Reply to: Rule of thumb for maximum mortgage for a contractor + permie couple?

[jamesbrown]

Yeah I need to look into this but my assumption is you have to pay it back the same tax year and the timing is looking like April will be the worst possible time for the tax year to end

I wonder if renting the place might be an option but I'd understand if the sellers don't want the hassle.

There's a brief description here:

https://www.gov.uk/individual-saving...ing-your-money

I think it matches your expectations, i.e. within a tax year, and only for ISAs that are designated "flexible". Of course, whether you're really saving much in ISAs now (vs. regular accounts) is also worth considering, given that interest rates are so low, there's now a Personal Savings Allowance (500 or 1000, depending on your tax status), and the annual ISA allowance is fairly high (so you could replenish it fairly quickly).

[d000hg]

Minor contribution here, but I believe you can now remove/return money within an ISA in the same year, i.e. without impacting your yearly contribution limit, although I'm not sure if all banks have adopted this flexibility. It could provide you with some additional time to sell your mother's place...

Yeah I need to look into this but my assumption is you have to pay it back the same tax year and the timing is looking like April will be the worst possible time for the tax year to end

I wonder if renting the place might be an option but I'd understand if the sellers don't want the hassle.

[PurpleGorilla]

I looked into a contractor mortgage earlier this year.

As I have multiple contracts with multiple clients it had to be based on my accounts (two years at the time). In the end was looking at being able to borrow around £300k, which seemed a bit low all things considered.
I'm hunkering down with the cheap mortgage we've got, and waiting for the Brexit crash to wreck things up nicely.

[SneakySimon]

Contractor Mortgage

I got a contractor mortgage last year - it was based off my day rate (£450 at the time) and my CV history (ie showing not gaps).

I spoke to several contractor brokers - at a £450 per day, the amounts they / the banks would lend varied hugely on a 90% mortgage - max was £600k and lowest was £240k.

I went through Halifax who had the best deal, though the amount they offered was close to the amount I needed. They just wanted 3 years company accounts and 3 years self assessments and a copy of my contract - it had to have at the time of exchange, at least a month left to run on it.

Broker I used was FrelancerFinancials - very professional and efficient.

Good luck

After going around a few brokers, I couldn't get a

[DimPrawn]

And they say self cert mortgages (liar loans) are consigned to history.

[Jess@ContractorFinancials]

Hi d000hg,

It depends on which lender you are approaching - some will only want to see your current contract. Others will want to see your last 12 months/possibly even 24 months and would then look to average your income over this period.

Ideally if you can get a contract that states what you work per week, i.e £500 per day / 5 days per week or £45 per hour, £40 hours per week etc, this would help as the lenders will annualise your income off of this. Some lenders, if days/hours per week are not mentioned will make an assumption of 5 days per week or 37.5 hours per week and will only amend this should your contract state differently.

If you are working less than this (i.e 3 days per week) it is up to your mortgage adviser to ensure the correct documentation is sent to the lender to confirm this and they will need to ensure your case works on affordability on this basis.

A letter from your end client is usually very helpful - although if they could word it as "works a minimum of X hours per week" rather than "up to X hours per week" that will probably work better for you with most lenders

[jamesbrown]

Minor contribution here, but I believe you can now remove/return money within an ISA in the same year, i.e. without impacting your yearly contribution limit, although I'm not sure if all banks have adopted this flexibility. It could provide you with some additional time to sell your mother's place...

[vetran]

It's Sixpence per person per week. She can service quite a few.

Blackadder: [Arthur wants Blackadder to tell him a children's story because he misses his mother] And then Squirry the Squirrel went "Ni, Ni, Ni" and they all went home for tea.
Arthur the Sailor: Thanks very much, me ol' shivering mateys! Now, how much do you charge for a good hard shag?
Blackadder: [nervously] A thousand pounds.
Arthur the Sailor: A thousand pounds? You've got to be joking!
Blackadder: Well, I'm sure we could negotiate.
[Tosses soliciting placard to Baldrick]
Blackadder: [next scene: back at home] Right, so we've got sixpence.

[Uncle Albert]

You reckon Sixpence a week will make a difference?

It's Sixpence per person per week. She can service quite a few.

[vetran]

And no going the NLadyUK route is not an option I want to pursue.

You reckon Sixpence a week will make a difference?

[d000hg]

Cheers Jess.

I've never used a contractor specialist lender/adviser before as we know an adviser well locally but it might be worth considering. I'm actually just about to (hopefully) renew my contract but there's a slight issue that I have worked part time with no fixed rules on hours in the contract.

Can anyone advise what language a contract needs, or what lenders/advisers will be looking for? For instance if they offer me full-time work for 2017 but I was half-time the last two years would providers red-flag the sudden jump in income? Or would they only look at my current contract?
I'm not normally keen on full-time working as I don't need the hassle but for 6-12 months to a)get the extra cash b)expand my mortgage options it might be prudent?

Or is there a little room for cleverness here e.g. contract says "up to 40 hours a week" - I'm sure my client would be happy to reword slightly as long as it's legit since we've a good relationship

[Jess@ContractorFinancials]

Hi D000hg,

Most lenders these days have moved away from just using income multiples and they will assess your affordability based on a variety of factors. Obviously your earnings will play a significant part in this, but lenders will also calculate any credit commitments and your lifestyle into their affordability.

Your mortgage adviser will be able to check all of this for you and will ensure your mortgage is fully affordable before submitting an application.

With regards to documents for proving your income, lenders that are contractor friendly will work off of your contract itself and annualise your daily/hourly rate without the need for you to supply SA302's/accounts. A mortgage adviser may ask to see accounts or SA302's before making a recommendation to ensure that they review all possible lending options for you and that they recommend the product that is best suited to all of your needs.

[d000hg]

I do recall that when buying or current home, our advisor ended up wanting sa302, SATR and company accounts to get the best permutation as different lenders wanted different things.

I have made sure to get personal and company returned completed early in preparation

[TheCyclingProgrammer]

As a rule of thumb take your joint average income over the last 3 years and multiple that by 4. You most probably won't be able to borrow more than that and your monthly outgoings bring this amount down depending on how high they are. The LTV percentage won't won't much difference to how much you can borrow that will affect the rate you get offered.

You will most probably need to provide proof of income by giving them your self assessment so work out your income using the 2013/2014, 2014/2015 & 2015/2016 tax years.

Not really a rule of thumb that easily applies to contractors who may be turning over more than they are actually paying themselves. There are lenders who will calculate what they will lend based on day rate or profits + salary rather than salary + dividends.

[davetza]

As a rule of thumb take your joint average income over the last 3 years and multiple that by 4. You most probably won't be able to borrow more than that and your monthly outgoings bring this amount down depending on how high they are. The LTV percentage won't won't much difference to how much you can borrow that will affect the rate you get offered.

You will most probably need to provide proof of income by giving them your self assessment so work out your income using the 2013/2014, 2014/2015 & 2015/2016 tax years.