Newcastle Building Society contractor mortgage lending criteria
Newcastle Building Society is another lender to have recently updated its contractor lending policies. The lender undertakes all its underwriting manually, which means no profession or income is off-limits.
Newcastle’s new policies now accommodate day-rate contractors, umbrella employees, locums, CIS workers, zero-hours contractors and agency workers.
The one underlying criterion the building society insists on is applicants must have at least two years’ industry experience. But unlike the city’s football colours, Newcastle’s contractor policy and lending criteria are not black and white. Because the lender insists on 24 months’ experience in the sector, underwriters can use common sense and flexibility where an application warrants it.
Contractor requirements inside or outside IR35
As such, there’s no specific contracting history requirement. But it will help the applicant’s cause if they’ve had at least one contract renewal. It will help further if there are less than six weeks’ gaps between contracts over the last year but Newcastle can be flexible on this point.
You will need to provide copies of your current contract and your previously employed contract (where applicable). And your current contract should have one month left to run, at time of application. Failing that, you should have evidence of a contract renewal.
The building society accepts contractors from a wide range of industries. It also imposes no minimum day rate or annual income threshold. The lender also has a contingency for day-one contractors!
Underwriters determine income on the contractor’s current contract rate. Whether the contract states hourly, day or weekly rate, underwriters will ‘annualise’ the amount by 46 weeks.
Umbrella payroll employees
Newcastle assesses umbrella contractors on their total gross pay. Umbrella payroll payslips typically include multiple elements:
- Basic salary
- Commission
- Additional taxable income
- Holiday pay
So long as your assignment schedule or contract confirms you charge a day rate or hourly rate, underwriters will treat all income sources in their earnings assessment.
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Newcastle is very flexible when accommodating locums, agency workers, zero-hours contractors and nurse bank staff. Underwriters are especially sympathetic to NHS and key workers.
Junior Doctors
With regards to Junior Doctors in Foundation Year 2 or higher, the building society will accept applications will be accepted. Newcastle doesn't yet accept Foundation Year 1 Junior Doctors.
Early Career Teachers
NatWest will use umbrella contractors' payslips to evidence income. Underwriters will use the figure after umbrella company deductions (excluding NICs).
It's a similar scenario with Early Career Teachers (previously known as NQTs). The lender will only consider applications from ECTs in the program's second year.
Evidencing income
Underwriters will look to use 100% of income provided applicants can evidence a two-year track record in their chosen industry. Applicants can use P60s or tax calculations and relevant overviews as evidence. Zero-hour contractors, nurse bank staff and agency workers will need to provide their latest three payslips to corroborate their other documentation.
Construction Industry Scheme (CIS) workers
Newcastle treats CIS workers as self-employed. Again, applicants must provide proof of income for the last two years in the sector. To support this evidence, underwriters will need CIS contractors' SA302s and any other relevant supporting documentation.
Features of Newcastle BS contractor mortgages
In addition to its updated contractor policies, Newcastle also offers:
- An income multiple of up to 5.5 x income for mortgages >500,000
- A flexible interest-only policy, considering earned income up to age 80, provided the borrower is contributing to a pension
- Flexibility for those with minor issues in their credit history
- Joint Borrower/Sole Proprietor mortgages to help family members onto the property ladder
- Foreign nationals access to 80% loan-to-value mortgages, even with less than two years remaining on their visa.
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Talk to the contractor mortgage experts
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Our specialist broking team will support you throughout your mortgage journey, and we have nearly 1000 5-star reviews from clients to prove it. Whatever your mortgage needs, it’s time to talk to the experts.
Why choose Newcastle Building Society?
In a nutshell
Newcastle’s updated policy combines flexibility, competitive income multiples, and a strong understanding of the contractors’ needs. If you have the requisite contracting history and are looking for a high-income multiple, Newcastle Building Society is worth considering.
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