Freelancer Financials are delighted to announce a major expansion of the contract based mortgage underwriting criteria by one of the major high street banks.
Mortgages for ALL Professional Contractors
Over the years we’ve been tirelessly working hard on behalf of the UKs Contractor Community to persuade major high street lenders to open their doors to all professional freelancers regardless of the sector that they specialise in.
“This is a major milestone for the UK’s freelance community as it unbolts the contract based mortgage market to any professional freelancer.”
Prior to this announcement Halifax would only consider IT Professionals based on their gross contract earnings. Non IT Contractors had to provide a minimum of one year’s accounts and were assessed on a multiple of their salary and dividend drawings. This meant that Non IT Contractors were faced with two major obstacles to securing a mortgage:
- The majority of Contractors with Limited Companies operate in a tax efficient way by drawing a low salary and minimising dividends to avoid higher rate tax. Great tax planning, under normal circumstances, the downside is that intelligent tax planning has the unintended effect of reducing your potential borrowing.
- Contractors just starting out may not be able to provide a minimum of one year’s financial accounts.
Ian Wilson, Head of Sales at Halifax Intermediaries said “We are pleased to be able to extend our existing IT Contractor policy. This is a natural step forward in supporting self employed customers in their aspirations to get on the property ladder. We hope that in widening our policy we will be able to help more customers benefit from our range of products and services.”
What does this news mean for Professional Contractors
This major high street lender no longer views Non IT Contractors as a higher risk and will allow ANY professional contractor to be assessed on a multiple of their gross annual contract earnings. Unlike other contractor friendly lenders that require a minimum of two years uninterrupted contract history, they will accept freelancers from their very first contract.
How do you qualify for a Professional Contractor Mortgage?
In order to qualify for a professional contractor mortgage, you must be on a minimum daily contract rate of £300 or £75K per annum. Whether employed or self-employed, Halifax will accept the gross value of the contract as evidence of income.
How much can I borrow?
Just multiply your daily contract rate by the number of days worked each week x 48 weeks. Multiply this total by a multiple of 5 to calculate how much you can potentially borrow. Typically, a contractor earning £475 per day equates to an annual gross contract earnings of £114,000 (£475 x 5 x 48). Allowing you to borrow up to £570,000 to buy or remortgage a property.
Before attempting to apply for a mortgage directly, we strongly recommend that you speak with a mortgage specialist first to arrange this type of mortgage. It is not worth the risk going to a standard mortgage broker that doesn’t have the knowledge or experience in securing mortgages for contractors. Multiple credit searches will leave foot prints on your credit history. Too many searches can adversely affect your credit score.
For further information on how you can qualify for a Professional Contractor Mortgage click here or contact one of our friendly advisors on 020 8421 7999.
John is MD of Freelancer Financials – Contractor Mortgage Specialists