Self-employed mortgages are not the same as contractor mortgages. On the High Street, you can get in-branch staff to quote you on the former based on your accounts.
Whether they ask for one, two or three years’ worth of documents will depend on the lender. Either way, it’s not ideal for many self-employed people just starting out on their own.
This is where it’s different for contractors; we can offer you contract-based underwriting. This type of mortgage underwriting is rare on the High Street because it remains in the ‘specialist’ niche.
Contract-based underwriting: the low down
It also doesn’t rely on accounts, which is why we can provide a mortgage calculator based on your contract. If you only have your day rate or weekly rate to hand, it doesn’t matter, as we’ll ‘annualise’ your income.
Our calculator reflects the deals we’ve negotiated with underwriters. Likewise, they’ll use the value of your contract to work out how much you can afford to borrow.
Once ‘annualised’, they’ll add their affordability factor, they’ll make you a respective offer. That affordability factor, if you’re wondering, is between 4.5-to-5 x your annualised income.
This method of working out how much you can afford gives contractors a distinct advantage. In effect, you can get a mortgage from day one of your first contract.
We’ve taken a cross section of those deals and fed them into the back end of our website. This enables us to offer you a ballpark figure of the potential worth of your contract in the eyes of an underwriter.
We’ve also used those figures to help you work out your possible monthly repayment. A simple offer may blow you away and light the touch paper. But before you go burning the fuse at both ends, it’s worth calculating how much your monthly mortgage repayments will be.
An oft-overlooked element to buying a home is the amount of Stamp Duty Land Tax for which you’re liable. We’ve produced the current table of rates and even built a calculator if you’ve a specific home value in mind.
If you are further down the line and have seen a home you’re interested in buying, you’ll need a more specific offer.
We’ve designed our mortgage calculators to give you a sixty-second accurate guide. But other circumstances may affect how much you can borrow and what you’ll have to repay:
- length of term served in your industry;
- the amount of deposit you have set aside;
- and, yes, even your credit rating
can affect how much a lender will offer you to buy your home.
You are not a number; your specifics will make the difference
Understanding your nuances is critical to you getting the most competitive deal for you. As such, our specialist advisors are in permanent contact with all contractor-friendly lenders.
Yes, our mortgage and repayment calculators offer generic figures; but these are not firm offers. That’s where our advisors step in. They’ll know in an instant which lenders are offering the best mortgage for your circumstances.
When you’re ready, we’re here for you. Until then, feel free to use our site as often as you need. It, like Freelancer Financials, is a well-established, trusted resource in the contractor community.
Author: John Yerou
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.