Reply to: Mortgage while in between contracts

[rawly]

Just my two pence worth, as I did a re-mortgage only last month.

For the past 4 years I'd been using Contractor Financials, but rightly or wrongly they now charge quite a hefty fee (used to be free), so I went it alone last month. My current provider (Clydesdale) simply were not competitive anymore. They didn't even move their base rate when BoE moved down the other month. Plus they had hefty redemption penalties and admin fees for all their products. They made it simple for me to choose a new product, however, just login to my account and choose it online with just a few clicks.

However, I chose to go with Nationwide, who I could see had a very clear policy on dealing with Contractors. I had an 'in principle' decision immediately just based on a credit check and entering my income for the past two years which was Salary + Dividends. I then proceeded to the full application, which was about 15 minutes online. For me as Ltd all they wanted was a screenshot of my HMRC online assessment for the past 2 years or an accountants Certificate. I chose to send them the HMRC screenshots showing my SA returns for the past 2 years. There was no questions what so ever about my current contracts, or any breaks, or anything of that sort.

My mortgage got approved within 2 days and the re-mortgage happened within 3 weeks, no Fees at all, or redemption penalties. It was so simple. Saved over £50 a month and knocked a year off the term at the same time compared to my previous provider.

Hope this helps.

[Power Mortgages Ltd]

Barclays are contractor friendly, or certainly were when I was looking to re-mortgage, although this was a couple of years ago now. Worth giving them a shout.

They were a contractor friendly lender but ceased being so a number of years ago now unfortunately. They would now require evidence of salary and dividends over 2-3 year average. They may be able to factor in any retained profit for each year within that period too but going down the route of using accounts as your proof of income, there are other options which could be more beneficial.

As one previous poster has said, your existing lender should be able to switch you over to a new deal so long as it is on a like-for-like basis, e.g. no additional borrowing and you are not decreasing the remaining term of the mortgage although there are a few lenders out there who would still request proof of income in this scenario. I think with these lenders you should be able to argue it through though as their 'risk' is not increasing - they already hold the mortgage anyway.

Other lenders if you wish to switch away would need proof of your income and if you are in between contracts then it would be the conventional route of Limited Company accounts and/or SA302 tax calculations which you would need to prove. It may be worth speaking to a specialist broker who will understand your circumstances as they will know which lenders favour which method of evidencing your income to suit your needs and circumstances.

Hope that helps?

Ben

[Lance]

Barclays are contractor friendly,.

as long as you're a customer not a supplier

[kaiser78]

Barclays are contractor friendly, or certainly were when I was looking to re-mortgage, although this was a couple of years ago now. Worth giving them a shout.

[vwdan]

If you're not using a specialist contractor mortgage provider, I'm not sure they'd even ask. They'd likely want your last 3 years' tax returns, proof of earnings (SA302?) and even a letter from your accountant but I don't recall being asked my daily rate or "are you earning right now" - I've always got a regular mortgage through my IFA/mortgage advisor who is in some way able to vouch for me I think.

Yeah - my circumstances were a touch different because we were primarily lending based on my wifes salary but our IFA just treated me as a Ltd Company director. Never mentioned contracting or contracts - just handed over my accounts and tax returns.

[CMS71]

remortgage

Hi, want to remortgage my residential property, am a contractor through my own Ltd, wonder if anyone knows the latest re remortgaging while in between contracts? Last time I applied for a mortgage they wanted proof of the contract as well as ltd company and personal income proof.

Hi Sandy D it typicaly depends on which lender your with some will allow you to remortgage with little evidence as long as your doing a like for like remortgage and not requesting any changes

[d000hg]

If you're not using a specialist contractor mortgage provider, I'm not sure they'd even ask. They'd likely want your last 3 years' tax returns, proof of earnings (SA302?) and even a letter from your accountant but I don't recall being asked my daily rate or "are you earning right now" - I've always got a regular mortgage through my IFA/mortgage advisor who is in some way able to vouch for me I think.

[Lance]

Hi, want to remortgage my residential property, am a contractor through my own Ltd, wonder if anyone knows the latest re remortgaging while in between contracts? Last time I applied for a mortgage they wanted proof of the contract as well as ltd company and personal income proof.

Best bet is use your current mortgage provider. They already have knowledge of you and your payments. If you are going to borrow less then it's straightforward. If you want to borrow more then you'll have to prove more.

[Emma Power Mortgages]

Hi, want to remortgage my residential property, am a contractor through my own Ltd, wonder if anyone knows the latest re remortgaging while in between contracts? Last time I applied for a mortgage they wanted proof of the contract as well as ltd company and personal income proof.

This can be done if in some cases - like Jess has said your accounts can be used if there is enough income being drawn or you meet certain criteria. Speak to a specialist mortgage advisor they will be able to guide you to the correct lender.

[SandyD]

Hi SandyD,

Remortgaging between contracts may not necessarily be a problem, however it will depend how long it takes you to get back into a new contract. Generally speaking, a gap of more than 6 weeks may cause some issues, however each lender has different policies around this.

If you have been trading for a significant length of time through your Limited Company, you may be able to use your accounts as your income proof instead of your contract daily rate. Although, the lender, or a mortgage broker should you use one, will need to ensure that the amount you are looking to borrow is affordable based on your accounts, and if you think it may take a while to get back into another contract, this may be the best route for you to go down.

Not all lenders these days will require your contract as well as your accounts as income proof - so it may be beneficial to explore all avenues, as some lenders will only require one or the other.

Thanks Jess, will make some inquiries, PM me your details please.

[Jess@ContractorFinancials]

Mortgage between contracts

Hi SandyD,

Remortgaging between contracts may not necessarily be a problem, however it will depend how long it takes you to get back into a new contract. Generally speaking, a gap of more than 6 weeks may cause some issues, however each lender has different policies around this.

If you have been trading for a significant length of time through your Limited Company, you may be able to use your accounts as your income proof instead of your contract daily rate. Although, the lender, or a mortgage broker should you use one, will need to ensure that the amount you are looking to borrow is affordable based on your accounts, and if you think it may take a while to get back into another contract, this may be the best route for you to go down.

Not all lenders these days will require your contract as well as your accounts as income proof - so it may be beneficial to explore all avenues, as some lenders will only require one or the other.

[SandyD]

Thanks very much NorthernLad and Support Monkey.

[Support Monkey]

Thanks, I am not taking a gap, my contract just finished and looking for a new role, but as I am on the bench thought I can use the time to do the remortgage now, hoping to go back to a role soon, when on a role things are usually too hectic, just wanted to use this downtime to do something useful.
Which contractor specialist did do you know?? ContractorMortgages? I think they charge a lot nowadays.

I would wait until your back in contract, your going to be jumping through hoops trying to get one with no current contract.

[northernladuk]

There are quite a few threads about just this situation, or people having long breaks. From memory (but you can do a search you know) none of them had any good news.

The answer is find a contractor mortgage provider, get them to do the legwork and come back to you with the criteria each lender has and try and work it. Halifax needs you to be less than half way in to your contract which is no good for you. Nor is Virgin who don't want breaks in contracts and so on (don't quote me on those sorry). You aren't going to get a quick answer here I am afraid.

I'd recommend asking for John Yerou at Freelancer Financials if you do want a recommendation.

[SandyD]

I have just remortgaged and they wanted every last bit of paperwork and proof however if you have previous good contract history you should be ok (assuming your not talking about 12 months off) they are a bit tight on it now compared to a few years back but if you go to a contractor specialist you should be ok as long as you can explain the gap

Thanks, I am not taking a gap, my contract just finished and looking for a new role, but as I am on the bench thought I can use the time to do the remortgage now, hoping to go back to a role soon, when on a role things are usually too hectic, just wanted to use this downtime to do something useful.
Which contractor specialist did do you know?? ContractorMortgages? I think they charge a lot nowadays.