There are a myriad ways in which people work today. Some of the more idiosyncratic methods of earning a living – those that differ from traditional employer/employee models – are now pretty much accepted as the norm.
At Roots Mortgages, we see ourselves as something of a bridge between people who work in these ‘new’ ways, and the slightly more ‘traditional’ mortgage industry.
We work closely with clients who earn their living by a range of means. Many are contractors who fulfil contracts for an employer without being a fully-fledged employee. This arrangement has pros and cons, with more take-home pay being a big, big plus. You don’t get holiday pay, pension contributions, healthcare and other employee benefits, but these have all been weighed up by contractors when entering this line of work.
The term freelancer is something more and more people have started working as since the turn of the millennium. The term is popular in creative industries, where specific skills are utilised by a selection of different businesses at the same time.
In this way, freelancing and contractor work differs. Contractors typically work one contract at a time. With freelancers, it’s not unusual for multiple freelance contracts to be on the go at any one time. These could differ in length substantially, with one off pieces of work and longer, more regular services being provided being commonplace.
What freelancers and contractors have historically shared in common is a difficulty securing mortgages due to their way of working. As a freelancer then, what can you do to secure a freelancer mortgage?
Freelancer Mortgage 101
One of the most important checks for a mortgage lender is around your financial history. As a freelancer, this is likely to be fairly different to the finances of somebody employed in a traditional way, and even to a contractor.
Freelancers can often have multiple sources of income at any one time, providing their specialist skills to a variety of people or organisations.
This means it is vitally important you take a measured and conscientious approach to your finances and ensure you have everything in order.
You need to make it clear what you’ve earned, and most lenders will want to see three years worth of business accounts.
This means that if, for example, you have benefited from the recent pandemic in terms of securing new business, then that could work in your favour.
All in all though, the aim should be to show consistency of income. This will give you the best chance of convincing a lender that you are going to be able to meet their repayments and other requirements of the mortgage deal.
Get support around Freelancer Mortgages
Securing a mortgage as a freelancer is all about alleviating risk factors for the lender. This can be tricky to take on alone, and there’s a possibility that you may get stuck around something specific that you really don’t know about or understand.
This is why getting support from a specialist broker can be really advantageous. Specialists can help ensure all is as it should be with your mortgage application and give you the best chance of securing your dream home.
