MORTGAGES FOR CONTRACTORS
Hope Mortgage Solutions offer expert advice on those looking to secure finance on a property while they are working as a contractor, this can be structured in multiple ways including:
Employed contractors – Employed and PAYE but on a contract for a fixed period.
Self employed contractors – A fixed term contract with a company but declare all personal income for tax purposes (this may be as a sole trader or through a limited company)
Zero hours contract – An ‘open ended’ contract with your employer which has no fixed term.
Lenders usually require a minimum earnings evidence of 6 months (this may be a copy of an existing contract and a previous contract if necessary) many lenders will require 2 or 3 years’ accounts showing annual earnings if self-employed. The main thing lenders look for with contractors is longevity either with that company, or in the field you are working in.
Contractors paid by a day rate: if your contract stipulates a daily rate as opposed to a fixed salary, lenders will use the daily rate and the number of days contracted to work per week and create an annual figure - allowing for leave such as holiday. This figure will be the income used for affordability calculations, for example:
£300 per day, contracted to work 5 days per week
£300 x 5 days = £1500 per week
£1500 x 48 weeks = £72,000
Therefore £72,000 will be the income figure used for affordability purposes.
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