Contractor Mortgages
Ascot Sinclair has teamed up with Freelancer Financials, to offer mortgage and financial advice designed specifically for those in the contracting community.
Trading accounts is often the biggest hurdle for self employed contractors seeking a mortgage but not for Ascot Sinclair clients! Freelancer Financials can help you secure a mortgage based on a multiple of your contract rate alone.
How does a contractor mortgage differ from a standard mortgage?
In terms of the actual mortgage products, there is no difference. The same mortgage products available for standard mortgages are also available for contractor mortgages. The only distinction that separates the two is the underwriting and assessment criteria.
With a standard mortgage, lenders will typically assess your affordability based on salary and dividends drawn. The majority of contractors operating in a tax efficient way draw a minimum salary and restricts dividend drawings to avoid higher rate tax. While this makes perfect sense from a tax planning perspective, it has the unintended effect of reducing the amount you are eligible to borrow under the standard criteria used by most lenders.
A contractor mortgage is based on your annualised current contract rate. This enables contractors to borrow more than they would be able to with a standard mortgage while choosing to take a smaller salary for tax planning purposes.
A number of important factors need to be satisfied for contractors to be assessed in this way:
- The current contract rate of the borrower?
- The length of the existing contract and when it ends?
- The trading structure in which the contractor uses? E.g. Limited Company or Umbrella?
- Type of contracting work - Are you an IT Specialist or Accountant?
- Contracting history - Are you on your first contract or have you renewed at least more than once?
This type of underwriting is totally different to the self certification mortgages that were available in the past. The interest rates that are available through lenders that do contractor mortgages, are no different to their standard products available to your employed counterparts.
A contractor mortgage is no more costly than a standard mortgage, as long as you seek the assistance of a contractor mortgage broker that is experienced in working with contractors. They have the knowledge and contacts with the underwriters who will be responsible for assessing your mortgage application.
Before attempting to apply for any type of mortgage borrowing we strongly recommend that you speak with Freelancer Financials first.
Freelancer Financials are able to utilise bespoke underwriting with the lenders, to offer you borrowing based on a multiple of your entire contract earnings and not just the Taxable Element.
For more details on how much you could borrow based on your contract rate use our Contractor Mortgage Calculator.
In addition to mortgage advice, Freelancer Financials offers a range of financial products tailored for contractors:
Contractor Pensions - Pensions are a great way for contractors to invest due to the significant tax breaks available. Pension investments can be invested from gross income (before tax) and thus attract tax relief at the investors highest marginal rate of tax.
Life Insurance for Limited Company Contractors - Limited company contractors can save tax by funding their life insurance through the business rather than paying the cost personally from post-tax income.
Income Protection Insurance for contractors - This helps pay the bills by replacing part of your income if you are unable to work for a long period of time because of illness or disability.
Critical Illness Insurance for contractors– This pays you a tax-free lump sum on diagnosis of a critical illness.
You can contact Freelancer Financials today on: 020 8421 7999 – Or request a Call back
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You can contact Freelancer Financials here for a quote.
