{"id":19809,"date":"2019-04-25T06:47:14","date_gmt":"2019-04-25T06:47:14","guid":{"rendered":"https:\/\/www.thehouseshop.com\/property-blog\/?p=19809"},"modified":"2023-09-28T15:21:22","modified_gmt":"2023-09-28T15:21:22","slug":"how-to-get-a-contractor-mortgage","status":"publish","type":"post","link":"https:\/\/www.thehouseshop.com\/property-blog\/how-to-get-a-contractor-mortgage\/","title":{"rendered":"How to get a contractor mortgage"},"content":{"rendered":"\n<!-- SEO Ultimate Plus (https:\/\/seoultimateplus.com) - Code Inserter module -->\n<script async>(function(s,u,m,o,j,v){j=u.createElement(m);v=u.getElementsByTagName(m)[0];j.async=1;j.src=o;j.dataset.sumoSiteId='b68b392479b5981b8acf46565e9fe32a0734fc21a1f7c1e60121eaa6ca1a1c64';v.parentNode.insertBefore(j,v)})(window,document,'script','\/\/load.sumo.com\/');<\/script>\n<!-- \/SEO Ultimate Plus -->\n\n<p><span style=\"font-weight: 400;\">If you work as a contractor, you might be wondering if it will even be possible to get a <\/span><a href=\"https:\/\/nichemortgageinfo.co.uk\/income-types\/mortgages-for-temporary-workers\/\"><span style=\"font-weight: 400;\">mortgage, when on a temporary contract<\/span><\/a><span style=\"font-weight: 400;\">. Since the end of the self-certification mortgage, it has become harder for self-employed people to get on the property ladder. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In many situations, the owner of a limited company will have a harder time proving their eligibility for a mortgage than the people they employ.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you work as a contractor and are dreaming of owning your own home or want to remortgage an existing property, read on to find out how this will work for you. <\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How much can I borrow?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">All lending decisions are made based on your past earnings. In most cases, you can borrow around 5 times your annual income. When you are a worker with a permanent contract, you can multiply your salary by 5. However, your income might be very irregular when you&#8217;re a contractor.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some lenders will ask to see at least 9 months of account, but others may ask for 2-3 years of accounts. If you\u2019ve only recently started your contracting business, this can significantly impact your earnings. Think back to your first year of trading \u2013 was your total income anything like it was by the second or third year? <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In some cases, it can be beneficial to wait until you have more trading history before making an application or you could be left short.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\"><img loading=\"lazy\" class=\"alignnone  wp-image-19810\" src=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2019\/04\/Accounts.jpg\" alt=\"\" width=\"759\" height=\"569\" \/><\/span><\/h2>\n<h2><span style=\"font-weight: 400;\">What accounts do I need?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you are a contractor trading as a limited company, your accountant must prepare your accounts for the mortgage application. Since many contractors take dividends from their company instead of a more regular pay cheque, you need to find a <a href=\"https:\/\/dollarbackmortgage.com\/\">mortgage provider<\/a> who can understand this key difference.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Rather than looking month to month, most mortgage providers will look at annual earnings. Since most contractors have variable earnings, they might take an average of the last two years as their final amount. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you earned \u00a339,000 one year and \u00a341,000 the following year, they consider this an average of \u00a340,000 yearly. However, if there is a significant difference, they might take the lesser year as the basis of their calculations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you earn \u00a355,000 one year and this falls to \u00a335,000 the next, they might take the \u00a335,000 as your annual earnings. <\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Boost your deposit<\/span><\/h2>\n<p><a href=\"https:\/\/www.equifax.co.uk\/resources\/Mortgages\/how-do-mortgage-applications-work.html\"><span style=\"font-weight: 400;\">Any mortgage application<\/span><\/a><span style=\"font-weight: 400;\"> will be looked on more favourably if you have a larger deposit. Lenders will see you as less of a risk if you can increase your deposit. You can either increase your deposit by waiting to submit your application and saving more money or setting your sights on a cheaper property. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">You might have to make some compromises on things like location or finish. If it means you can get on the property ladder sooner, this might be a worthwhile compromise.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Show future earning potential.<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">One way to make your application more attractive to lenders is to show evidence of future earning potential. If you can show future contracts or retainer agreements for work, this can help make your application stronger. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Likewise, look to the past. If you can show past evidence of earnings in a similar full-time permanent contract, lenders will look favourably at this. This is particularly important in cases where you have changed your employment status to start your own business. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">If one mortgage provider rejects you, don\u2019t assume that all lenders will treat you the same way. Every lender has different criteria, so don\u2019t give up. Sometimes it\u2019s just a case of finding the right lender.<\/span><\/p>\n<h6><span style=\"color: #999999;\">Ref: 3501.30866<\/span><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>If you work as a contractor, you might be wondering if it will even be possible to get a mortgage, when on a temporary contract. Since the end of the self-certification mortgage, it has become harder for self-employed people to<span class=\"ellipsis\">&hellip;<\/span><\/p>\n<div class=\"read-more\"><a href=\"https:\/\/www.thehouseshop.com\/property-blog\/how-to-get-a-contractor-mortgage\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":41,"featured_media":19811,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wl_entities_gutenberg":"","_lmt_disableupdate":"","_lmt_disable":"","spay_email":""},"categories":[7,15,16],"tags":[],"wl_entity_type":[602],"modified_by":"Editor","_wl_alt_label":[],"jetpack_featured_media_url":"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2019\/04\/1111.png","wl:entity_url":"http:\/\/data.wordlift.io\/wl0502\/post\/how_to_get_a_contractor_mortgage","_links":{"self":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/19809"}],"collection":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/users\/41"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/comments?post=19809"}],"version-history":[{"count":3,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/19809\/revisions"}],"predecessor-version":[{"id":29781,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/19809\/revisions\/29781"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media\/19811"}],"wp:attachment":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media?parent=19809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/categories?post=19809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/tags?post=19809"},{"taxonomy":"wl_entity_type","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/wl_entity_type?post=19809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}