Are you checking your tax and National Insurance Contributions (NIC) on each of your payslips?…
Looking to get on the property ladder? Carry on reading for our quick-read guide to mortgages as a contractor!
Plan ahead
No one ever secured a mortgage by simply hoping for the best (although, wouldn’t that be great?). Make sure you come up with a strategy which will allow you to save whilst being realistic about your goals.
Check your credit score
We know you know this already, but in order to secure the most competitive mortgage it is important to check your credit score. You can do this for free via websites such as ClearScore.
Save that cash!
Once you know how much you will need for your deposit, work out how much you need to put aside a month. While you shouldn’t scrimp on your grocery shop, consider cutting back on non-essentials and occasionally saying ‘no’ to that bottomless brunch! You’ll be surprised how much you’ll save just by making a few minor changes such as these.
Contractors are advised to put down a 10% to 25% deposit – however, it may be more desirable to offer more as it will make you appear less of a financial risk to the lender.
It is also important to evaluate how big a mortgage you can afford to pay back monthly without breaking the bank.
Get a professional opinion
If in doubt, it’s always best to speak to someone who knows what they’re talking about. However, instead of going to a bank or financial advisor, it might be worth investing in a mortgage lender that specialises in contractor mortgages. This is because they will be better placed to find a mortgage arrangement that suits you, given the realities of being paid as a contractor.
Keep an eye on the market
While there’s no better time than the present to get started on your plans to save for a mortgage, make sure to keep an eye on the market so you can get the most for your money.
What will lenders ask to see?
To prove your eligibility for the mortgage you are applying for, lenders will typically ask to see the following:
- Proof of income
- Tax paid over an extended period (e.g. payslips from your umbrella provider over the last six months)
- Bank statements
- Two years of accounts (for limited company directors)
- Proof of identity e.g. passport or driving licence
- Utility bills for proof of address
We hope you found this article helpful – don’t forget to speak to a financial advisor for further information!
Got any queries or looking for an umbrella provider? Call us on 0203 967 6846 or email [email protected].