IT Contractor Mortgages
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IT Contractor Mortgage – finding a good deal
IT contracting is usually a stable and well-paid career choice, which most Mortgage Lenders recognise. So it shouldn’t be problematic to find a competitive mortgage deal, as long as you have been in business for a few months at least.
Are there specific mortgages for IT Contractors?
There’s no need for a special IT Contractor mortgage, as you can take your pick from the hundreds of mortgage products available in the marketplace.
The only difference for a Contractor in getting a mortgage, compared with permanently employed people, is in how you demonstrate your earnings to a lender as part of the mortgage application.
Every Mortgage Lender has to look at your income to understand what size of mortgage will be affordable to you.
How will my income be assessed?
How the lender will consider your earnings can vary by provider. Some will see you purely as Self-Employed and will want to see your accounts to calculate your average annual income.
If you operate as a limited company, you may need to take extra care. Some lenders, such as the high street banks, might simply base their mortgage offer on your salary and dividends. If you pay yourself a nominal wage for tax reasons, this might limit your borrowing. It could help to seek out a lender that will also take account of the retained profit in your business.
Meanwhile others are more tuned in to what working as a Contractor is like, and will be more focused on your current contract, your day rate and how long the project is.
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Our fully qualified, experienced advisers have access to a wide range of products from across the entire mortgage market, including specialist mortgages for people with complex circumstances. We can even access exclusive deal available only to our customers.
What documents will I need?
One of the key steps when you apply for a mortgage is to provide proof of income by providing various documents to the lender. You will always need bank statements and photo ID, as well as proof of address via a utility bill. Further documents might depend on your business set-up.
Sole traders are usually asked for self-assessment forms from the past year or two, while limited companies usually need certified accounts.
Some more specialist lenders will be more contract-specific and ask for proof of your daily rate, your current contract details and history over the last year or two. Some will make their own calculations of your annual Contractor income based on your full time rate over 48 weeks.
If you, like many Contractors, operate under an umbrella company, you may be asked for evidence of your contract rate and past payments.
How much can I borrow as a Contractor?
The amount you may be offered in a mortgage can vary widely by lender, as they will all apply their own rules in working out the loan amount. It’s even more important to shop around as an IT Contractor to make sure you’re getting the most appropriate deal.
The general rule of thumb for mortgages is that you can usually borrow up to five times your annual income, so this is a good amount to aim for.
Bear in mind that the higher the loan, the higher your monthly mortgage repayments. By putting down a deposit of 15% to 20% you can usually find more competitive interest rates to reduce your repayments.
How can a Mortgage Broker help?
Our role is to take all the hard work out of finding a mortgage deal so that you can focus on your day job. We’ll explore your specific circumstances and property plans, and explore all the options across both high street and specialist lenders.
We’ll help you at every step to secure a mortgage and we’re on hand for support right up until you complete on your property.
We’re authorised and regulated by the Financial Conduct Authority for financial advice, so get in touch today to find out how we can help.
I cannot express the quality of service received as a first time buyer from Luke at Heritage Mortgages. No query to big or small, with quick responses alongside an exemplary level of service, Luke secured a great result during the pandemic so I could purchase my beautiful new home. Great market knowledge surrounding self-employed earnings was clearly evident and secured the desired result. Thank you!
Annabelle is a top notch Mortgage broker. She took a year of silly questions, being stupid and setbacks from me and she stuck by me and got me my mortgage on my first home. She’s an excellent person who just thoroughly loves her job and wants to see people happy in their homes. Could not recommend anyone higher! Thank you Annabelle.
Highly recommend Annabelle, she is a fantastic broker, she sorted our remortgage in a flash! My hubby and I were concerned about the process due to him being self employed but Annabelle got us a DIP in no time at all, a mortgage offer within days and I’m happy to say we’ve just completed. We couldn’t be happier with the service we received, it was faultless – thank you! So if you are reading this and like us you are hesitant about speaking to a broker I’d say just do it, Annabelle took away all the stress and got us a great deal. ?