Clydesdale Bank Contractor Mortgage Lending Criteria
The Clydesdale Bank has been offering contractor mortgages for several years. Like Halifax, they’re 100% in tune with contractors’ needs and the way they work.
In short, they’re an outstanding lender, offering:
- flexible lending criteria;
- excellent mortgage products;
- including offset mortgages, with no early repayment charges;
- competitive interest rates.
Clydesdale remains one of few lenders with a common sense approach to manual underwriting. Their underwriters, with whom we have a close working relationship, are experts. Experience has nurtured within them an inherent understanding of how contractors’ finances work.
Leveraging this close relationship enables us to obtain exceptions for quality cases. What does that mean? If an application isn’t a direct match with their contractor lending policy, they'll listen!
The Clydesdale team strives to find ways to improve the service it offers to contractors. As the sector grows, this is a continual work-in-progress. If they identify a relevant need and can tweak criteria to meet it, they do.
Differentiating factor: Clydesdale understands limited company structures
The Clydesdale appreciates that contractors often don't withdraw all their income. They draw low salary and dividends to remain tax efficient. But why should they sacrifice prime rate mortgages to remain so?
Their underwriters understand this. They also know that tax efficiency differentiates contractors from other self-employed people and employees.
Drawing low salary is just one of the barriers contractors face when going to a High Street lender. Using a specialist mortgage broker, contractors can circumvent such obstacles with the Clydesdale.
Working with Clydesdale bank to secure a competitive mortgage
If you’d like to work with a mortgage lender who understands the way you trade, Clydesdale:
- accepts applications from contractors on an “open” sector approach (not just from IT);
- but to qualify for a Clydesdale bank mortgage, calculated income must exceed £50k pa;
- expects applicants to have had their contract renewed at least once;
- calculates annualised income using the current/previous 2 years’ contracts;
- they take an average weekly rate from those two years and multiply it × 46;
- the calculation would thus be: Daily £ Rate x 5 (days) x 46 (weeks);
- calculates income pro-rata for any contracts of less than 35 hours per week;
- will not accept offshore income structures;
- will consider less than two years contract history if the LTV is less than 70%;
- ask for both the current and previous contracts;
- uses the latest 3 months’ bank statements as evidence of contract income;
- expects a CV demonstrating at least 2 years contracting in the sector;
- does not expect to see breaks of more than 6 weeks between contracts dates;
- said CV must also include income details covering at least 2 years;
- expects at least 4-6 weeks remaining on a contract at the time of application;
- if less time remains, the contractor must provide evidence of a contract renewal/extension.
If you’re unsure whether you meet the above criteria for Clydesdale mortgages, don’t worry. We may be able to negotiate an exception if your other supporting evidence is strong enough.
As we alluded, our advisers work side-by-side with the bank’s senior underwriters. They can discuss the merits of your application if your circumstances warrant it.
Also, if your situation isn’t straightforward, let us discuss your case with their underwriters. This way, we could agree a “decision in principle” before submitting your full application.
Discussing your intent before submitting an official application serves a double purpose; it helps:
- smooth the process of getting you the mortgage your contract earnings deserve;
- to prevent a failed mortgage application*.
*You may think that you've nothing to lose other than time by going to the High Street direct. If only it was that simple.
All manner of financial services use your credit history to reconcile information. A failed search leaves harmful traces on your credit file.
Best case scenario, those footprints will result in higher interest rates. Worst case, you won't get a mortgage offer at all, even if everything else meets a lender's criteria.
A mortgage broker who understands contracting can apply to a like-minded lender. Clydesdale is one such lender; you can check out their rates on our best buy tables.
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.