Reply to: Mortgage brokers

[Emma Power Mortgages]

Steer well clear of Countrywide.

And when it comes to conveyancing time, keep a very very wide berth from them.

Countrywide Conveyancing and Countrywide mortgage brokers are ran in very different ways, I know they have some excellent advisors there. That being said, as Freelancer confirmed they are not contractor specialists and it is likely they wont be aware of all the options available to you.

[saptastic]

Why is that? How about the ContractorMortgatesUK? Any good?

They are Contractor Mortgages made Easy I believe. Defo worth a call whilst comparing - they have offered out good products in the past.

[Freelancer Financials]

Probably too late for MVL now because the distribution might not be made until after April, unless perhaps the initial distribution can be completed quickly. It takes several months to go through the whole liquidation.

It would (should) impact your application if you've told the lender you are an ongoing contracting business. It'll be akin to losing/leaving an employed position if a permie had applied for a mortgage.

If you already have the deposit then carry on as normal. At some point in the future when you go through MVL you can then lump sum the mortgage down.

Actually you will be surprised to learn that it wouldn't impact your mortgage application as a contractor. The banks that we deal with are familiar with contractors doing this to save tax. But your right, it's very tight as there's only six weeks left.

[Freelancer Financials]

Thanks for mentioning about the MVL. Would it impact on my application of mortgage if I take out my company money via MVL distribution, in order to have a bigger deposit?

I was wondering that the lender would question my company closure and reject application, as I need to provide 3 years income history in my company account, right?

If you were looking to be assessed on a self-employed basis, e.g. company accounts, SA302, salary, dividends, net profits etc. then depending on which lender you approached you would need a minimum of 1 year to 3 years accounts. However, if you use your contract rate to assess your relevant earnings then you wouldn't need accounts or income history. All you need is your contract stipulating your contract rate.

We've dealt with many contractors in this situation.

[ChimpMaster]

Thanks for mentioning about the MVL. Would it impact on my application of mortgage if I take out my company money via MVL distribution, in order to have a bigger deposit?

I was wondering that the lender would question my company closure and reject application, as I need to provide 3 years income history in my company account, right?

Probably too late for MVL now because the distribution might not be made until after April, unless perhaps the initial distribution can be completed quickly. It takes several months to go through the whole liquidation.

It would (should) impact your application if you've told the lender you are an ongoing contracting business. It'll be akin to losing/leaving an employed position if a permie had applied for a mortgage.

If you already have the deposit then carry on as normal. At some point in the future when you go through MVL you can then lump sum the mortgage down.

[Aden]

Thanks for mentioning about the MVL. Would it impact on my application of mortgage if I take out my company money via MVL distribution, in order to have a bigger deposit?

I was wondering that the lender would question my company closure and reject application, as I need to provide 3 years income history in my company account, right?

[Freelancer Financials]

What about the countrywide? any good? someone told me that they are also a big company dealing with contractor mortgage. They charge 200 pounds less than freelancer financial.

The question is how you pick the right one? Do you guy talk to several brokers and then compare them based on the good deals? Any tips?

I haven't contacted them yet as I don't want to pass my personal data and information to so many brokers for comparison.

Countrywide are not mortgage specialist dealing with contractors. You may be lucky and get one that has had some experience dealing with the odd contractor but in general they are your run of the mill vanilla mortgage broker! They even refer some of there existing clients onto us when they're not sure who to take them to. But there's nothing stopping you contacting them to see for yourself.

There are a number of contractor Mortgage Specialists on this forum like Contractor Mortgages Made Easy, Power Mortgages, etc,etc that you should try first. Sorry if I've left anyone out.

[Freelancer Financials]

This company advised me, as a way of avoiding extra dividend tax, to close my company and claim ER. Then form a new company straight away. When I suggested that my accountant dis-advised this method, he said get a new accountant.

There are several contractor specialists accountants on this forum you can consult to find out whether you can take advantage of Entrepreneurs relief.

But you should know this:

With the changes in taxation of dividends due to commence on 6 April 2016, HMRC are introducing new targeted anti-avoidance legislation that will prevent small companies from extracting retained profit by way of a distribution in a solvent Members Voluntary Liquidation (MVL). Capital distributions can only be made on the closure of a company. This would prevent a shareholder taking advantage of Entrepreneurs Relief, thereby paying only 10% tax on the retained profit. The new rules will apply when a company is closed and a new company incorporated within two years of the closure of the first company and both companies carry on the same trade i.e. a contractor continuing to contract through a new company.

Any contractor who has a significant cash balance in the company or director’s loan account balance, and wants the benefits available to them with an MVL before 6th April 2016, their MVL process needs to be started as soon as possible to allow the capital distribution to be made before the new rules are implemented on 6 April 2016. It is worth stressing that the rule change will not affect MVL closures in circumstances where a contractor is permanently retiring or going back into permanent employment for at least 2 years. However for those who wish to continue to work as a contractor/freelancer the changes can have a dramatic impact on the client’s tax position and this is the last chance they have to cash in and pay only 10% tax on profit withdrawals. The tax benefits from a pre-6 April MVL distribution are extraordinarily generous. If funds are distributed after 6 April then assuming the client is a higher rate taxpayer and wishes to continue operating through a limited company they will have to pay a substantial further 32.5% tax on dividends. This is significantly more than the maximum 10% tax payable where the retained profit is treated as a capital distribution through an MVL. In practice those using an MVL to distribute profits will pay even less than 10% because in calculating the chargeable gain that is taxable at 10%, each shareholder is allowed to deduct an £11,000 nil rate band for capital gains tax. Consequently in a typical scenario where both a husband and wife are shareholders this means the first £22,000 is completely tax free and only the remaining distribution is taxable at 10%.

Details of the proposed change in legislation were only recently disclosed and this creates considerable time pressure leaving you a very limited window of opportunity to meet the 5 April deadline for making a capital distribution. MVL’s are carried out by licenced insolvency practitioners.

I hope that helps!

[Scruff]

Can't elaborate for legal reasons.

[Aden]

Steer well clear of Countrywide.

And when it comes to conveyancing time, keep a very very wide berth from them.

Why is that? How about the ContractorMortgatesUK? Any good?

[chopper]

Steer well clear of Countrywide.

And when it comes to conveyancing time, keep a very very wide berth from them.

[Aden]

I'd avoid Countrywide. You have pot luck, since it's very dependent on which advisor you get in the branch. My wife used to be one of their advisors (now independent).

Hi Scruff,

Can you elaborate it? Do you mean that they may not give the best deal for me?

[Scruff]

mnah mnah do do do do doo

[heyya99]

Freelancer Financials: very very good. Have used them a number of times over the past few years.

Mind if I ask what you constitute good? Is it the rate you got or the fact you got a mortgage at all, based on your circumstances?

[Aden]

What about the countrywide? any good? someone told me that they are also a big company dealing with contractor mortgage. They charge 200 pounds less than freelancer financial.

The question is how you pick the right one? Do you guy talk to several brokers and then compare them based on the good deals? Any tips?

I haven't contacted them yet as I don't want to pass my personal data and information to so many brokers for comparison.