Mortgage Lenders - Please help!

[Peter Loew]

Have also used CMME and had no such hassles.

I'd be looking for another broker to be honest. anyway, you should have nother broker to make sure you're getting whole of market.

You're right. I've contacted Contractor Money and spoke to one of their brokers who have given me quotes for another lender and specified that there are two other lenders they deal with (aside from Halifax) who's criteria are contract value only and who meets my needs. They are ready to go pending the decision with Halifax.

[Freelancer Financials]

Contractor Friendly Lenders and Mortgage Brokers

Instinctively, most contractors go onto the web and Google "best buy mortgage deals” or “best low rate mortgages” and more often than not will find HSBC Bank, First Direct and ING leading the tables. However, the reality is that all the above lenders are not contractor friendly! The majority of contractors that come to us have previously obtained an “agreement in principle” only to be told once their application reaches the underwriter that their application has been declined because it is “out of criteria”. Some contractors are also let down by non specialist mortgage brokers who have approached the wrong lender or poorly packaged the application. Each failed application leaves a footprint on your credit record, this makes the next application more difficult and it is therefore essential to get it right from the start.

Lenders like HSBC, First Direct and ING have a simplistic view of what qualifies as relevant earnings for lending purposes. They also have a bias towards permanent employment as they view this type of borrower as less of a risk.

If you have been contracting through a limited company for more than 3 years, your application may be considered by some of the above lenders. In this case they will apply their standard multiple of income (3 to 3.5) to your personal salary and dividend drawings. But they are likely to also ask for 3 years accounts. For tax reasons, many contractors working through a limited company will draw a minimum salary and also restrict dividend payments to avoid higher rate tax. Although this is a perfectly reasonable tax planning strategy it also has the unintended consequence of reducing the amount a contractor is eligible to borrow under the standard criteria used by most mortgage lenders.

A small number of mortgage specialist like ourselves can secure competitive mortgages based on contract rates alone, irrespective of whether you are operating through your own limited company or an umbrella company. This means that you don’t have to rely on the traditional method of using accounts, which may not fully reflect the total earnings that you have at your disposal, for income verification on a mortgage application.

A Contractor Mortgage Specialist will present your mortgage application directly to senior underwriters so that your full earnings potential is taken into account - including earnings which are not paid out but retained within the company for tax planning purposes.

The following documentation is normally requested for “Contract based underwriting”:

• A copy of your latest CV
• A copy of your latest contract, confirming your contract rate (some banks may ask for the previous 12
months contract history)
• Some lenders request 3 months personal and business bank statements


I hope this information prepares Contractors for what lies ahead in getting a mortgage.

Best Wishes