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

As the largest Contractor Mortgage specialist in London, Freelancer Financials has welcomed in the New Year with a number of exciting rate cuts.

We have some fantastic mortgage rates to announce

Many of the lenders we have worked closely with over the years to facilitate “Contract Based Underwriting” are cutting their interest rates and even going as far as reducing rates for contractors with a 10% deposit to 4.65%. That’s great news considering that, only a few months ago, rates were 5.95%.

“A number of contractor friendly lenders have made huge rate reductions in the past week, in part fuelled by the government’s launch of Funding for Lending scheme designed to incentivise banks to increase lending to individuals and businesses,” says John Yerou, MD of Freelancer Financials. “This is fantastic news for those contractors with existing mortgages who are interested in securing more attractive, fixed rate deals providing greater long-term security in today’s difficult times. These rates are currently the lowest since the economic crisis began in 2008.”

Breaking news - IT contractors with no trading accounts can get onto the property ladder with as little as 10% deposit. We can secure you a 2 year fixed rate mortgage at only 4.99%. All we need is a copy of your contract. Surely this must be cheaper than renting!

Even better news for those contractors with a larger deposit, Furness Building Society are offering Contractors with a 20% deposit, a two year 3.20% fixed rate for both purchase and remortgage. It also comes with a free valuation and legal service for remortgage clients.

Those contractors who are fortunate enough to have 40% deposit can now secure rates as low as 2.49% from banks like Clydesdale and Nationwide. So if you’re a home mover or considering remortgaging for a better rate, there is no time like the present.

Applying direct can cost you the mortgage

Before attempting to apply for any type of mortgage borrowing, we strongly recommend that you speak with a Contractor Mortgage Specialist first. It is important to note that attempting to apply to lenders direct on a “contract basis” can be difficult and may result in your application being unsuccessful.

Freelancer Financials are the largest contractor mortgage specialists in London. We are able to utilise bespoke underwriting with lenders, to offer you borrowing based on a multiple of your gross contract earnings and not just the Taxable Element. As a contractor you can potentially borrow up to 4.5 times your annualised contract rate, so a contractor earning £350 per day could secure borrowing up to £378,000.

At Freelancer Financials we make sure your application is processed by senior underwriters who are completely familiar with “contract based underwriting”.

What documents do I need to secure a Contractor Mortgage

All you need is a copy of your current contract, two forms of ID and recent bank statements, we’ll do the rest. We can even secure you an agreement in principle on the same day as you make your enquiry.

If you want to find out what you could potentially borrow to buy your first property, move home or remortgage to save payments our team of professional advisers are waiting to help.

Furness Building Society launch new exclusive mortgage for contractors

Freelancer Financials are delighted to announce that they have access to a new, exclusive 2 year fixed rate mortgage deal from Furness Building Society for Contractors.

This is a 2 year 3.20% fixed rate available to contractors for both purchase and remortgage and includes an arrangement fee of £999. It also comes with a free valuation and legal service for remortgage clients. The maximum loan to value is 80%, meaning you only need 20% deposit or equity.

“Once again, Furness Building Society has demonstrated its continued support for contractors. With the building society’s strong flexible underwriting approach to contractors, I am sure that this exclusive product will be popular with our clients.” John Yerou, MD of Freelancer Financials

This product only has a limited tranche of funding available, so don’t delay!

Reasons to use Furness Building Society

• Great for contractors, especially IT workers
• Minor arrears are considered
• Manual underwriting – cases are considered individually
• Flexible underwriting for company directors

For more information on the exclusive products available to you, visit www.freelancerfinancials.uk.com or call you dedicated Mortgage Helpdesk on 0208 421 7999

New Interest-Only mortgage launched by Contractor Friendly Clydesdale Bank

Clydesdale bank will be introducing Interest Only mortgages through a selective panel of mortgage brokers on Monday, 21^st January. This is fantastic news for contractors looking to secure a competitive INTEREST ONLY mortgage based on their contract rate.

“It’s a breath of fresh air to see that one bank is bucking the recent trend of lenders pulling out of the interest-only mortgage market by launching a new Interest Only product” John Yerou, MD of Freelancer Financials

What’s the Deal?

The new product is called Low Start Mortgage. It offers borrowers the opportunity to fix their mortgage rate for 3 years on an interest only basis, without the need to prove they have a credible savings or investment vehicle.

Borrowers applying for Clydesdale’s Low Start Mortgage must be able to afford the loan on a capital repayment basis. The product will be available to borrowers with a minimum deposit or equity of 20%. At the end of the 3 year period the mortgage converts to a repayment mortgage.

What rates can I get?

Rates begin at 3.09 per cent for borrowers with a minimum deposit of 40 per, increasing to 4.49 per cent for borrowers with a 20 per cent deposit. There is a fixed arrangement fee for £999 and the minimum loan size is £100,000.

Clydesdale’s Low Start Mortgage will be aimed at borrowers that fall into the following categories:

• Home Movers who are looking to take on a bigger mortgages
• Clients preparing for Lifestyle events – children, wedding etc
• Reducing monthly repayments for first time buyers who have been stretched to purchase a property
• Clients who are expecting pay rises, promotion and progression in their current employment role in the next few years
• First time buyers with larger deposits

The products are available for both purchase and remortgage up to 80% LTV.

The mortgage will appeal to contractors and self employed people who want to minimise their repayments in the first 3 years of their mortgage term whilst providing assurance that their mortgage will be repaid in full by the end and is based on a 3 year residential fixed rate, tiered across four LTV’s:

• Low Start Residential 3 Year Fixed: 60% LTV with an initial rate of  3.09%.  The overall cost for comparison is 4.5% APR

• Low Start Residential 3 Year Fixed: 70% LTV with an initial rate of  3.39%.  The overall cost for comparison is 4.6% APR

• Low Start Residential 3 Year Fixed: 75% LTV with an initial rate of 3.79%.  The overall cost for comparison is 4.8% APR

• Low Start Residential 3 Year Fixed: <80% LTV with an initial rate of 4.49%. The overall cost for comparison is 5.0% APR

For further information about Clydesdale’s Low Start Mortgage products, or to find out how much you can borrow based on your contract rate, please contact Freelancer Financials on 0208 421 7999 or click here to obtain a quote.

Woolwich

Abbey lead the way with rate reductions this week with up to 0.4% slashed across its main range of products. This includes a very competitive 5 year fix at 70% LTV, now priced at only 3.09% with a £995 fee.

Nationwide has made reductions on its 3 and 5 year fixed rates of 0.10%, with their 3 year deal at 60% LTV now starting at 2.69%.

NatWest has added two new 50% LTV rates to their range, but has increased rates on 7 other existing deals by up to 0.20%.

Interest Only Mortgages

Virgin Money became the latest lender to amend their interest only criteria this week, with the announcement that they will now only consider this type of lending on loans of over £300k.

A report by the Recruitment & Employment Confederation shows that the need for IT specialists has been at an record high this winter, results indicate that the demand for IT contractors being greater than much of the summer months.

Hopefully this increasing need for IT contractors is a change in times ahead, it can only be positive news for limited company IT professionals. The steady increase in contractor demand in the IT sector shows encouraging signs of climbing out of the recent economic downturn.

So for IT contractors, it’s happy days! Whilst on first glance these statistics appear to be the ‘Happy New Year’ start to 2013 we all crave. However, widening the circle, in the permanent jobs market on the whole, the news is not so good, as recruitment opportunities are declining in other industries.

The REC’s report goes on to confirm that in this fragile economy there is still a clear shortage of IT specific expertise, such as JAVA, NET and ASP which is lacking across the commercial market whether these professionals are contractors or permanent employees. Consequently, for those working in the IT industry, things are definitely looking up for 2013.

According to the Association of Residential Letting Agents rental demand will continue to outstrip supply in 2013. If rental property prices continue as they have been for the last 3 months, the average investor in England and Wales could expect to make a total annual return of 2.7% per property over the next 12 months – equivalent to £4,451 per property.* With rents high and the buy-to-let market thriving, the risk on rent arrears also continues to be high.  

A survey earlier in this quarter by Law of Property Act receivers estimated that there are 99,000 tenants two or more months in arrears. This problem is due to worsen as the tough economic climate continues and the number of people renting increases.

If you are a landlord or are looking to invest in property, you should carefully consider landlords insurance and ensure you are properly protected. Landlord insurance can protect your property by providing cover against fire, floods, accidental damage, theft, unpaid rent, malicious damage by tenants to buildings or contents and much more. Not all policies are the same and some elements may not be covered as standard and instead may be optional extras.

Some insurers offer additional benefits. For example, Legal and General provide a free legal helpline giving you expert advice on any legal problems that may arise 24 hours a day 365 days a year. Other optional benefits include home emergency cover which can provide 24 hour call-outs, including cover for labour costs and materials to make your home safe after an emergency such as a burst pipe or break in.

There are many options available, thankfully here at Freelancer Financials we can offer landlords cover through a number of insurers.  This means that we can fully guide you through the benefits of different policies and assist you by recommending the most appropriate policy to meet your requirements and budget. Even if you already have a policy in place it is still worth reviewing this with us as we can ensure that the cover you have is still relevant to your situation. Contact us today on 0208 421 7999 or email john@freelancerfinancials.uk.com  to discuss the options available and to ensure that you are protected against the unexpected.

We typically charge a fee of £499

*Source: Figures from Mortgage Introducer

After several years in the economic doldrums that followed the global financial crisis, the housing market may see better times in 2013. One of the most authoritative sources on market activity is the Council of Mortgage Lenders (CML), whose members, mainly banks and building societies, account for about 95% of UK residential mortgage lending. One of its regular reports, issued late-November, painted a positive picture, suggesting recent market weakness might be coming to an end, partly due to the official Funding for Lending scheme that helps lenders to meet borrowers’ needs.

Mortgage lending on the up

The CML’s estimates showed total gross mortgage lending of £12.9 billion in October, around 4% up on the previous October. Chief economist at the CML, Bob Pannell, pointed out: “House purchase and remortgage activity both appear to have picked up recently, and this should be supported by an improvement in the availability and pricing of mortgages. The Funding for Lending Scheme is likely to have made an early positive impact, helping to counter some of the negative pressures associated with a protracted and weak economic recovery.”

The CML reference to remortgaging is also interesting as it highlights that many homeowners have been finding new mortgage deals as existing arrangements come to an end or in situations where they have had a mortgage for some years and discovered that its terms were no longer as competitive as they might be. So, whether you are a homeowner –planning to move or staying put – or a prospective first-time buyer, the early weeks of 2013 may present a great opportunity to seek professional advice on the mortgage deals currently available. First-time buyers wanting a new-build property have the added incentive of the NewBuy scheme. This may, in the CML’s words, “allow you to buy a home with a lower deposit than a lender would normally need.”

Buying your new home will inevitably involve the need for insurance cover. Making certain that mortgage payments will continue if accident, illness or other misfortune strike should be a priority. Your adviser can tell you about mortgage protection, critical illness and other cover to help your family cope financially in difficult circumstances. It is also essential to cover both buildings and contents for risks like fire, flood, subsidence and burglary.

Taxman waits at Pearly Gates

A little internet research suggests that death duties first came to the UK in 1796, some years after US founding father Benjamin Franklin first talked about death and taxes being the only two certainties we all face. Those death duties brought an even stronger link between the two dreads in Franklin’s words; and what we now call Inheritance Tax (IHT) still combines a loved-one’s departure with a potentially large tax bill payable from the deceased’s estate before probate can be granted and distributions made to beneficiaries.

What is IHT?

Inheritance tax (IHT) applies to your entire estate, including property, savings, investments and any share of jointly owned assets. IHT is levied at 40% on estates valued above a certain figure, though only on the amount above the threshold – in simplified terms, £325,000 for a single person and £650,000 for married couples and civil partners. This includes property; so, many people whose estates suffer IHT are not immensely wealthy. It is only natural to want your successors to gain maximum benefit from your estate and there are various legitimate ways to plan for and to mitigate the impact of IHT.

Plan Ahead – Offspring and IHT mitigation

IHT is sometimes referred to as a voluntary tax because there is so much that you can do to avoid it. A relatively simple way to reduce the size of your estate, and thus any IHT liability, is by giving assets to younger generations during your lifetime, perhaps when they most need it. There are possible snags to weigh up against the advantages. IHT may still be payable if you die within seven years of making such ‘potentially exempt transfers’ (PETs) in excess of the prescribed limits for outright IHT exemption. Other issues surround whether the recipient might fritter their windfall and whether you should retain your wealth for possible care fees.

If you decided to divest yourself of a very large sum but did not survive for seven years, a resulting IHT liability could have been covered by a ‘gift inter vivos plan’, a decreasing term assurance policy (held in trust) to cover the gradually decreasing potential IHT liability. Sometimes, despite carefully considered giveaways, an IHT bill may be inevitable and it is sensible to plan for this.

IHT being payable before probate is granted can be awkward for your heirs if the estate is locked into property and other illiquid assets, so they could need a loan to pay the taxman.

Accessible money to pay IHT can be released from a whole of life policy. A sole or ‘joint life second death’ policy, according to circumstances, placed in trust for the beneficiaries and thus excluding its proceeds from the deceased’s estate, can provide the cash required. The premiums paid on this policy naturally reduce the estate. Cover may depend on health and other things, whilst premiums may sometimes be regarded as PETs or as chargeable lifetime transfers, so do discuss matters with your professional adviser to identify the best course for you.

Inheritance Tax Planning, taxation and trust advice are not regulated by the Financial Services Authority.

Major high street banks took £4.4bn in cheap funding from the Bank of England to encourage more lending to First Time Buyers and Home Movers. A number of the banks that received funding included contractor-friendly lenders such as Halifax, Clydesdale, and Virgin Money. This has lead to fantastic reductions in their interest rates, especially over the past few weeks.

Clydesdale Bank last week introduced a 2 year fixed rate starting at 2.49%, and Halifax 2.79%. Virgin Money has also joined the race to reduce rates by slashing their fixed rates down to 2.68% this week. All good news for contractors looking to secure a competitive mortgage based on their contract rate alone!

Mortgages based on a multiple of your contract earnings

At Freelancer Financials, we can secure you a competitive mortgage from high street lenders based on your contract rate alone. This also means that you don’t have to rely on the traditional method of using accounts, pay slips or tax returns, which is unlikely to reflect the total earnings that you have at your disposal for income verification on a mortgage application. The mortgage loan can be as much as 5 times your annualised contract earnings based on 48 weeks.

Click here to calculate how much you could borrow as a contractor

Contractors that we speak to, tell us of their disappointment when they have approached their bank or a lender direct for a mortgage.

Many contractors operate through a personal services company and operate in a tax efficient way, or others just don’t have 3 years trading history as they have recently started contracting.

Bespoke underwriting for contractors, NO accounts required!

We have worked tirelessly over the years to develop strong relationships with strategic high street lenders to simplify the underwriting process that verifies contract earnings for lending purposes. The key here is to ensure that the application is properly packaged and falls in front of the right decision makers rather than using staff in branch networks.