Mortgage: How much to borrow - calc on perm or contract rates

**Jet Setter** · 28 July 2010, 10:41

Originally posted by Rangster View Post

Hi,

We are looking at securing a mortgage but are unsure to work out how much we can borrow based on my current contract rates (mid level banking IT) or a perm role which is obviously much less. I have been contracting for around 6 years and have a good warchest for rainy days but not sure if I should risk it or play safe and work it out based on a contract rate. Wife is a teacher so she is permanent although she is broody....

Any thoughts/experiences welcome

Thanks

There's another thread that addresses this, but I found it was best to use a company specialising in contractor mortgages as I had the added complication of being on a Tier 1 visa. I used Contractor Mortgages Made Easy and they were pretty good. I tried a couple of High Street banks but they just gave me donuts. They get you loans based on your rate, not what you take out of you ltd.

**Support Monkey** · 28 July 2010, 10:41

Contact Contractor money Contractor Mortgage and Pension Advice - Independent Financial Advisors for IT Contractors, Design Engineers and the Self-Employed - mortgages

let them work it out for you, its not worth wasting your time contacting high street banks when your a contractor, they just don,t get it

**Jaws** · 28 July 2010, 11:10

I've recently remortgaged via natwest and the advisor I spoke with had no problem putting it through based on me being a contractor. The amount available to borrow was 5x what I pay myself via salary/dividends. I'm under the impression they counted my personal income as a salary rather than my contract rate.

**Support Monkey** · 28 July 2010, 11:30

Originally posted by Jaws View Post

I've recently remortgaged via natwest and the advisor I spoke with had no problem putting it through based on me being a contractor. The amount available to borrow was 5x what I pay myself via salary/dividends. I'm under the impression they counted my personal income as a salary rather than my contract rate.

Some are ok some have no clue its pot luck, I was with the Skipton building society for 10 years and went to remortgage for 70 grand and they said i could only have 40,(took em a week to tell me that) i tried explaining but i would have had to jump through hoops to prove my earning, one email to Contractor money and they got me a better deal same day from Barclays, when your dealing with a local branch you may get some spotty clerk just following the script. I just want the money not the hassle

**northernladuk** · 28 July 2010, 12:22

Most lenders have standard processes to speak to your accountants who can prove your income to the satisfaction of the lenders. I don't think there is a need to go with 'contractor friendly' mortgages. This thing about not taking divis as an income seems to be rubbish. Advise your accountant you are going to do this and then when the lender asks you for proof of income give them your accountants name. They didn't bat an eye lid. To be fair as well most of the wealthier people will have accountants so would be pretty dumb of them to turn this type of business away.

**Support Monkey** · 28 July 2010, 12:37

Originally posted by northernladuk View Post

Most lenders have standard processes to speak to your accountants who can prove your income to the satisfaction of the lenders. I don't think there is a need to go with 'contractor friendly' mortgages. This thing about not taking divis as an income seems to be rubbish. Advise your accountant you are going to do this and then when the lender asks you for proof of income give them your accountants name. They didn't bat an eye lid. To be fair as well most of the wealthier people will have accountants so would be pretty dumb of them to turn this type of business away.

I agree it should be simple but i did all that with Skipton building society they had all the paperwork including a full set of account(which they lost, but thats another story)then waited a week for them to turn me down..

the other issue is if you go to a high street provider they are only going to sell you their product a broker is going to look at multiple providers

**northernladuk** · 28 July 2010, 12:57

Originally posted by Support Monkey View Post

I agree it should be simple but i did all that with Skipton building society they had all the paperwork including a full set of account(which they lost, but thats another story)then waited a week for them to turn me down..

the other issue is if you go to a high street provider they are only going to sell you their product a broker is going to look at multiple providers

You forget to tell us why they turned you down. There are a whole host of reasons it could be and may not be because you are a contractor. This example (until qualified) isn't really good feedback.

**Scrag Meister** · 28 July 2010, 12:59

Sounds like you have plenty of years accounts, they wouldn't touch me with < 2 yrs.

I guess the question is how much do you pay yourself.

I went with salary + divs, they checked personal and business accounts, and share structure etc...

Do you have a mortgage to port? I did and got 0.49% above base as a loyalty rate (Santander, was Abbey National).

Mine was joint with my now wife, and we took 3x joint I believe.

**Support Monkey** · 28 July 2010, 13:50

Originally posted by northernladuk View Post

You forget to tell us why they turned you down. There are a whole host of reasons it could be and may not be because you are a contractor. This example (until qualified) isn't really good feedback.

They turned me down because I did not earn enough money, they would only lend on the basic wage not the dividend payment, they had full accounts details i wanted 70 grand for a property valued at 200 so we had more than 50% equity.

I am not saying all banks are like this it was just my experience, it was a lot of hassle and wasted time, i sent one email to contractor money and they sorted it out and came back to me with a better deal and advised me that on my rate i could have 200 grand

I have had dealings with them since and have always had a quick response and a good service so i recommend them

Mortgage: How much to borrow - calc on perm or contract rates