Can I get a Contractor Mortgage with Bad Credit?
Special circumstances need a Specialist Contractor Mortgage Broker
First thing to do is – DO NOT APPLY TO ANOTHER LENDER UNTIL YOU HAVE SEEN A COPY OF YOUR CREDIT FILE. See the link below on where to obtain a copy of your file that I will need to see when we talk.
And just to let you know, that I know, what you are looking for in a Contractor mortgage and that is a lender that will lend to you based on your day rate – not Accounts, SA302’s, Tax Overviews or Tax Computations – just your day rate. For example;
£500 per day x 5 days of the week x 46 weeks in a year = £115,000pa.
That is the figure a lender would assess you on for a mortgage not your Net Profit if you were Self Employed or Drawings & Dividends if you were a Limited Company.
Listed below are criteria that some lenders will use when assessing you for a mortgage.
Income calculated on current weekly contract – typically this would be 46 weeks but some will lend based on 48 weeks income.
Only 12 months contracting history required but this could be less if you are starting out as a Contractor but have been in the same line of work for a few years. For example, if you were employed as a Programme Manager for a few years but now started out on your own contracting as a Programme Manager, lenders take comfort that you are working in the same line of work. If you were on your second 6 month contract and had a reasonable deposit, you would stand a much better chance of getting a mortgage than someone who had only just started Programming having come from a background of Car Sales for example.
No minimum income
Every year, a higher percentage of the workforce is made up of contractors and contract workers. But the way mortgage applications are processed hasn’t yet caught up with this change, which means more and more people are having their contractor mortgage applications refused for reasons beyond their control.
If you find yourself in this position, it can be frustrating at an already stressful time. But I can help you because I am a contractor mortgage broker, helping clients who have CCJ’s or Defaults or any manner of adverse history on their credit file. I specialise in helping those who’ve had an application declined.
If your Contractor Mortgage was refused, that doesn’t mean you won’t be successful next time
Many lenders want to see a regular pay slip before they sign off on a mortgage. Contractors can fall through the gaps, because even though you’re invoicing more than enough to pay your mortgage and meet their requirements, your fluctuating income is seen as a risk.
The standard criteria lenders apply just doesn’t work for contractors, and that means you can find your applications refused regardless of the amount of money in your bank account. This way of thinking is becoming outdated with a workforce that’s becoming more and more reliant on the hard work of contractors – and it’s a way of thinking that I’ll challenge by securing your Contractor Mortgage.
I know which lenders accept Contractor Mortgage applications having built up a list of lenders and I’ll make sure your application isn’t rejected because they are looking for accounts or SA302’s. The lenders I talk too will lend based on your weekly contract amount times a number of weeks you work in a year. Provided you have had a contract or two under your belt, I have lenders who will lend to you and if you have a poor credit history.
In my nearly three decades as a Mortgage Broker, I’ve learned the root cause for mortgages being rejected. And it’s very simple.
Lenders don’t like to take risks.
As a contractor, you represent an increased risk to lenders because once a contract comes to an end, you may not get a new one. As a contractor mortgage broker, I’ll do everything I can to minimise the risk you pose to lenders and negotiate a successful mortgage application on your behalf.
But there are steps you can take to ensure you’re successful when you apply.
What Can I Do To Increase My Chances of Success?
Approach a Specialist Broker like me!
If you’re reading my website, you’re a phone call away from increasing your chances of success. I understand the way contractors are paid and what paperwork lenders are looking for when applying for a mortgage. I can help you to secure a mortgage based on your contract rate even if you’ve been declined in the past.
Manage Your Finances
This almost goes without saying, but your finances need to be in order. Contracting can be lucrative, but your financial records need to demonstrate this. By this I mean your business bank statements cross reference with weekly contract invoices, your personal bank statements do not show bounced DDM’s or returned cheques. If you have a positive credit rating and your finances are in order, you will be in a stronger position when it comes to finding you a mortgage.
Have a deposit
Unsurprisingly, large deposits help a successful application. The higher your deposit, the lower the loan to value ratio will be and the fewer hoops you’ll be forced to jump through. If you’re managing your finances well, you should be able to put money aside to increase your chances of a successful application
Check My File provide data from the 3 credit reference agencies that lenders use – Equifax, Experian & Call Credit – so it is a good place to start to get an overview of your credit history. It maybe that once I have identified a lender, we get copies of your credit file directly from the agency the lender uses to make absolutely sure your credit history is OK for that particular lender.
Even if your application has been declined or refused in the past, give me a call as I know this market and may have lenders you may not have approached for a mortgage.
Owning your own home doesn’t mean finding a different career path to follow. Call me, Steven Neale, now on 01494 526 400 to discuss a Contractor Mortgage.