Skipton Building Society Contractor Mortgage Lending Criteria

Skipton Building Society is the latest mortgage lender to offer favourable lending criteria to contractors.

Through Skipton for Intermediaries (i.e., appointed brokers and advisors), they're bringing exciting mortgage options to UK contractors.

Here, we relate the key elements of lending criteria their underwriters consider when appraising applications. It's easy to see why they're becoming one of our go-to contractor mortgage providers.

Before we go into the details, we must acknowledge the current dynamic financial markets. With so much uncertainty, Skipton reserves the right to withdraw any or all of these criteria without prior warning.

And, as Skipton's underwriters judge each case on merit, it follows that an applicant's credit status will determine any firm mortgage offer.

Thus, we provide the following guide on the proviso that it's a general outline of Skipton's contractor mortgage lending criteria. Our brokers can provide a specific mortgage quote for you upon request.

Contract history and evidencing income

Like most lenders, Skipton underwriters like to see history in a field of work if an applicant is new to contracting. So, any applicant's CV must show six months' contracting experience plus two years' experience in their given industry at time of application.

As well as their CV, applicants need to provide a copy of their current contract. If their contract has one month or less remaining, they must approach their agency/client to get an extension.

Skipton's underwriters also use one month's personal and business bank accounts to support applications. These they use to substantiate income and gauge applicants' overall expenditure.

What contractors won't need to provide is payslips*. This eradicates a huge headache for umbrella contractors.

The lender also accepts Restricted Stock Unit income at 100%. And they'll factor in *100% commission and bonuses, but applicants must provide 12 months' payslips to substantiate this income element.

Affordability and income calculations

What Skipton has done to simplify self-employed income is somewhat refreshing. Their underwriters use a contractor's day rate whether they're umbrella, Ltd Co. or sole trader.

They use the standard 48-week 'annualised' income model with a maximum multiplier of 5. So, to calculate what Skipton's underwriters use for borrowing purposes use the equation: Day Rate [£] × 5 × 48 [weeks].

Where there are gaps in the employment history the income calculation modifies pro-rata. So, if there is an eight-week gap, the calculation would be: Day Rate [£] × 5 × 40 [weeks].

Access to affordable homeownership is important to Skipton, too.

Skipton offers mortgages at 95% LTV on new build houses, 90% on flats. Joint borrowers and sole proprietors can access their mortgages up to 90% (10% deposit). And existing homeowners can take advantage of Product Transfers up to 4½ months in advance of a fixed term's expiry date.

Special exemptions for locum medical professionals and supply teachers

Skipton goes the extra mile for medical professionals and teachers who've been in the profession for at least 2 years and are providing locum or supply work. They have a 'no minimum income' policy, including no restrictions on nurse bank work.

As most professionals in these brackets don't have a contract stating their day rate, obtaining mortgage finance can often be tricky. To simplify matters, Skipton is asking for the following documentation:

• the last 3 months' invoices or payslips
  • (where they'll use the three-month average for affordability purposes);
• the latest month's bank statement;
• a current contract (where one exists).

As with any application, if the underwriter is uncomfortable with any of the information submitted, they may request additional evidence.

We're excited to act on behalf of Skipton Intermediaries and their simple, flexible approach to mortgage finance. Few mortgage lenders are as sympathetic to the contracting way of life in today's uncertain climate.

Have you seen the home you want, but are concerned a lender won't grasp your income structure? Our personable, experienced broker team is on hand, ready to discuss your unique circumstances and borrowing requirements. Thank you, and good luck!