CALL USWhat is the definition of a contractor?
A contractor is typically someone who charges by the day and offers a professional service such as consultancy. It can cover a wide range of disciplines; project management, business analysis, marketing, sales. The majority of contractors will contract through either their own limited company handling their tax & NI or an umbrella company. There are now many people who prefer the freedom of choosing which assignment they work on next and don't want to be tied to one employer.
What is a contractor mortgage & how do I get one?
A contractor does not need to apply for any special mortgage and can have access to all the lenders in the UK. The key thing that someone who contracts needs to consider is how each lender calculates their income. This can vary drastically from lender to lender. Some lenders will want to see a full 3 years history of contracting including tax returns and trading accounts, other lenders may be happy only to see a copy of your latest contract and use your current day rate to calculate your annual income.
As well as having the correct documentation to prove your income, lenders will also want to know
- How long you have been contracting for
- Whether you were employed previously in that same profession
- How long you have left on your current contract
- Whether your current client has previously extended your contract
Knowing which lender is right for you is not easy and there is a minefield of criteria to search through. The advise of a good mortgage broker could make the difference between being accepted or being rejected for your mortgage.
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Summary
There are now around 20 high street lenders that will accept a contractors income based on a day rate. This simplifies the process for getting a mortgage, particularly for those that don’t have to wait to have 2 or 3 years contracting experience. The key is to ensure that you meet the criteria of the mortgage you are applying for and having the documentation available to meet their criteria.
Bennison Brown have expertise in this segment of mortgages and we can quickly find you a suitable mortgage. We offer a free initial consultation which includes an evaluation of your circumstances and an illustration to show what mortgage we recommend for you.
Did you know?
As well as mortgages, Bennison Brown can put you in touch with accountancy service as well as a pension and investment advice through our trusted partner, Andrew Graham Wealth Management.
Bennison Brown can support contractors with a number of other services including;
- Producing annual accounts
- Corporation tax calculation
- Book keeping
- VAT return and advice in general on VAT (including the flat rate VAT scheme)
- Payroll
- IR35 compliance
- Personal tax return calculation and submission
They have experienced advisers who can offer advice on pensions provision. You may have historic pensions pots at various different providers you have built up from your career that need to be consolidated. Potentially with no company scheme in place you may want to setup a new personal pension to ensure you are planning for retirement. You can read more about how we can help here.
Your home may be repossessed if you do not keep up repayments on your mortgage.
