Mortgages and deposits

[pr1]

Do they not take other outgoings in to account as well? Surely they don't lend a flat multiplier of your contract and disregard any other outgoings you have?

in my case, yes, they did

also wanted to know number of dependants, expected perm salary if I had to get a perm job (as I've only just finished my first year of contracting), my CV (presumably to check I wasnt BSing on the perm salary), and current contract - they will want 3 months of bank statements both personal & company when I go ahead with it (to check my income is what I say it is)

[PurpleGorilla]

Do they not take other outgoings in to account as well? Surely they don't lend a flat multiplier of your contract and disregard any other outgoings you have?

I wouldn't have thought so, I would guess this is the starting point...

[northernladuk]

I know what you mean, assuming a day rate of £500 then a mortgage of £517,500 might be available.

3% repayment on that is £2454 a no month. No small amount to find EVERY month!

Do they not take other outgoings in to account as well? Surely they don't lend a flat multiplier of your contract and disregard any other outgoings you have?

[PurpleGorilla]

I'm surprised that lenders are willing to lend at 4.5 x annual contract value, because that is a large amount and risky when you consider that contracting is not guaranteed work.

So someone with an annual contract value of say £200k could borrow £900k - that's a large debt to take on and will very soon become unmanageable once out of contract for a short while.

I know what you mean, assuming a day rate of £500 then a mortgage of £517,500 might be available.

3% repayment on that is £2454 a no month. No small amount to find EVERY month!

[pr1]

I'm surprised that lenders are willing to lend at 4.5 x annual contract value, because that is a large amount and risky when you consider that contracting is not guaranteed work.

So someone with an annual contract value of say £200k could borrow £900k - that's a large debt to take on and will very soon become unmanageable once out of contract for a short while.

doubt they'd go up to 900k on the same basis, I'm not on your level of earnings

[northernladuk]

Don't see why not - they will just assume you are within IR35 (a chunk of their clients were anyway) and calculate you have 15-20% less disposable income than if you were outside. They would lend as much, but they should still lend as before.

Even if the doomsday scenario hits were clientco's refuse to engage LtdCo contractors, then PAYE contractor will still be an option.

Yeah but the whole model if lending could change if we are considered perms. They could rethink the lending criteria and go back to the same models as the rest rather than by contract value etc. It could be much easier to calculate income for them now so may not need the contract rate products etc.

[ChimpMaster]

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

I'm surprised that lenders are willing to lend at 4.5 x annual contract value, because that is a large amount and risky when you consider that contracting is not guaranteed work.

So someone with an annual contract value of say £200k could borrow £900k - that's a large debt to take on and will very soon become unmanageable once out of contract for a short while.

[PurpleGorilla]

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

Ah I read it wrong. Thanks once again.

[pr1]

Thanks for the info. I guess there is a *5 in there somewhere?

What sort of interest rate are you looking at?

no :s basically 4.5 times annualised contract value

2.09% for 15% deposit, 3.14% for 10% deposit (2 year fixed, £999 arrangement fee) or +0.40% for the fee-free verisons - & higher for 3/5/10 year fixed (obv)

worth getting in contact with them even if you're not planning to move for a while just to see where you're at - there's no obligation or anything to pay until you go ahead with it anyway

[PurpleGorilla]

I've been speaking CMME recently and been approved in principle for 4.5*46*5*dayrate with 10% deposit (not that I'll borrow that much...)

edit - after credit check, contract check & CV check (it wasn't just the "we can offer you XXX!" on the website)

Thanks for the info. I guess there is a *5 in there somewhere?

What sort of interest rate are you looking at?

[centurian]

I wonder if there will even be contractor mortgages available when ir35 hits.

Don't see why not - they will just assume you are within IR35 (a chunk of their clients were anyway) and calculate you have 15-20% less disposable income than if you were outside. They would lend as much, but they should still lend as before.

Even if the doomsday scenario hits were clientco's refuse to engage LtdCo contractors, then PAYE contractor will still be an option.

[pr1]

I've been speaking CMME recently and been approved in principle for 4.5*46*5*dayrate with 10% deposit (not that I'll borrow that much...)

edit - after credit check, contract check & CV check (it wasn't just the "we can offer you XXX!" on the website)

[PurpleGorilla]

Not a clue as contractor mortgages can bebquite different. Am not sure 15% is enough for one either. I know you say you don't think you need to yet but I'd say 5 mins on the phone to someone like Freelancer Financials would certainly be time we'll spent.

I wonder if there will even be contractor mortgages available when ir35 hits.

That's my fear, the lending tide may be turning.

[northernladuk]

Not a clue as contractor mortgages can bebquite different. Am not sure 15% is enough for one either. I know you say you don't think you need to yet but I'd say 5 mins on the phone to someone like Freelancer Financials would certainly be time we'll spent.

I wonder if there will even be contractor mortgages available when ir35 hits.

[PurpleGorilla]

Is 2 years signed off accounts and a 15% deposit still realistic terms to secure a contract mortgage, or is it now a min of 3years and 20% deposits? Any idea on current lending multiples too would be appreciated (x day rate, or x contract rate). I appreciate a broker can answer these, but I'm a few months a way from this formal dialogue, or another year away lol!