Mortgage with contract breaks

[Mark McBurney@CMME]

If it's 14 months since your last break then you may well have some good options.

The mortgage with HSBC based on trading accounts is not a contractor mortgage, it has been assessed as self employed (hence the 3yr account history). If you're assessing self-employed then breaks in contract matter not one jot as they aren't looking at the contract at all.

With a year of continuous work then you may well find that you're in a better position that you feared. I suspect that the 'broker' that you spoke to initially is not a contractor specialist, and as such doesn't know how to get your income assessed.

Engage a contractor specialist broker - as previous posters have said there are 3 or 4 contractor specialists who will be able to help you.

Best wishes,

Mark

[heyya99]

Only caveat here is do NOT spend the warchest. You do that, your gig ends next month and you are likely to lose the house you just bought. Don't spend you corp tax or VAT savings either obviously.

I had thought about this to.. Being relatively new to the contract game, new gigs historically are difficult to get so I think I'd need to be careful with my warchest.

[northernladuk]

I am currently saving for a deposit for a house. I am trying to find the best way to use my business to get the money together. I don't have enough in my personal account for the deposit I want to get but do if I take some out of my business.

I think I have 2 options:

1. Take money out of my business and pay the 25% tax.
2. Wait until I have taken enough tax-free dividend + salary taken from my company, then buy.

Which option is the best one? If I go with 1, is that throwing money away in tax? Is is always advisable to wait?

IMO don't let your tax situation control your life. You went contracting for the flexibility it offered. To them limit yourself lifestyle just because of tax is wrong. You will still be paying a hell of a lot less tax overall than a permie. The tax threshold isn't a hard stop. It's just a level that you will be paying more (but still a whole lot less than a majority of the working population).

If you have excess money in the account it's going to cost you to get it out anyway eventually. Maybe some of it at 10% instead of 25% but still, you will still get taxed on it at some point...

You are going to have a long contracting career and money will build up in the account and there is nothing you can do about it. Take a chunk out now and enjoy your life. It won't be long before you have too much in the company again and have to take a tax hit getting it out again. Only caveat here is do NOT spend the warchest. You do that, your gig ends next month and you are likely to lose the house you just bought. Don't spend you corp tax or VAT savings either obviously.

There is also the argument that house prices are going up at a rate of knots at the moment so IMO if you are going to buy do it sooner rather than later.

[northernladuk]

Believe it or not, the search was the first thing I tried but couldn't see much. I'm not ruling out my not using it right but it didn't give me what I needed.

The best method to search is explained here...

http://forums.contractoruk.com/welco...uk-forums.html

[heyya99]

Mortgages have been discussed a million times on here with at least 3 specialist contractor mortgage providors contributing. You have been around long enough to think about searching before asking.

Ring John Yerou at Freelancer Financials on 020 84217999 They deal with lenders that specialize in contractor friendly products so gaps between contracts, low net income etc are not a problem and the amount you can borrow is based on your contract rate...


Oh... And learn to use the search.

Believe it or not, the search was the first thing I tried but couldn't see much. I'm not ruling out my not using it right but it didn't give me what I needed.

[heyya99]

I am currently saving for a deposit for a house. I am trying to find the best way to use my business to get the money together. I don't have enough in my personal account for the deposit I want to get but do if I take some out of my business.

I think I have 2 options:

1. Take money out of my business and pay the 25% tax.
2. Wait until I have taken enough tax-free dividend + salary taken from my company, then buy.

Which option is the best one? If I go with 1, is that throwing money away in tax? Is is always advisable to wait?

[SarahL2012]

Just 3 years - had to hassle my accountant to get 2013 accounts done, but hsbc did say they would take a letter from him confirming profits & dividends if accounts weren't ready.

We did have a large deposit on house though & the b/f is in a PAYE job so that would have helped too

[northernladuk]

Mortgages have been discussed a million times on here with at least 3 specialist contractor mortgage providors contributing. You have been around long enough to think about searching before asking.

Ring John Yerou at Freelancer Financials on 020 84217999 They deal with lenders that specialize in contractor friendly products so gaps between contracts, low net income etc are not a problem and the amount you can borrow is based on your contract rate...


Oh... And learn to use the search.

[heyya99]

I've recently got one with hsbc. I did need to show them 3 years accounts, but they looked at the P&L and my level of dividends - never asked about contract lengths.

Had you been contracting long?

[SarahL2012]

I've recently got one with hsbc. I did need to show them 3 years accounts, but they looked at the P&L and my level of dividends - never asked about contract lengths.

[heyya99]

I have been contracting since Sep 2011. Between then I have had 2 breaks (3 months and 4 months). It is now 14 months since my last break.

I would like to by my first home and need a mortgage. Based on my limited contracting experience, do you think I could get a mortgage? I rang one broker and they said no provider would touch me with 7 months in breaks.