At last competitive mortgages for contractors
Last year when the Bank of England base rate dropped to 0.50% the mortgage industry entered unchartered waters. Initially, first time buyer contractors looking to take their first steps towards owning a property were excited with the reduced base rate; only to see that the reductions in base rate was soon wiped out as lenders rushed to increase the margin of interest to which they track the Bank of England (BoE) base rate. They referred to this as their “margin for risk”.
The fall in BoE base rate was fantastic news for all those contractors who had already secured tracker rate mortgages with us. Although contractors with existing tracker mortgages saw a huge benefit in the reductions, first time buyer contractors looking to secure a new mortgage lost out as high street banks increased their interest rate margins and arrangement fees. With the FSA introducing tougher regulation and lenders restricting mortgage lending, first time buyer contractors with deposits less than 25% found it near impossible to get a mortgage.
Since mortgage rates peaked in September 2009 they have been falling steadily since. This month the average two year fixed mortgage - the bench mark of the mortgage market - stands at its lowest level in 1 year, with the average three and five year fixed rate mortgages not far behind.
Hope for first time buyer contractors with smaller deposits
High street lenders are now starting to compete with each other with the number of mortgages available reaching the highest level since September 2008. More importantly for first time buyer contractors, a significant proportion of the new mortgages now available are for those with smaller deposits, which is another welcome boost for the mortgage market.
Specialist mortgage underwriting based on contract rates alone
We’ve definitely seen more lenders taking more steps to improve the competitiveness of their mortgage deals. A number of those lenders are happy to accept mortgage applications from contractors. We have negotiated specialist mortgage underwriting based on your hourly or daily contract rate.
Mortgages for contractors in their first week of their first contract
As more high street lenders become active in the mortgage market, this is good news for contractor borrowers as increased competition is one of the key factors driving mortgage rates down. A 25% deposit remains the benchmark for the majority of the most competitive deals. However, contractor borrowers with small deposits are increasingly getting access to a wider proportion of the market. Those contractors who have only been contracting for a short time needn’t worry as we have agreed bespoke underwriting with high street lenders who accept contractors in their 1st week of their first contract.
This resurgence in the mortgage market is great news, but lending figures show that there is still a way to go before the market returns to any sort of normality.
Contractor Mortgage Specialist
Many contractors have been let down by less experienced mortgage advisors who have approached the wrong high street bank or packaged the application poorly. It is important that you understand that each failed application attempt, leaves a footprint on your credit record, making it more difficult for you to get a mortgage when you next apply. For this reason alone it is essential that you get it right from the beginning.
How Can I Get A Mortgage?
Talk to Freelancer Financials, who are specialists in the field of providing mortgage advice to contractors and freelancers. For a mortgage quote please contact our contractor mortgage specialist John Yerou on 020 8421 7998.
To find out how much you can borrow based on your contractor rate click here
If you have any questions or comments please send an email to john@freelancerfinancials.uk.com and we will get back to you shortly.