Advice for contractors looking to secure a mortgage before year-end
Posted Oct 31, 2011
With only eight weeks to go, the rush is on for contractors looking to move before Christmas. The good news is you still have time to secure a mortgage if you act now.
The lengthy process associated with securing a mortgage on the high street may make those plans seem impossible to achieve, especially as you will often be required to produce three years' accounts to prove your income. However, securing a mortgage as a contractor doesn't have to take this long or indeed be that taxing.
Why use a specialist broker?
A specialist contractor mortgage broker will enable you to borrow based on a multiple of your contract rate alone. These unique mortgages for contractors are only available through a handful of advisers, but working with a specialist means that your mortgage is handled efficiently and lands on the desk of a key decision maker at the lenders headquarters rather than getting stuck in an offshore processing department.
Tony Harris from our partner IFA, Contractor Financials, told us:
"We have worked hard over the past 10 years to negotiate specialist underwriting on behalf of the UK's freelance community and these arrangements enable us to secure your mortgage based on your contract rate alone."
"Our experienced team are able to secure an agreement in principle for our Contractor clients within an hour of your initial enquiry and the entire mortgage application process is completed within three to six weeks."
How to beat the competition
With so many prospective homeowners looking to move in the next eight weeks, here are some tricks that contractors can use to set themselves apart:
According to Tony, the process of securing a new home is much quicker when a contractor has secured an agreement in principle (AIP) before they put in an offer on a property:
"An AIP is an important bargaining tool when negotiating on a property as it shows the seller that a mortgage provider has already agreed to lend to you. This proves that you are good for the money and often means that the seller will accept a lower offer because they know the chain is unlikely to fall through with you as opposed to a buyer who has yet to even discuss how to finance his purchase. We liaise with your estate agent to confirm that we have everything in place for you and this can really help your credibility as a realistic purchaser."
Whilst you won't need three years accounts to secure a mortgage based on contract rate, there are some documents that you will need to gather to speed up the application process.:
"An up to date copy of your signed contract, ID such as a passport and a utility bill and also your last three months bank statements are all necessary to secure a contractor mortgage. If a client gets in touch with these documents to hand then this is all we need to get the application going straight away", says Harris.
What to do next if you want to take out a mortgage
If you are keen to complete a house purchase by Christmas, speak to a specialist mortgage adviser over next few weeks. A small number of advisers, including Contractor Financials, won't charge you any broker fees so, it is worth finding out if you will be charged arrangement fees by your broker before you decide to proceed.
For more information, and to find out what mortgages are currently available to you, read our contractor mortgages guide.
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