Contractor mortgage - going direct with 1 year of accounts - is it possible?

[DigitalUser]

Has anyone had any luck going direct to, say, someone like Halifax direct with 1 year of accounts? I've spoken to a couple of specialist contractor brokers and with a 10% deposit the only product I'm offered (Halifax) is quoted 0.5% higher than what's currently on their website.

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[northernladuk]

Have you tried searching for the term mortgage? We have had a number of threads very recently asking almost exactly the same questions.

[DigitalUser]

Have you tried searching for the term mortgage? We have had a number of threads very recently asking almost exactly the same questions.

I did - no one has stated whether they've been successful, nor commented on the rate offered Vs going through a contractor broker. I'll have to pop down the local Halifax this weekend, but given it's a small branch I can only hope they understand the company policy of lending to IT Contractors...

[northernladuk]

They probably won't but they will understand lending to small business owners. If you pigeonhole yourself to something so specific, which isn't really the best description of yourself you are likely to be met with blank looks.

Tell them you have a small business owner and they will have forms specifically for your accountant to verify your income etc etc....

I got my mortgage through RBS and they guys were more than helpful over the phone. You can chose and advised or non advised options and they only had 4 or 5 mortgages for me so didn't take too long to write the details of them down and then check them against the compare sites to see how they stood up.

[administrator]

If you think you can squeeze 0.5% out through going direct with Halifax then I wouldn't wait for the weekend and the small local branch - is there a main mortgage centre you can call and enquire?

[Freelancer Financials]

I did - no one has stated whether they've been successful, nor commented on the rate offered Vs going through a contractor broker. I'll have to pop down the local Halifax this weekend, but given it's a small branch I can only hope they understand the company policy of lending to IT Contractors...

All the points you've raised have been commented on in previous post. Many contractors on this forum have been successful securing a mortgage with Halifax both through a mortgage broker and going directly.

Currently a 90% LTV (10% deposit) mortgage is 4.49% going direct. Through a mortgage broker the rate is 4.99%. If you go to your local branch, they will probably want to assess your affordability based on accounts, rather than the IT Contractor policy. But you never know, the world is full of surprises and you might just find an advisor who understands the contractor policy. Definitely worth a try, please let us all know how you get on.

If they adopt the traditional self-employed criteria, you will be assessed on your drawings (directors salary and dividends).

Just multiply your drawings by a multiple of 4.5 to calculate how much you can potentially borrow.

A good broker on the other hand should be able to examine whole of market based on your self employed status and contract rate to source you the best deal based on your personal circumstances.

This will depend on a number of factors:

1. How many years accounts you have?
2. Whether your profits are rising or decreasing?
3. Directors remuneration, net profits and dividends?
4. Whether you're still in contract or not?
5. Current contract length and time left?
6. Contracting history?
7. Daily/hourly rate?
8. Your credit history and score?
9. Loan to Value
10. Type of property, new build, flat, house, ex-local authority?
Etc, etc, etc.

A good mortgage specialist, should examine all your options based on your self employed and contractor status. They should only resort to "contractor based underwriting" as a last resort. Be careful of lazy contractor mortgage specialist. Any advisor that just ask you for your contract and bank statement without checking to see whether your accounts stack-up first, is either lazy or too busy to do the research.

Good Luck!

John Yerou
Freelancer Financials

[DigitalUser]

Assuming I find a property I want to complete on, I'll do a submission for a formal application and let the forum know of the outcome. For some reason Halifax require a SA302 form, which doesn't make any sense in this context but I'm sure my accountant will be able to iron out any issues.

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[Perhentian02]

Could you let us know how you got on?

[kirankumar]

I think if you approach halifax directly they would ask for 3 years accounts. Can anyone comment If halifax asks for SA302 If you go through brokers ? Thanks

[Power Mortgages Ltd]

I think if you approach halifax directly they would ask for 3 years accounts. Can anyone comment If halifax asks for SA302 If you go through brokers ? Thanks

It depends how we would be presenting your income to the lender whether they would need SA302's. If you have no gaps in your contracting history and a current contract in place at the moment then we can look to use your contract to prove your income which will negate the need to reference the Limited Company at all so you do not need to provide accounts or SA302's.

If there are gaps in your contracting history then Halifax can accept 1 year of trading history. They will either need finalized accounts and an accountants reference (which they will send directly themselves) or an SA302. SA302 is preferable but it is feasible you could have accounts but not an SA302 depending on when your company tax year started/ended in which case Halifax will accept the accounts and a reference from your Accountant.

I have found (through client feedback) approaching Halifax directly is very hit or miss. It depends upon the competency of the advisor you speak to. General consensus from a number of my clients who have spoke to them previously is that they do not really have a decent grasp of how contractors operate on the whole. That said, I know a few people, include some from here who have been lucky and managed to get the funding agreed going directly.

Hope that helps?