Mortgage Quest: the all-inclusive specialist mortgage broker
Last Updated: 07-02-2024
Reading Time: 8 minutes
With the tumultuous nature of finance markets, it seems all I've written about recently is how x affects y, potentially giving us z. Today, our news is much closer to home.
In fact, it is our home I want to talk—no, shout!—about.
After undergoing a huge facelift, we've relaunched our parent brand's website, Mortgage Quest.
Why now? In short, many contractors have returned to PAYE employment, recently. After talking to them, they assumed we could no longer help with their mortgage. So not true.
Through Mortgage Quest, we now welcome everyone, no matter how they work.
Does this mean we've stopped specialising in contractor mortgages?
Absolutely not. We'll continue to fly the flag for independent professionals, as we have done for 20 years.
Here's more about our parent brand. First, more on why we've had to reach out to past clients.
The changing face of the contractor landscape
Since the year 2000, IR35 has been the biggest thorn in professional contractors' sides. With the introduction of off-payroll—in the public sector in 2017, and the private and voluntary sector in 2021—those thorns have cut deeper.
Many contractors who worked through a PSC found that doors previously open to them were now closed. The irony is it wasn't their fault. Nor, can you say, was it the fault of the end client.
Before off-payroll, it was the contractor who decided whether they were working inside or outside IR35. After rollout, it was the client who had to decide the contractor's status.
The government and the NHS were two of the biggest hirers of contractors at that time. Can you imagine the administrative burden of assessing each contractor individually?
No. Neither could the clients. The result? Many businesses refrained from hiring contractors altogether, sometimes to the detriment of the service they could provide.
Well played, HMRC. Not.
The uptick in umbrella employment
The government estimates that 130,000 contractors folded their PSC post off-payroll legislation. Research shows that, to provide their services, they either went PAYE with their client or joined an umbrella company. Or, as is often the case, tried an umbrella company, then went direct to the client. Just what HMRC wanted.
There are pros and cons of working through an umbrella company. Perhaps the most pertinent is that end users, after eschewing hiring contractors direct, deemed it feasible to use an umbrella company to retain the flexible element of the workforce.
But not all contractors were, or are, happy with this type of employment. Here's a brief overview of the key pros and cons of umbrella employment:
An umbrella company can:
- Get you in the door if a client won't engage contractors direct;
- Take the brunt of the administrative burden of being a contractor;
- Ensure that umbrella employees get fair pay and treatment, on par with the client's employees.
- Almost all of the tax relief you claimed as a limited company contractor is off the table;
- There are many deductions before you get to your 'gross pay' equivalent*;
- Your day or 'assignment rate' may be reduced because of both recruitment agency and umbrella company fees;
- Even today, many tax avoidance schemes pose as umbrella companies.
These aren't exhaustive lists of the pros and cons of working through umbrella companies. But they do illustrate why many contractors returned to permanent employment.
*Umbrella payslips for mortgage purposes
Many of our clients have ended up at our door because a high street lender has let them down. And we're not talking about contract-based underwriting or accounts, here. We're talking about umbrella employees who went to their lender with their payslip thinking:
Yay! I have a payslip like an employee. I'll get a mortgage now, for sure!
Not so. Deductions on umbrella payslips serve only to confuse mortgage advisors not familiar with contracting. ContractorUK covers it best, here:
Your umbrella employer will invoice the recruitment agency or end-hirer for the work you complete, and will pay the required Employer National Insurance, Apprentice Levy, Employer Pension Contributions and Holiday Pay from this income, after retaining their margin. The remainder forms your 'gross pay' and PAYE tax and NI deductions are made to this before you are paid your 'net pay.'
The return to PAYE employment
As well as contractors' struggles, businesses have also kept purse strings tight since the pandemic. Bottom lines and profits have drawn closer together. Backed into a corner, businesses have reassigned their contractor budget, using it to hire employees.
How do we know this? We've spoken to many clients who've been through the mixer, and suddenly find themselves an employee again.
What's been most disconcerting for us is that these clients have assumed we can no longer help them with their mortgage because they're no longer contractors. Nothing could be further from the truth.
Unveiling our overarching brand's website: Mortgage Quest
Since our inauguration in 2004—20 years! Where've they gone?—Mortgage Quest has been our trading company, the FCA-regulated body through which we conduct our affairs.
Freelancer Financials, Self-Employed Mortgages, Contractor Mortgages, et al? They're trading styles of our parent brand, and will continue to fly the flag for independent professionals.
We have—and will continue to—specialise in mortgages for contractors and people with complex income or circumstances. But, now more than ever, we need to let our past clients know that we're still here for them.
Explaining the past to a mortgage advisor
Even if you're a new employee now, you'll still need to explain your income history. The biggest question untrained advisors are sure to ask is:
"If you were earning £450/day, why have you settled for £75k/year now?"
The last thing you want to do is raise suspicion. Especially if you got a mortgage based on your day rate and you're now looking to remortgage using your salary.
The underwriters we use haven't changed. Like us, they specialise. Like us, they understand why you've gone PAYE and abandoned the contractor lifestyle.
Still 100% independent. Still 'whole-of-market' brokers
We still have access to every lender in the country. And now that you're an employee, your options are even greater.
So, if you're amongst those who assumed we couldn't help because of your change in payment structure, think again. We'd love to rekindle past relationships. Or even if you've never used us, no matter how you work, we can help!!!
You can get in touch in the usual manner here. Or, you can check out our mortgage offerings on Mortgage Quest. We'll be happy to catch up, chew the cud and get your quest for a mortgage back on track.
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.
Posted by John Yerou
on January 30th, 2024 11:28am in