Reply to: Getting a Mortgage - First House - 4 months Contracting

[Martin@AS Financial]

Thanks Martin! I certainly wouldn't be looking for that much but good to know never the less!

No problems at all - delighted to be able to help.

[Kelstar]

Thanks Martin! I certainly wouldn't be looking for that much but good to know never the less!

[Martin@AS Financial]

Martin, out of interest, in the current market, what would the lending multiple be for using 3 years worth of company account?

I am not looking to buy at the moment, but will be upgrading at some point in the future, and my plan was to approach a lender based on 3 years worth of accounts. This information would just be good to know (with the knowledge that it may be out of date come the time I wish to buy).

Thanks

Hi Kelstar

Subject to credit score and affordability, it is possible to get upto 6X income still.

[Kelstar]

Martin, out of interest, in the current market, what would the lending multiple be for using 3 years worth of company account?

I am not looking to buy at the moment, but will be upgrading at some point in the future, and my plan was to approach a lender based on 3 years worth of accounts. This information would just be good to know (with the knowledge that it may be out of date come the time I wish to buy).

Thanks

[Martin@AS Financial]

Scoi, that is the idea. I want to buy somewhere nice where I can spend my weekends, regardless of where I work. That is the setup I would like.

I will have to wait and see when I file my accounts for the first time next year and take it from there I guess...

You may not have to wait if you are keen to purchase. Most lenders today will work off an IT Contractor’s limited company accounts. Whilst this income is not hard to prove, banks tend to want 3 years of accounts, will only work off the average net profit figure and will not take into account retained profit. Essentially, this does not give a true reflection of the earned income.

There are however a couple of bank out there that are favourable to you chaps and will work off your daily rate. For example, lets say your daily rate is £600. They would multiply this by 5 and then again by 48 on the assumption that you work a 5 day week and give yourselves 4 weeks off a year. Essentially this then give you a useable income of £144,000 to buy your new home.

[Segush]

Its a nice part of the country and not a bad drive to and from home if you plan to live on the m4 corridor during the week.

Scoi, that is the idea. I want to buy somewhere nice where I can spend my weekends, regardless of where I work. That is the setup I would like.

I will have to wait and see when I file my accounts for the first time next year and take it from there I guess...

[Scoi]

Its a nice part of the country and not a bad drive to and from home if you plan to live on the m4 corridor during the week.

[Segush]

Scoi,

I know what you mean, but my idea is to buy my first property there where I can live even if only the weekends and rent wherever I work. I know about the IR35 and the 24 months rule. In regards to the IR35 I must say I get different treatment to the others (no parking spaces given etc) although I know I still have to worry about it.

Yes I agree Jacobs FW and other companies are within minutes from where I am based during the week. But I would like to continue with this company for now, and they are moving there hence why I am considering this...

Difficult decision!!!

S

[Scoi]

I have a house in south Beds so a good commute for London gigs and currently renting a room in Basingstoke as current contract is down here. Every agent that calls me is for roles in London, sandwiched between the m4 and m3, Manchester/Warrington or Aberdeen. I would think Reading is the best place to be based, quick trains to London and easy drive to loads of places around this area.

Gloucestershire would be a great place of the country to be based but apart from your new office or the few in Birmingham you'd be lucky to find a place commutable from home.

Check out oilcareers and have a look at the locations on offer for when you need a new role. I'm in process, I know a lot more CAD, mech and electrical roles are more countrywide but when look at the big design houses, KBR, Kellogg, Foster Wheeler, Jacobs, Davy, Snamprogetti, Saipem etc. are based, these will be your main targets over the next few years and all the smaller places are dotted around the big clientco's.

Be careful about promises of years of work, projects go elsewhere/fall through etc. a one project loss means 50 contractors leave a big company, you have to watch IR35 with very long stints at one location. My accountants legal bods said after a year it's time to start worrying. It's hard enough to be convincing for any role as an engineer as you have to prove you aren't doing the same job as a staff member, which generally we are, after 2 years its much harder to argue.

Sorry, don't want to dissuade you from your plans, just future proofing.

[Segush]

Scoi,

Where are you based? I am currently based in Reading as a matter of fact, but the department I work for is relocating to the Gloucester area and I kind of prefer being based there to be honest, although there are potentially only a couple of companies I could work for from there. In the future I wouldn't mind as I could rent out and rent somewhere else where work may lead me, but I like this job and it seems I can get a couple of years out of it in the current climate if things don't go tits up.

Indeed I am trying to save as much as I can for a deposit.

Jase,

Meeting did not take place, I had to postpone due to travel arrangements.

[Scoi]

I am not in IT but in oil and gas, I have been told that makes things more complicated?

S

I'm in O&G as well, when going through a mortgage change with Halifax they weren't too happy with the contractor/Ltd company arrangement and said that i was 15k over what they'd consider based upon my first signed contract.

They still signed it off as it was only a renewal though but said they wouldn't lend over 18 months worth of a similar contract. I can see you struggling with a new mortgage with no accounts to back up the application.

O&G runs in cycles typically every 7 years. We're in the middle of the upwards slope so should be good for another 3 years. From my experience with O&G engineering rates, you should have a big deposit in 6 months and a pay off time which should be comfortable in the current oil boom.

Cheltenhams a bit of a random place for the oil market though, would have thought Cheshire or Berks would have been a better location if you want to commute from home.

[Jase]

Jase,

I am going to meet Martin @ AS Financial next week, he said they can help. Did you have a good experience with them? I just do not want to rent again for more than 6 months really...

S

Sorry - missed this post. Assume the meeting has taken place and hope it all worked out.

[DeludedAussie]

I recently purchased a property (completed 1 June) with a 20% deposit. I’d been in my contract since August 2010 but only started a limited company in November 2011. So no company accounts but a decent period in the same contract. I approached two mortgage companies discussed on here:

1. Contractor Money
2. Contractor Mortgages made easy

Both ended up offering me the same provider and deal but Contractor Mortgages wanted to charge me a £495 fee on top of their commission. So I went with Contractor Money until Clydesdale stopped taking new applications. At least that is what Contractor Money told me but they stopped returning my calls and left me high and dry as I’d had my offer accepted and was in the process of surveys etc. Really poor service.

After doing a search of this board I found a post by AS Financial stating they were also mortgage brokers for IT contractors. Very professional and I had the mortgage offer and Halifax’s survey completed in two weeks. Segush, I know you said you are in oil and gas so you may want to find a financial adviser who specialises in your industry.

Jase.

Interesting you say this - I went with Contractor Money about six weeks ago and they suggested I take a mortgage out with Clydesdale.

I made them aware that I need the mortgage approved asap but they insisted I go through Clydesdale. In the end Clydesdale withdrew the product after I had applied and carried out the survey and they refused to take my calls or explain what was happening nearly one month after we submitted the application.

As the previous reader said - Very poor service and I would not use or reccomend again.

I submitted an application through Mortgage Talks and found Halifax offered within five days of the application submitted.

Conclusion? Stay away from contractor money. They used to be decent but now some of their advisors are taking the pi**

[Segush]

I recently purchased a property (completed 1 June) with a 20% deposit. I’d been in my contract since August 2010 but only started a limited company in November 2011. So no company accounts but a decent period in the same contract. I approached two mortgage companies discussed on here:

1. Contractor Money
2. Contractor Mortgages made easy

Both ended up offering me the same provider and deal but Contractor Mortgages wanted to charge me a £495 fee on top of their commission. So I went with Contractor Money until Clydesdale stopped taking new applications. At least that is what Contractor Money told me but they stopped returning my calls and left me high and dry as I’d had my offer accepted and was in the process of surveys etc. Really poor service.

After doing a search of this board I found a post by AS Financial stating they were also mortgage brokers for IT contractors. Very professional and I had the mortgage offer and Halifax’s survey completed in two weeks. Segush, I know you said you are in oil and gas so you may want to find a financial adviser who specialises in your industry.

Jase.

Jase,

I am going to meet Martin @ AS Financial next week, he said they can help. Did you have a good experience with them? I just do not want to rent again for more than 6 months really...

S

[escapeUK]

One of those places offered me a Clydesdale bank mortgage too. Quite frankly they are rubbish in the marketplace, but if that's all you can get I suppose its better than nothing.