Mortgages for Oil and Gas Contractors
At Freelancer Financials, we appreciate the risks an oil and gas contractor faces every day. Technical, groundbreaking, safety critical and often dangerous. What you earn, you work hard for.
We also know what you don't need when you dock on dry land are barriers to you putting a permanent roof over your head.
But problems are exactly what offshore–and all–contractors face when they visit High Street mortgage lenders.
Their generic advisors take one look at your application and alarm bells start ringing. You see it in their eyes.
Then, you see their posture and attitude become agitated as they read further through it.
You might think that their (eventual) rejection has its roots in what you do for a living. But I don't think it is, not all the time…
How your payment structure limits your offshore contractor mortgage options
…The barrier to getting a competitive mortgage is neither what you do nor the way you do it.
The biggest risk you face to getting an offshore contractor mortgage is your payment structure.
You know that limited company payment structure that helps you optimise your taxes? It's great for keeping hold of your top line income.
But when you put those accounts down in front of an in-branch mortgage advisor? They're stuck with their own bank's inflexible lending criteria.
In short, without specialist broker help: you're doomed, laddie.
What does an oil and gas contractor do?
One look at the insurance QDOS offers for your sector gives us a clue. Their policy offers an insight into the breadth of roles and skills under the oil and gas remit:
- Oil and Gas Project Managers;
- Oil and Gas Designers;
- Oil and Gas Electricians;
- NDT (Non-Destructive Testing)/Inspection;
- RF (Radio Frequency) Testers;
- Rope Access Contractors;
- Rigging Contractors;
- Well Supervisors.
And, for sure. You face more risks in a week than a 9-5 office worker ever will in all their working life. One contract can see you in the North Sea for three months. The next, you could be half way across the world in the Middle East.
After all that travel and diversity, you want a place to put your head down at night that you can call your own.
But what happens when you say you're an 'offshore contractor' to an in-branch advisor?
They may think you're either a private investor or have a dodgy payment structure. To them, offshore is somewhere they aspire to have a savings account one day.
That attitude doesn't fill you with the greatest confidence.
The great divide: do governments want entrepreneurs?
The problem you have getting a mortgage isn't always down to you being an oil and gas contractor. Rather, it's how you process your income thereafter that can scupper lenders' affordability tests.
One reason is that in UK governance, there's a conflict of interests. Yes, it's politics; but it does impact contractors across all industries.
On one hand, politicians tell you they support self-employed entrepreneurs. In some instances, they actually mean what they say, too. Rare, I know.
On the flip side, you have the tax man's aggressive pursuit of single person limited entities. Their fearmongering makes the aforementioned herald of politicians moot.
Has your accountant or agency ever explained the labyrinth of IR35 to you? Great to see you've recovered, but at least you know HMRC's dubious viewpoint on contracting.
The point: HMRC and entrepreneurship are two sides of a coin that can't look each other in the eye.
Fortunately, banks and building societies have taken a different tack.
Special dispensation for limited company contractors
Lenders have segregated professional contractors from the mainstream. IT contractors and Oil and Gas contractors get even greater special treatment. But this support is only accessible at underwriter level, not in branch.
Specialist mortgage underwriters assess offshore contractors against their gross contract rate. They don't even ask to see the applicant's accounts from their trusted brokers. Use our calculator to get a guide to what you could borrow based on your contract day rate:
Contractor Mortgage Calculator
How much can I borrow on my daily rate?
Potential Borrowing = £
The biggest problem all professional contractors face is accessing terms that allow them to borrow what they can really afford!
High Street branch aversion to offshore contractor mortgage applicants
One or two lenders have trained advisors to deal with contractor applications in branch. But those institutions are definitely the exception, not the rule.
Most lenders prefer to receive offshore contractors' mortgage applications through a specialist broker. And one who understands the way limited company contracting works, at that.
They do this so that their underwriter only gets vetted applicants. They know that the broker will highlight only the key criteria to help them make a decision. In essence, brokers show the underwriter how much that contractor can actually afford to borrow.
Some mortgage providers even class themselves as "intermediary only". This means they won't deal with applicants direct, only through a trusted supply chain of brokers.
Start your application the right way
Let's right the wrongs of your past. Or if this is your first mortgage application as an oil and gas contractor, even better. Let's get you into good habits from the start.
Your agency or accountant deduct what they can from your gross income for you in the name of tax planning. This strategy's a 100% legitimate practise and that's what you use them for.
If you didn't, the feasibility of your independent professional status would be questionable. Both income and employability benefits are the reasons you're independent in the first place.
In an ideal world, you wouldn't have to go this extra mile to prove your affordability. But until government departments sing from the same hymn sheet, we're all stuck with it.
So, don't present those streamlined accounts to an advisor who doesn't know any better. They'll only look at the bottom line figure, the one that appears on your SA302 after those deductions.
Yes, you might get an offer based on that figure. But it won't reflect your true mortgage affordability.
Due to the brevity of your contract(s), they may class you as high risk, too. If When they do, any offer will come with an eye-watering interest rate.
Get a competitive mortgage that reflects your professional status
We know, as do the underwriters we deal with direct, what mortgages offshore contractors can truly afford. Your application in our hands will secure you a competitive mortgage rate. The amount you can borrow will reflect your contract rate, not a post-tax 'salary'.
We won't rig the mortgage offer in anyone's favour. We won't ask you to dig (or drill) too deep. Our mortgages for offshore contractors are, usually, off limits on the High Street.
Let us engineer your ownership of a permanent residence on terra firma here in the UK. Both in between contracts and over the long term, you'll have a place to hang up your hard hat you can call your own.