Contractor Mortgage Guide

(2 minutes to read)

A common worry for contractors is that they will struggle to get a mortgage. Indeed, the temporary nature of the work and variable income can cause problems for traditional brokers, who haven’t adapted to the changing nature of the UK workforce.

Dolan Accountancy has two contractor mortgage partners, Wardour Investments and Caulder Financial Services who specialise in taking the difficulty out of securing a mortgage, for contract workers. You can find out more about them here, our IFAs.

Both have partnerships with a large number of High Street lenders, enabling them to secure a mortgage without any additional difficulties. They have answered some common questions below, so that you know exactly what to expect.

I’ve heard lenders quote higher interest rates for contractors – is this true?

This is one of the most common misconceptions we come across and it’s just that – a misconception. Interest rates are generally the same as for permanent staff. In some cases, interest rates can even be lower than for permanent employees! Typically, this applies when either your credit rating is very strong, or when you have a large deposit saved – this is common when contracting long-term, as any professional freelancer knows the need to keep money in reserve.

As a contractor, am I classed as a ‘high-risk’ individual in terms of a mortgage?

Absolutely not. The lenders we partner with will base your risk status on your credit rating and your deposit available. If your credit rating is fine, you should be able to borrow around four times your current contract rate. The same factors that affect a permanent employee – CCJs, defaulted payments or outstanding credit card bills – will weigh against you too.

Rather speak to someone?

Find out about your IFAs

Do I need three years of accounts or to have been contracting for a minimum period of time?

In the past, this might have been true – but for several years now, contractors have been able to secure a mortgage on the basis of their current contract rate. You may still hear that you need to have been contracting for a ‘substantial period of time’ when contacting a broker directly, from inexperienced first-line staff on a helpdesk – but this is simply part of the lender’s strategy to minimise risk.

Is it more complicated to secure a mortgage a contractor mortgage?

Perhaps if you approached a broker directly, without using a specialist contractor mortgage service – but why would you do that. Both of our IFAs have built up partnerships with lenders and key underwriters over many years and these relationships allow us to help you sidestep any additional complications. Getting started is as easy as providing your contract, ID and bank statements.

If you’re looking to remortgage an existing property, move to a new one or take the first step on the ladder, or if you want to find out how much you could borrow based on your contract rate, or for any other enquires, please contact one of our IFAs.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, ContractorUmbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of ContractorUmbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, ContractorUmbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use CashPlus free of charge for the first year, saving you £69.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

dav1