Securing a mortgage as a self-employed individual can be perceived as very challenging, due to the many myths and misconceptions that exist… but contractors can and do get mortgages!
While the process might be slightly different, working with an expert Mortgage Advisor will give you the best chance of applying for and securing your future mortgage.
Myth 1: It is extremely difficult to get a mortgage if you are self-employed.
Reality: While your application is assessed differently to that of a PAYE worker, you have the same chance as anyone else once you have the right paperwork, indicating sustainable income and showing a demonstrated ability to repay the mortgage. Everyone is assessed on a case-by-case basis, so it’s always worth speaking to a mortgage broker as soon as you’re starting your mortgage journey. An experienced mortgage professional, specifically one who understands contracting, can guide you on how best to demonstrate your position, what documents you might need, and what next steps to take.
*Remember, if you’re working with Contracting PLUS, we’ll look after all the paperwork for you – simply contact your Dedicated Account Manager and we’ll prepare your mortgage pack immediately.
Myth 2: Rent is not considered when applying for a mortgage.
Reality: While your rent might not have a direct influence on the mortgage application process, it can demonstrate your repayment capacity. Lenders want to assess what you can realistically afford, so consistently saving and paying rent on time through your bank account, can support you in indicating your financial responsibility and ability to meet future mortgage payments.
Myth 3: Contractors require a larger deposit than full time employees.
Reality: There are no changes – your work category has no implication on the deposit required! A 10% deposit is required for all borrowers, regardless of whether you are a first time buyer or a mover.
*Remember, as a self-employed professional you typically earn, and take home 20 – 30% more than your employed counterparts, which means you have higher borrowing potential and the ability to build up your deposit in a shorter space of time.
Myth 4: You can’t get a mortgage if you’ve changed contract recently.
Reality: While a stable work history is beneficial to your application, changing roles doesn’t immediately disqualify you. Lenders will assess your overall financial stability and income. Many contractors operating in specialist industries, with in-demand skillsets, will be able to demonstrate this. Factors that may support this include how long you’ve been contracting for, how long is left on your current Contract and your long term prospects of future contracts.
Myth 5: If I’m going to apply for a mortgage in the future, I shouldn’t accept a contract position.
Reality: This blanket statement doesn’t consider personal circumstances and timing! If you’re about to draw down on a mortgage, it might not be the right time to make any change, but if you’re considering a mortgage in the next year or two, there’s no reason not to go Contracting. As part of the Mortgage Assessment, the broker will work with you to demonstrate the sustainability of your income, and this is reviewed over a 2-3 year period!
We know that mortgages are stressful. Getting personal, expert advice from a dedicated Mortgage Broker is the best first step you can take.
Mortgage Navigators are a dedicated team who understand both contracting and lending. They understand how you work as a Professional Contractor, the unique challenges you face, and how best to communicate your application to the lenders in the market. They’ll guide you through the entire mortgage journey and secure you the best deal on the market. To book a consultation with them, click here.
Be sure to contact me by email if you have any questions Adrienne Jermyn or call me on 01 6110707.
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