Mortgages for Oil and Gas Contractors
At Freelancer Financials, we appreciate the risks oil and gas contractors face every day. Technical, groundbreaking, safety critical and often dangerous. What you earn, you work hard for.
We also know that the last thing you need when you get to dry land is problems putting a permanent roof over your head. But that’s often the case when you visit High Street mortgage lenders.
They take one look at your application and alarm bells start ringing. You see the change in their posture and attitude as they get 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.
The barrier’s neither what you do nor the way that you do it. When it comes to your mortgage, the biggest risk you face is your payment structure.
That limited company that helps you out no end with your taxes? Great for keeping hold of your top line income. But in front of a mortgage advisor who only knows his bank’s criteria? 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 never 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 mention ‘offshore contractor’ to your in-branch advisor?
They either think you’re a private investor or have a dodgy payment structure. To them, offshore is somewhere they aspire to have a savings account one day.
It doesn’t fill you with the greatest confidence.
The great divide: do governments want entrepreneurs?
The problem you have getting a mortgage is often not be down to what you do in your line of work. 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 that affects contractors.
On one hand, you have the politicians telling you they support self-employed entrepreneurs. In some instances, they mean what they say, too.
Yet on the flip side, you have the tax man. Their aggressive pursuit of single trading entities makes the herald of the politicians moot.
Have you ever had your accountant or agency explain IR35 to you? Great to see you’ve recovered, but you now know HMRC‘s viewpoint on contracting.
The point is: they’re two sides of a coin that never the twain shall meet.
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 accessible at underwriter level, not in branch.
Specialist underwriters assess oil and gas contractors on their gross contract rate. They don’t even ask to see accounts with brokers whom they’ve built a rapport.
The biggest problem professional contractors face is accessing these mortgages. 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 get oil and gas contractors’ applications through a specialist broker. One who understands the way limited company contracting works, at that.
Lenders do this is so that their underwriter only gets vetted applicants. They know the broker will highlight only the key criteria to help them make a decision. In essence, brokers show how much that contractor can actually afford to borrow.
Some lenders even class themselves as “intermediary only”. This means won’t deal with ‘specialist’ applicants direct, only through trusted brokers.
Start your application the right way
Let’s right the wrongs of your past. Or if this is your first mortgage application as a 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 only look at the bottom line figure, the one that appears on your SA302 after those deductions. You might get an offer on that figure, but it won’t reflect your true mortgage affordability.
Due to the brevity of your contracts, they might just class you as high risk, too. If they do, any offer will come with an eye-watering interest rate to boot.
Get a competitive mortgage that reflects your professional status
We know, as do the underwriters we deal with direct, what oil and gas contractors can truly afford. Your application in our hands will secure you a competitive mortgage rate. The amount you can borrow will also 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.
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