MMR - Getting a mortgage whilst on the bench?

[eek]

I have been out of the house market for years but this approach still seems weird to me. Surely people usually secure the finance (in principle) before making an offer for a house?

I think its usually sell your house and then see what is available...

[Power Mortgages Ltd]

I can understand why having no current contract would affect an application, but why should going through an Umbrella?

Because it closes a few routes (director, company history....).

A contractor using an umbrella is an employee of that umbrella company / consultancy.

A contractor using a limited company is a company director.

Exactly what Eek said.

As a contractor, contracting through an Umbrella Company you are only able to verify your income via the contract or via payslips from the Umbrella Company neither of which you would have if you are not in a contract whereas as a Limited Company Director you potentially at least have accounts to demonstrate your income as a Limited Company Director over a number of years

[JRCT]

Exactly what Eek said.

As a contractor, contracting through an Umbrella Company you are only able to verify your income via the contract or via payslips from the Umbrella Company neither of which you would have if you are not in a contract whereas as a Limited Company Director you potentially at least have accounts to demonstrate your income as a Limited Company Director over a number of years

Ok. That makes sense and makes me feel like I asked a stupid question, now. Which, is not unusual.

[jmo21]

I think its usually sell your house and then see what is available...

Correct, but that should not stop you knowing your price range you can afford by calculating the deposit you will have (maybe dependent on a house sale and the price you get there of course) and the mortgage you could get.

Offering on a house without having a mortgage offer in principle is pretty daft to be honest and wasting everyone's time.

Of course a mortgage can still fall through even after having had the mortgage offer as they dig deeper into your finances.

In the OP's case, he would have found out sooner that his working arrangements were going to be an issue.

A contractor broker or bank would probably have told him this in a 5 minute phone call.

[jamesbrown]

Offering on a house without having a mortgage offer in principle is pretty daft to be honest and wasting everyone's time.

Essentially, I agree, but I think it depends how long you've been looking. Certainly, get an offer in principle early-on, but you don't want to keep getting offers in principle if they expire (e.g. because you haven't found something or your parameters change slightly).

[jmo21]

Essentially, I agree, but I think it depends how long you've been looking. Certainly, get an offer in principle early-on, but you don't want to keep getting offers in principle if they expire (e.g. because you haven't found something or your parameters change slightly).

Why not, does it affect your credit score or something?

Unless it is a life altering event, and not having a job/contract fits, then you DO need to know you can get a mortgage.

Regardless, renewing offers was not my point, talking to a broker/bank before ever making an offer was.

[d000hg]

I was considering something similar the other day. Our fixed-term lock in is due to expire at the start of 2015 and my current contract runs until the end of 2014. That means I could find myself benched at exactly the wrong time, 'trapped' in a much more expensive mortgage.

In that scenario would company accounts and SA302 paint a nice picture? I seem to recall our IFA had 3 different options and only one of them was a "contractor mortgage" asking for my day-rate.

[jamesbrown]

Why not, does it affect your credit score or something?

Unless it is a life altering event, and not having a job/contract fits, then you DO need to know you can get a mortgage.

Regardless, renewing offers was not my point, talking to a broker/bank before ever making an offer was.

Yes, I know what your point was, which is why I qualified my response. In many cases, an offer in principle will impact your credit score (although I believe some lenders do not make a hard footprint).

[NorthWestPerm2Contr]

Hello

I have been contracting again since January 2013. Unfortunately, my last gig came to end a couple of weeks ago, so I am on the bench.

I am selling my house and last week I put an offer on another house, which was accepted, then I went looking for mortgage. I was caught off guard when the mortgage consultants / advisors (a couple of the high street lenders, a contractor mortgage specialist company, a few IFAs) told me that I need a current income in order to prove to the mortgage lender that I can qualify.

madmad Mortgage Maker Reviewer


Has an contractor on the bench managed to get a mortgage?

PS: The answer is yes. Currently, I am urgently looking for my next gig. I am sending emails to recruitment agents and ex co-workers, calling out on my network, doing linked-in mails on my connection just to secure the next contract gig as soon as possible.

WTF?

You are urgently looking for contract work since you only just realised it would help your mortgage case?! Are you sure you are cut out for this - go permie lad.

[rocktronAMP]

WTF?

You are urgently looking for contract work since you only just realised it would help your mortgage case?! Are you sure you are cut out for this - go permie lad.

Have you ever had your contract cut out from under you when the project suddenly comes to an unexpected end? Do you always know where the road lies?

Gosh, I wish I had known the mortgage way and had a crystal ball in senior managers office. I'd love to be the first... sheesh