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Previously on "Am i facing mortgage problems?"

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  • Freelancer Financials
    replied
    Originally posted by itsnotarace View Post
    Hi,

    First time poster here, and looking for some advice.
    Basically, I have been contracting as a Business Analyst for two years now, and before that I was a full time PAYE employee in the same business area. I had to take some personal time off though between April and August and have just started a new contract (initial term is 3 months.)

    However, myself and my husband would like to move house. We currently have a mortgage which we took out when we were both PAYE, and my husband is still PAYE. We both earn more now than we did when we took out the mortgage, but when we spoke to a mortgage adviser at a high street bank the other day the amount she reckoned she would be able to offer was very surprising...in a very low sort of way, given my daily rate.
    Obviously the mortgage market has changed radically in the past few years, but I'm not convinced she knew much about contractor mortgages either.

    Does anyone know if we are likely to come up against major issues when applying for a mortgage because of the 5 months I've had off? During this time, I have still been drawing a salary from my Ltd company.

    Thanks for any help
    Just wondering how you're getting on with your mortgage endeavours? Did you manage to sort something out?

    As Martin@AS fiancial pointed out you can go down the self- employed status route (assessed on your accounts) or apply for a contractor mortgage (assessed on your contract rate alone).

    If you take the self employed status route, you have a wider choice of lenders that you can apply to but each lender assesses affordability in a different way. There is no universal standard I'm afraid. The majority of lenders will take the average drawings (salary plus dividends) and then apply their affordability calculator based on your credit score and any commitments in the background. More flexible lenders will consider share of net profits and directors salary. These tend to be Virgin, Coventry, NatWest, Woolwich and Clydesdale. In the the majority of cases this allows you to borrow substantially more.

    If you want to go direct, then you need to do your own research to find out which lender would give you the most favourable solution.

    If your accounts don't stack up, then you can resort to using your contract rate. However, because of the 5 month break, you can only really go to one lender, Halifax. Unless you can get an exception from one of the other contractor mortgage lenders, which is going to be tight. The rates at Halifax are quite competitive at the moment.

    There are also a few mortgage specialist like ourselves on this forum, like Martin@AS Financial, Power Mortgages and Contractor Money that can also help if you need a mortgage broker.

    I'd love to hear how you got on.

    Leave a comment:


  • GazCol
    replied
    Originally posted by Crossroads View Post
    But she didn't say that... said same "business area"... i.e. she was a permie BA, and is now a contract BA. I didn't read that as "my former employer is now my client"
    That's how I interpreted it too.

    Leave a comment:


  • malvolio
    replied
    Originally posted by Crossroads View Post
    But she didn't say that... said same "business area"... i.e. she was a permie BA, and is now a contract BA. I didn't read that as "my former employer is now my client"
    I did. How do you deduce that it isn't? She's still a BA working for her ex-employee. Hector won't be too fussed about the precise details.

    Leave a comment:


  • Crossroads
    replied
    Originally posted by malvolio View Post
    While working for your ex-employer makes an IR35 defence difficult
    But she didn't say that... said same "business area"... i.e. she was a permie BA, and is now a contract BA. I didn't read that as "my former employer is now my client"

    Leave a comment:


  • malvolio
    replied
    Originally posted by GazCol View Post
    How so? She works in the same business area as when she was PAYE - not necessarily for the same business. Unless I'm misreading things.
    While working for your ex-employer makes an IR35 defence difficult, it is not a given that you will be caught if the new role is significantly different from the old one and you meet the usual IR35 escape clauses in the contract and in reality. The hard part is working as a contractor, not as an ex-employee that everyone knows.

    Don't forget, IR35 remains primarily concerned with Friday-to-Monday, according to that nice Me Osborne: if he didn't need that defence mechanism it would have died a couple of years ago.

    Leave a comment:


  • GazCol
    replied
    Originally posted by stek View Post
    Caught by IR35 most definitely...
    How so? She works in the same business area as when she was PAYE - not necessarily for the same business. Unless I'm misreading things.

    Leave a comment:


  • FarmerPalmer
    replied
    Originally posted by Martin@AS Financial View Post
    Hi Itsnotarace

    As a contractor you are in a fortunate position in that we can either work off your limited co accounts or daily rate. Working off your accounts is preferential as it opens up more options. Furthermore, lenders will not need to know about your 5 month break. How long has your ltd co been running for and how many sets of accounts do you have?
    The 5 month break would be obvious in the years accounts as the turnover would be significantly lower. It might be worth looking for a mortgage based on your current contract and rate, but talk to a specialist mortgage broker like Contractor Money (as an example, no connection, just that they sorted me out with a mortgage 5 years ago when the High Street banks were saying "No").

    Leave a comment:


  • handyandy
    replied
    Originally posted by Wanderer View Post
    No relation to handyandy then?
    nothing so obvious I'm afraid - I picked up the nickname a good few years back as some colleagues thought I looked and sounded like the bloke off of changing rooms (the other choice I had was cockney W****er)

    Leave a comment:


  • Wanderer
    replied
    Originally posted by handyandy View Post
    The company (mods feel free to censor if I've crossed a line) was contractor mortgages made easy and the person I spoke to was Andy McBride.
    No relation to handyandy then?

    Leave a comment:


  • Martin@AS Financial
    replied
    Originally posted by itsnotarace View Post
    Hi,

    First time poster here, and looking for some advice.
    Basically, I have been contracting as a Business Analyst for two years now, and before that I was a full time PAYE employee in the same business area. I had to take some personal time off though between April and August and have just started a new contract (initial term is 3 months.)

    However, myself and my husband would like to move house. We currently have a mortgage which we took out when we were both PAYE, and my husband is still PAYE. We both earn more now than we did when we took out the mortgage, but when we spoke to a mortgage adviser at a high street bank the other day the amount she reckoned she would be able to offer was very surprising...in a very low sort of way, given my daily rate.
    Obviously the mortgage market has changed radically in the past few years, but I'm not convinced she knew much about contractor mortgages either.

    Does anyone know if we are likely to come up against major issues when applying for a mortgage because of the 5 months I've had off? During this time, I have still been drawing a salary from my Ltd company.

    Thanks for any help
    Hi Itsnotarace

    As a contractor you are in a fortunate position in that we can either work off your limited co accounts or daily rate. Working off your accounts is preferential as it opens up more options. Furthermore, lenders will not need to know about your 5 month break. How long has your ltd co been running for and how many sets of accounts do you have?

    Leave a comment:


  • handyandy
    replied
    I'm not sure what the rules are re referencing mortgage brokers on this site. I'm also no longer contracting (went perm a few years back) but I have lot's of friends and a few people who work on projects for me who do.

    When I last needed a mortgage as a contractor (about 6 years ago) I went to a specialist broker that focussed on contractor mortgages. They charge a fee (I think it was around £500) and I suspect they also got some intro commission from the bank. They worked on the basis that they took a copy of your contract and used a specialist underwriter to insure the risk you'd default. They base the amount you can borrow on a multiple of gross rate and were doing up to around 4 x annual contract value.

    The good thing is they were getting access to good rates with high street lenders and had fixed and variable loans available.

    Whilst I hesitate to praise financial intermediary companies (I always feel it is money for old rope) I do feel (6 years down the line) that the deal I got was really good and well worth the fee I paid - no accounts required, no problem with 3 month contract at that time and very quick.

    No idea what their deals are like now or if the 'bar' has been raised but 6 years ago was a very tough time to get mortgages.

    The company (mods feel free to censor if I've crossed a line) was contractor mortgages made easy and the person I spoke to was Andy McBride. Yes, I reckon if I gave you my name I'd get some kind of reward for the introduction but I've got too many boxed pen sets already! )

    Leave a comment:


  • stek
    replied
    Caught by IR35 most definitely...

    Leave a comment:


  • BrilloPad
    replied
    Originally posted by itsnotarace View Post
    Does anyone know if we are likely to come up against major issues when applying for a mortgage because of the 5 months I've had off? During this time, I have still been drawing a salary from my Ltd company.

    Thanks for any help
    No.

    Next

    Leave a comment:


  • eek
    replied
    Originally posted by itsnotarace View Post
    Hi,

    First time poster here, and looking for some advice.
    Basically, I have been contracting as a Business Analyst for two years now, and before that I was a full time PAYE employee in the same business area. I had to take some personal time off though between April and August and have just started a new contract (initial term is 3 months.)

    However, myself and my husband would like to move house. We currently have a mortgage which we took out when we were both PAYE, and my husband is still PAYE. We both earn more now than we did when we took out the mortgage, but when we spoke to a mortgage adviser at a high street bank the other day the amount she reckoned she would be able to offer was very surprising...in a very low sort of way, given my daily rate.
    Obviously the mortgage market has changed radically in the past few years, but I'm not convinced she knew much about contractor mortgages either.

    Does anyone know if we are likely to come up against major issues when applying for a mortgage because of the 5 months I've had off? During this time, I have still been drawing a salary from my Ltd company.

    Thanks for any help
    Find a specialist mortgage adviser and speak to them. Power Mortgages posts on here, Contractor Money have been discussed on here and I'm sure there are others.

    Leave a comment:


  • itsnotarace
    started a topic Am i facing mortgage problems?

    Am i facing mortgage problems?

    Hi,

    First time poster here, and looking for some advice.
    Basically, I have been contracting as a Business Analyst for two years now, and before that I was a full time PAYE employee in the same business area. I had to take some personal time off though between April and August and have just started a new contract (initial term is 3 months.)

    However, myself and my husband would like to move house. We currently have a mortgage which we took out when we were both PAYE, and my husband is still PAYE. We both earn more now than we did when we took out the mortgage, but when we spoke to a mortgage adviser at a high street bank the other day the amount she reckoned she would be able to offer was very surprising...in a very low sort of way, given my daily rate.
    Obviously the mortgage market has changed radically in the past few years, but I'm not convinced she knew much about contractor mortgages either.

    Does anyone know if we are likely to come up against major issues when applying for a mortgage because of the 5 months I've had off? During this time, I have still been drawing a salary from my Ltd company.

    Thanks for any help

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