People say that nothing is ever easy. We’re not sure if that’s true. It’s easy to binge your favourite TV series for example. It’s easy to have another biscuit. There are easy things out there, but they often bring about short term, rather than long term, rewards.
When it comes to getting a mortgage, you are very much dealing with the long term reward side of the coin. Logic dictates then that getting one might not be easy, and more often than not, than can be the case.
Ever since 2008 and following changes from the Financial Conduct Authority (FCA), the process of securing a mortgage as a contractor has been tricky. These changes saw lenders take a generally stricter approach around mortgages for self-employed workers, and ever since there have been more hoops for workers such as contractors to jump through.
If you are in that situation at present, then getting some free mortgage advice is always a good idea. This can be tailored to your personal circumstances.
However, there are some tips and tricks that might prove advantageous to you. Here are three things to look at if you are a contractor or freelancer seeking a mortgage and finding it tough.
1 – Find proof of longer contracts
One reason lenders are sometimes reluctant to lend to contractors is because of a common misconception around working habits. This centres on the erroneous presumption that working in this way means you regularly jump from pillar to post.
This is not always the case however, with plenty of contractors working for a long time in the same role, for the same employers, on a contracting basis.
If this applies to you, being able to prove this can swing the pendulum away from ideas of varied and fluctuating working and back towards stability. This means in the eyes of the lender, you are a more suitable mortgage candidate.
2 – Keep working
Securing a mortgage is all about proving you have the kind of lifestyle that should ensure you are financially able to keep up your end of the bargain when it comes to mortgage payments. This means mortgage lenders don’t like any period of employment inactivity.
This applies to every mortgage candidate. But in the contractor space, long gaps between contracts are not good and will be a definite red flag for lenders.
It’s therefore a good idea to try and do what you can to have stable contracts in place that show regularity and do not bring gaping holes into your employment timeline.
We’re not saying cancel that month-long trip to Australia. But if you just don’t fancy working for 6 months, that could be problematic down the line when seeking a contractor mortgage.
3 – Can you pay a bigger deposit?
As a general rule of thumb, the greater the deposit, the greater the chances of a lender giving you the thumbs up.
Obviously saving for a deposit is no mean feat, and can be a big challenge in and of itself. However, if you are able to stump up more cash in the initial stages, it heightens the likelihood of the whole process being that bit easier.
Saving cash takes time, so consider whether revisiting your mortgage plans in a year’s time might ultimately put you in a better position.
There are other factors to consider of course, such as market conditions and various personal circumstances. But if you are able to put down a higher deposit, the rewards could be substantial.
Get the contractor mortgage you want
We’ve spoken before about things to do as a contractor when seeking a mortgage and some of the common pitfalls.
The three things listed above are further considerations, and could be the difference between you getting the contractor mortgage you want and falling short.
Planning is of the essence here, so take the time to get things in order as best you can. This can help you reach those goals of yours all the quicker.
Of course, nothing is ever easy. But these are certainly things you can consider to help make things easier in the contractor mortgage space.
