Reply to: Contractor Mortgage

[Freelancer Financials]

Mortgage

Hi,

I am interested in getting a contractor Mortgage. My partner is permanent and has a steady job (senior teacher). I have been trading since Dec 07 but only submitted one year of accounts (Oct 09). Does anyone know if the 2 years of accounts that most banks require relate to two years of submitted accounts or 2 years of trading with an income?

Any advice on how to get the best deal. I went to my accountants broker but they could only offer me 1 supplier which was 6.99% fixed due to not having 2 years of accounts

Thanks

You're accountants broker should retire! That's a ridiculous deal. Unless you only have a maximum deposit of 10%.

There are many lenders out there that will consider you. A specialist contractor mortgage broker can secure you a competitive deal with a high street lender with one years accounts or just your contract rate alone. As long as you have been contracting through your own limited company for more than a year and have no adverse credit history.

Best of luck!

John

[Freelancer Financials]

I was able to secure a mortgage with C & G based on one years accounts and one years projected income.

This was for a "buy-to-let" mortgage though, so that could've had some bearing on it (i.e. "guaranteed" earnings from rental income)

Absolutely correct. BTL mortgages are assessed differently to residential mortgages. The main criteria for lending on a BTL is for the rental income
to cover 125% (sometimes more) of the mortgage interest-only repayments.

Very few BTL lenders will want more than 1 years acconts.

John

[BlightyBoy]

I was able to secure a mortgage with C & G based on one years accounts and one years projected income.

This was for a "buy-to-let" mortgage though, so that could've had some bearing on it (i.e. "guaranteed" earnings from rental income)

[Moscow Mule]

.. in the form of ? the Revenue does not provide any receipts as I remember ..

My self-assessment statement (prior to starting Ltd) would have given a good idea of my income...

[GreenerGrass]

Do you have to bank with them to get a mortgage ? I had a FD current account several years ago but then closed it when they introduced a monthly fee.

No, I didn't have an account with them before. But you are required to open an offset account which works in conjunction with the mortgage.

As Bellymonster says an offset account is an ideal place to keep your emergency cash fund and personal income tax amount (for payment on account) tax free.
And as stated you can borrow money back all the way up to your original LTV amount (e.g. 75%) without hassle.
This gives an added incentive to make big overpayments, which you can automate, without worrying that you may need the money back if benched.

There used to be a price for this flexibility but since the credit crunch most of their deals have had no higher interest rates than most conventional mortgages.

[Rangster]

Thanks all. I will definitely look at First Direct. My accountant is recommending Woolwich (Barclay’s) which is the one I have been offered. I contacted Contractor Mortgages but yet to get a response.

Rang

[Lumiere]

Have to agree with the comments re First Direct

Do you have to bank with them to get a mortgage ? I had a FD current account several years ago but then closed it when they introduced a monthly fee.

[Svalbaard]

Have to agree with the comments re First Direct. Works just like a regular bank account as well so you can choose to overpay, underpay, withdraw mortgage capital without notice if you're a bit short, or pay just the interest which is great if you're benched for a few months. They are also always quick to pass on rate cuts and both the website and telephone service is excellent.

FD overdrafts are also free if you have a mortgage with them and they accepted me with two years accounts - no hassles.

Only downside nowadays is that that the arrangement fee is a bit steep, but I've had mine since 2002 when it was only about £199.

[Clarky]

.. in the form of ? the Revenue does not provide any receipts as I remember ..

Maybe he means P60's?

[Lumiere]

sent in tax returns as proof of previous income.

.. in the form of ? the Revenue does not provide any receipts as I remember ..

[Mailman_1]

got approved (Monday) by HSBC on a tracker.

Only had 1 yr ltd accounts, but sent in tax returns as proof of previous income.

LL

What interest rate did u get? And what was the LTV?

[Mailman_1]

Hmmph. Contractor Money??? I spoke to one of thier "advisers", sorted out what mortgage i wanted to go for and mailled him to move forward a week and a half ago. He hasnt acknowledged the email or responded to my email chasing either.

Im looking for another vendor now.

[Lazylobster]

got approved (Monday) by HSBC on a tracker.

Only had 1 yr ltd accounts, but sent in tax returns as proof of previous income.

LL

[Epiphone]

Contractor Money always get good feedback.

[bellymonster]

First Direct are worth a try, their offset mortgages are ideal for contractors. I don't think I had more than 1 years accounts when I applied, although they will want previous years proof of income as well(permie/umbrella whatever).
Great telephone service, and you can use HSBC branches to pay stuff in.

Seconded. I only had one years accounts but they were happy enough to take a peek at the income on my HSBC business account. Approval took less than a week.

With their offset mortgages you basically just have to cover the interest each month so if you go through a spell of not working you can lower the payment without any hassle. You can also draw back any overpayment you've made by simply transferring the cash back to your current account.
Plus you can offset your personal tax stash as well.

You do have to bank with them to get a mortgage but their online banking is pretty good and I've never had any cause to complain.