Reply to: Mortgage for a new Contractor

[Pegasus]

Yes, I will surely let you know my findings.

Thanks.

[d000hg]

No, it's not incredible at all

It's not surprising, I've heard of new builds being sold at half-price even, but it's still amazing as far as I'm concerned if you actually manage to find such a place.


Pegasus will you let us know what you find? I'm in only a slightly better position - UK resident but contracting (more like freelancing) for 1 year now. The contractor financials calculator is throwing out about a 3.75X multiplier based on 48 weeks full work at my current rate which sounds quite high to me. So I'm interested to know what offers you get.

If you think this is really a bargain, surely it's possible to get a mortgage if you are willing to pay a significantly higher interest rate, maybe 2-3% more even than what you could get if you were UK resident. If you funnel all your income into paying off the mortgage - very single penny you can afford - that might let you get the property without paying too much extra. It sounds like this is virtually your perfect property right now after all.

[Pegasus]

Yes, thats right.

Being a repossessed flat though, I feel that the rate is exceptionally low.

The going rent at the apartment (even in the current climate) is around 1000 per month, so the rental yield also is pretty good.
(Agreed it wasn't great at 285K, but its certainly very good at 140K)

Seeing another mortgage advisor in the afternoon, lets see what he says.

Else will look further into Halifax 5.19% with an arrangement fee of 500, on Monday.

Thanks.

[Cyberman]

Wow. That's incredible, but you might still be able to get a bit more off since they've already showed just how desperate they are.

No, it's not incredible at all, if you keep up with the news. Far too many flats have been built for Buy-to-let and were being sold at over-inflated prices and thus we had the demise of Bradford and Bingley when people found that they could not let at a sustainable price, and handed back the keys.
Flats are where the biggest falls in prices have been seen, whereas larger properties have fallen by considerably less.

[Cyberman]

Also, from the same source, the world will end in 3 weeks, but during that time we can expect at least another 8million to sneak past our immigration laws.



Horsetulip. The guy sat next to me has been contracting for only 18months and just secured a mortgage with Barclays @80% LTV based upon 12months of accounts and no verification from accountant on 3rd year (how would they do this anyway? Crystal Ball?)

Good luck to him if that is the case, but I was quoting my experience with HSBC which is a more solid bank for the reasons I gave. Barclays are obviously prepared to take more risks, even when we are in a depression. Perhaps they are carrying out government policy to try to avoid eventual nationalisation.

[Pegasus]

Yes, I will certainly try to. Actually their offer is 145K, but am assuming that I will get it at 140K. Anything lesser would obviously be even better.

Also, the fact that it is right adjacent to the flat I have been renting for 2 years, makes it even more attractive (easy shifting, no lifestyle change at all as I love the in-house gym, easy commute etc etc).

Now, if I can just get a good mortgage!

Mortgage is being an issue because:
1) I have been contracting for less than 12 months (has been 4 months so far)
2) I am not a permanent resident of UK (HSMP is valid till Apr 2011)
3) I have not been in UK for last 3 years continuously (have been for 2 years)

The mortgage advisors say that if 1 or 2 of the above probs were there, they could have managed, but it is difficult to manage all 3, and even more so in the current climate!

I do understand that saving cash in next 8 months, and then (when I have completed 12 months contracting) taking a 60% loan at lets say 4% would work out better than taking a 75% loan at around 5% now.
But the key thing is that I don't know if there would be any such repossessed selling in my own apartment at that point of time!?

Let us see. Any more pointers/guidance would be helpful.

[d000hg]

Thanks for all your responses.

Yes, I do understand that there is a fair chance of property prices going down further, but I am still interested because:
1) This flat is in the same building where I currently rent - I will just need to move in the adjacent flat, so extremely convenient, and
2) It is being sold at a substantial discount because it is a repossessed selling. It last sold in Jan 2008 for 285K, and is currently being sold at 140K.

Wow. That's incredible, but you might still be able to get a bit more off since they've already showed just how desperate they are.

[Pegasus]

Thanks

Thanks for all your responses.

Yes, I do understand that there is a fair chance of property prices going down further, but I am still interested because:
1) This flat is in the same building where I currently rent - I will just need to move in the adjacent flat, so extremely convenient, and
2) It is being sold at a substantial discount because it is a repossessed selling. It last sold in Jan 2008 for 285K, and is currently being sold at 140K.

So even with a further 2 year downfall in property, I don't know whether I will get a flat at this rate in my own apartment building!

ContractorMoney (or Financials, same thing!) told me that the Woolwich offset requires a minimum of 12 months contracting.

With less than 12 months contracting, they mentioned that only Abbey 4.49% and Halifax 5.19% fixed for 2 years are available, but as am not a permanent resident here (have a HSMP valid till Apr 2011), that rules out Abbey also.

I have been banking with HSBC for 2 years, so let me see what they say! Else Halifax may be the only option!

[bodnobal]

Pegasus, 1st thing, have you thought of putting in an even lower bid for the flat, I'd say 95K. Seriously, the ball is firmly in the buyers court now.

Sit on the offer, wait for a ring back.

[vetran]

why do you reckon that Threaded?

[blacjac]

I got a mortgage from HSBC after 6 months contracting.

They accepted a financial statement from my accountant and the last 3 P60's from my permie days.
However I had been a custom of theirs for over 10 years previous so they knew my history....

[Ravello]

It's extremely difficult getting a mortgage now without a large deposit according to the Daily Mail yesterday.

Also, from the same source, the world will end in 3 weeks, but during that time we can expect at least another 8million to sneak past our immigration laws.

As a contractor you will also need to show at least two years accounts and get your accountant to verify salary for the third year.

Horsetulip. The guy sat next to me has been contracting for only 18months and just secured a mortgage with Barclays @80% LTV based upon 12months of accounts and no verification from accountant on 3rd year (how would they do this anyway? Crystal Ball?)

[FSM with Cheddar]

I think they still do. Try here as well.

Yeah I found contractor money (the same as contractor financials) really good.

They worked on a multiple of my daily rate, based on working 48 weeks a year.

That was 6 months ago though

[oracleslave]

contractormoney used to offer woolwich flexible mortgages based on rate. Don't know if they do now though...

I think they still do. Try here as well.

[threaded]

Hi,

I have been contracting for around 4 months (since Oct 2008). Have got 2 months left in the current contract, but have also been informed on email about a confirmed 6 month extension (till Oct 2009).

I am looking to buy a repossesed flat which is being offered at around 140K. I am planning to make a down payment of 35K (25%), and take a mortgage for 105K.

Am in touch with 1-2 mortgage advisors, but thought it will be good if I can ask for some advice on this forum also.

It will be great if any of you can share any information/advice/experience regarding getting the best possible mortgage in the current climate, considering my personal details provided above.

Thanks.

I believe properties are due to become significantly cheaper, so do what any proper contractor would: save up and pay cash.