So you’ve been contracting for a couple of years, making some good money and have a long term contract with a great day rate. So you head off to talk to your friendly bank manager and has one look at your situation and quickly comes back with a rejected.
Now you’d be right in thinking that Banks should be fighting for you business considering the amount of money you are taking home.
But the banks don’t understand!
They view contractors as self-employed and a risk. Contractors sit in a unique position in the eyes of the banks as they are not a permanent employee yet they aren’t self employed.
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If you’re employed you walk into a bank you show theme your payslips and you’re offered a mortgage dependent on that banks lending criteria. It’s a little different for the self employed as they need to show three years worth of accounts ,showing a healthy profits and related references to walk away with their mortgage.
Now this is a problem for contractors as all advice from all good accountants is for contractors to maximize their costs so they can minimize their profit.
But the Banks don’t want to see this.
Now if you think this sounds like a catch 22 you’d be right.
So what do you do?
Start the process early
Once you start contracting, start talking to your bank, book an appointment with a mortgage advisor and explain your situation. Make them aware of your timeframe that you are thinking of before you submit a application, show copies of your contract and keep them involved.
Ask them to talk to the central lending process unit to make sure you won’t run into any problem or even better try and get the contact details of someone there.
Talk to other contractors.
Your fellow contractors are a great source of information, ask other contractors who have mortgages for the name of their mortgage advisor. If they have issued a mortgage to a fellow contractor, chances are they GET IT and would be happy to talk to you about it.
Use your Network.
Ask your accountant, umbrella or recruitment agency for any recommendations. Chances are most will have a link with a bank or mortgage broker. Also using your social networks will bring back a lot of valuable contacts.
Talk with a Mortgage Broker
Now not all brokers are created equally. It’s best to speak with a broker who mainly deals with contractors. That way they understand your situation before you begin the process.
Find out how much you can borrow?
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