Contractor Mortgages

Contractor Mortgages Explained

Being a contractor is very common nowadays and there are many lenders out there that are very willing to lend to you as a successful contractor.  We can help you navigate the complexity and requirements of different lenders and get you the right deal for you in your circumstances.

contractor

As a contractor, you will usually need to show evidence of your earnings history for at least the past six months, though many lenders will expect to see two to three years of accounts.  Due to this, applying for a mortgage early in your contractor career can be more difficult, though you may still have options we can help you look at.

Don’t forget! The stamp duty holiday is coming to an end!

During the Coronavirus pandemic, the government has increased the threshold at which stamp duty is paid on property sales from £125,000 to £500,000. But this increase won’t be around forever! You have until 30th June 2021 to save on the first £500,000 of your property, after which the scheme tapers back down to £125,000 by the end  of September. Make sure you allow enough time to complete the purchase of your dream home and reap the benefits.  Give us a call today to see how we can help you get the right deal.

We can help you strengthen your mortgage application as a contractor.  Always remember that the less risk a bank takes in lending to you, the more favourably they will view your application.  Lenders will typically look for signs of longer-term security and stability.  If you can produce an ongoing agreement with an employer, or evidence of past agreements that are likely to be renewed, this may make your application more appealing to lenders. 

Whatever your position is come and talk to us.

What types of mortgages are there?

Fixed rate mortgages

A fixed-rate mortgage is a home loan where your interest rate is guaranteed to stay the same for a set period of time, giving you peace of mind because you know exactly how much your payments will be every month.

Variable rate mortgages: Tracker mortgages

In short, a tracker mortgage is a home loan where your interest rate will ‘track’ the Bank of England’s base rate, plus a set percentage. This can mean your payments will reduce as the interest rate reduces, but it can also mean they increase too.

The base rate is currently at a record low of just 0.1%, due to changes caused by the COVID19 pandemic. So, if the interest rate on a tracker mortgage was the base rate +1%, the amount of interest you would pay is 1.1%. If the base rate went up, the interest rate on your tracker mortgage would also rise.

Variable rate mortgages:
Discount mortgages

With a discount mortgage you pay the lender’s standard variable rate, with a fixed amount discounted. For example, if your lender’s standard variable rate was 5% and you had a 1.5% discount, you’d pay 3.5%.

Repayment mortgages

A repayment mortgage means as long as you meet all your payments every month, you will be repaying off part of your capital (the money you borrowed) and part of the interest rate. At the end of your mortgage term the property will be fully repaid and will be fully owned by yourselves.

Interest-only mortgages

Unlike a repayment mortgage, you only pay off the interest portion of your loan. This means you have to make sure that at the end of your mortgage term you have enough money saved to pay off the outstanding capital in one lump-sum in order to complete your mortgage agreement and own your home.

Try our mortgage calculator to get an idea of what you could borrow. No credit checks required.