the company won't help as they generally don't accept loans as a deposit.

The landscape for contractor mortgages has change significantly in the last year so unless you can find someone in exactly your position that's completed in the last six months or so I don't think you are going to get anything useful from us.

Your best bet is to speak to a contractor specialist broker who knows how we work and deals with the providers that do contractor type mortgages. They can look at the day rates and contractors and will understand the small income high div's model without messing about changing stuff.

Speak to Freelancer Financials. I've used them for many years and there is an existing thread at the moment with others that have used and recommend them.

[northernladuk]

Find the most flexible mortgage you can, with the best interest rate. And apply for it. Different lenders have different methods to ascertain the ability to pay.

Barclays are doing 1.72% with complete flexibility. And want to see evidence of the deposit, 3 months bank statements (company and personal) and two years of CT600. They are willing to lend me the c. £450k I asked for.
When I sell the current property I simply throw that money straight into the new mortgage to reduce the monthly payments.

A broker/adviser will save you the effort of finding the deal, but they won't actually do the deal. I don't mind paying them £500 as the situation is bit more complex. But I am realistic that all they are doing is finding the best deal.

Is that true? Whenever I've used Freelancer I fill in some paperwork at the beginning, sign the odd doc and I'm done.

[Lance]

Is that true? Whenever I've used Freelancer I fill in some paperwork at the beginning, sign the odd doc and I'm done.

maybe I phrased it poorly. They are simply an information conduit. You give them the info, they pass to the lender.
The lender will provide a mortgage based entirely on your information. And you sign the agreement not the IFA.
The same as if you went direct but you only do it once.

It has saved me time as I didn't have to speak to any lenders myself. They found me two options I chose one and provided the paperwork. If I hadn't used an IFA I'd have had to speak to more than one

[northernladuk]

maybe I phrased it poorly. They are simply an information conduit. You give them the info, they pass to the lender.
The lender will provide a mortgage based entirely on your information. And you sign the agreement not the IFA.
The same as if you went direct but you only do it once.

It has saved me time as I didn't have to speak to any lenders myself. They found me two options I chose one and provided the paperwork. If I hadn't used an IFA I'd have had to speak to more than one

Ah then yes correct.

[marius123]

Find the most flexible mortgage you can, with the best interest rate. And apply for it. Different lenders have different methods to ascertain the ability to pay.

Barclays are doing 1.72% with complete flexibility. And want to see evidence of the deposit, 3 months bank statements (company and personal) and two years of CT600. They are willing to lend me the c. £450k I asked for.
When I sell the current property I simply throw that money straight into the new mortgage to reduce the monthly payments.

A broker/adviser will save you the effort of finding the deal, but they won't actually do the deal. I don't mind paying them £500 as the situation is bit more complex. But I am realistic that all they are doing is finding the best deal.

Thanks - if Barclays were willing to do that for you I think it's worth a chat with them.

[marius123]

You've a pretty unique situation there so very much doubt any anecdotal evidence is going to help you. I don't think inflating your income in the short term is going to help as they go back two, maybe three years. Also loans from the company won't help as they generally don't accept loans as a deposit.

The landscape for contractor mortgages has change significantly in the last year so unless you can find someone in exactly your position that's completed in the last six months or so I don't think you are going to get anything useful from us.

Your best bet is to speak to a contractor specialist broker who knows how we work and deals with the providers that do contractor type mortgages. They can look at the day rates and contractors and will understand the small income high div's model without messing about changing stuff.

Speak to Freelancer Financials. I've used them for many years and there is an existing thread at the moment with others that have used and recommend them.

It's is a bit unique. I guess it's more business owner rather than contractor - ironically what I always strived for. It does however make it a bit more complicated than day rates & high div/low salary.

I don't mind paying a broker. I just had a poor experience with CMME a few years back. I was recommended Ryan at Freelancer Financials after things were a long way down the road with CMME, had a little chat with him and he seemed to know his stuff. Probably worth a chat with him again.

I guess the bit I'm still keen to know if anyone does have any insight is about salary... If I was a permie for an organisation I didn't own, three payslips, my own personal bank statements, that's all I think I'd need. I've always assumed it was different because I own the company. If I decided to have a good salary it is just another way of getting my income, is that enough?

[northernladuk]

. If I decided to have a good salary it is just another way of getting my income, is that enough?

I doubt it. It's a different model with competely different risks associated with it.

I don't think they use payslips anymore. Isn't it an S302A now?

[marius123]

Been a fair few years since I applied for a 'permie' mortgage - definitely used to be "here's my payslips". Looking briefly at Nationwide's site they seem to just be asking for a single payslip for permies. They do then go on to state later that limited company directors may be 'treat as self employed' so anyway.

Either way, I suspect transparency is the key here for now and will see what the broker and someone sensible direct at a bank (if that's possible) say