Mortgage Blog

Why do Contractors Struggle to get Interest-Only Mortgages?

Posted by John Yerou on November 6th, 2012 in Mortgage Blog

The criteria for taking out an interest only mortgage have changed. Now, lenders will only consider borrowers with at least 25% deposit.

For contractors, interest-only mortgages had all but disappeared from the High Street. It was a real shame.

Freelancers' and contractors' income can fluctuate, depending upon the nature of their assignment/contract.

Interest-only gave them the option of paying off chunks of the outstanding balance at year-end. This, in turn, helped affluent independent professionals reduce their mortgage term.

We look at why interest-only lost favour, with a view to highlighting the risk. Plus, we consider options available where interest-only isn't available.
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What on Earth is Contract-Based Mortgage Underwriting?

Posted by John Yerou on January 11th, 2012 in Mortgage Blog

Contract-based underwriting is a method some lenders use to assess a contractor's mortgage 'affordability'. If you're an umbrella or limited company contractor, it's the safest way to fund your mortgage loan.

But here's the thing. Not all lenders use this type of underwriting to work out how much a contractor can borrow.

You're even less likely to find contract-based affordability in-branch or via call centres.

Many lenders, especially those on the High Street, demand at least 2–3 years' accounts. That's even if you, as a bona fide contractor, operate through your own limited company.

So, how can you make sure a lender sees what you can really afford? That's what we're looking at today.
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Help! HSBC Rejected My Contractor Mortgage Application!

Posted by John Yerou on July 24th, 2010 in Mortgage Blog

If you're experienced in securing mortgages for contractors, this conversation gives you nightmares. It goes something like this:

Table of contents

• The High Street Lender-Contractor conversation (fill in the blanks);
• Before committing to the sale, get a firm mortgage offer;
• Beware, the trappings of the Search Results;
  • Falling foul at the final hurdle;
  • How can that be the case? These advisors approve mortgages all the time;
• Choose a specialist broker who understands contracting;
  • What's the key to their success when all others have failed?
  • What does "whole of market" mean?
  • What about mortgages based on my self-employed status?
  • And if I've got less than one year's accounts?

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Mortgages for Foreign Nationals: HSMP or Immigrant VISAs

Posted by John Yerou on April 26th, 2010 in Mortgage Blog

For too long, it's been a struggle for foreign nationals working in the UK to get a mortgage. Irrespective of the way they work, lenders perceive immigrants as a risk.

It needn't be this way. As with most of life's challenges, the answer lies in finding the relevant authority for help.

That authority figure is a specialist mortgage broker who understands how immigrants work.

Working with foreign contractors who'd struggled to get mortgages unveiled a much bigger picture. Immigrants from all manner of employment backgrounds find High Street mortgages hard to come by.

Even Ancestral VISAs no longer cut any ice with lenders. So where's the bottleneck?

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Can foreign nationals get contractor mortgages in the UK?

Posted by John Yerou on April 6th, 2010 in Mortgage Blog

We had something of an epiphany, which came about like this…

…We were working on ways to solve UK contractors’ problems of getting mortgages on the High Street. In doing so, we realised that immigrant workers had a similar problem, only twofold:

• lenders didn’t know how to deal with them as a contractor;
• advisors showed similar ignorance when dealing with them as a non-UK citizen.

The logic we applied to typical contractors' problems we applied to those of an immigrant.

It meant abandoning trying to reason with in-branch and call centre staff.

That's because they're restricted to their own set lending models. Nine times out of ten, they tailor those algorithms to permanent, salaried employees.

We know the limits of their inflexible systems. In our experience, mortgages for immigrants fall outside their boundaries.

No matter. We've faced this problem many times working with independent professionals. Now, we only go to people with the power to make decisions: the underwriters.
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