A lot of lenders have become contractor-friendly in recent years. It’s even possible that your existing lender has contractor-friendly products now, but they won’t let you know if you’re paying premium price on a standard variable rate, just to avoid the perceived hassle of switching.
In fact, if you’re on a joint mortgage, it’s probably because it increased the amount you can borrow by combining your household income rather than your contractor earnings alone. It’s also probable that you can secure more than you think based on your contractor rate alone.
We’re in a position to present joint applications with one contractor to super friendly and competitive lenders with direct access to the underwriters who can tailor your terms and rates to be the utmost best in the market. Whilst comparison browsing online will show you the headline rates, we’ll likely be able to better them.
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It’s advised you do this every year when you receive your annual statement from your current provider. The areas to pay attention are listed below.
1. Your current interest rate
2. The type of mortgage you’re on (fixed, tracker etc.)
3. When it's due to expire - you need to know this because if you remortgage before that expiry date, there's likely going to be high exit fees payable to switch your mortgage. Yet if you stay on the same deal past that expiration date, you'll revert to your current lenders standard variable rate, which will be exorbitantly higher than the rates we can secure.
Currently some of the best deals are on 2-year fixed rates. Due to the current financial climate there are very few promising rates on 5-year fixed terms.
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Our years of experience in the mortgage market have built us a solid working relationship with a huge panel of lenders. The vast majority of our lending panel are very contractor-friendly and go way beyond just the Metro Bank and Halifax (we remember the days of eye-watering restrictions on contractor mortgages).
Today, the market’s changed and now offers a massive selection, with many of our lenders very flexible to individual circumstances.
One document for a Decision in Principle..
The process is much simpler than a standard application. There are other checks of course, such as the affordability factor, but it all starts with one document and that’s your contract because to state the obvious, you are not going to get a contractor remortgage without having the contract to verify that. That’d be going backwards to the self-cert days.
Provided you’re in contract, there will be options to remortgage available
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Simply to save on your largest monthly outgoings, or to raise the money for whatever you want. Debt consolidation, home improvements, a new kitchen, a break away, and a more reliable car so you can get more achieved and boost your contractor earnings.
The choice is completely yours.
The more you’ve paid towards your mortgage, the more equity you have in it. When you remortgage, you can increase the size of your mortgage, or you can just move it to a better deal.
Every homeowner who doesn’t remortgage and sitting on a standard variable rate product is paying over the odds every month towards their mortgage. Every penny that’s overpaid on a standard variable rate could be money going straight towards paying your home loan down.
The smart choice is simple and that’s to stop paying towards the profits of a bank and instead put those pennies (often pounds) directly towards your equity. Then tap that anytime you need a cash injection by switching your mortgage product.
As specialists in the freelancer remortgage market we cater to a wide variety of circumstances. Find the perfect rate talk with an expert today.
We know you want access to what mainstream borrowers can get and we’ve gone out of our way to bring that to the table.
We’ve done the leg work and secured some great deals behind the scenes and are in a position to bring better than competitive interest rates to contractors.
Some of our lenders throw in additional perks, like these:
The finance market for contractors has become a lot more competitive and is more in-tune with the standard mortgage market now. Competition among lenders who want to approve more contractors is high.
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Every lender on our panel has different lending criteria. The average we find is around 4.5X your annual contractor earnings.
Each lender assesses your annualised earnings for affordability, just the same as a permanent workers salary is declared as an annual salary.
Working out your annual earnings:
1. If you charge by the hour, multiply it by eight. That’s your day rate.
2. Your week rate is five times that of your day rate, because you’re really not expected to work seven days a week.
3. Your annual contractor earnings are a multiple of 46 times your daily rate because everyone needs a holiday. You can’t multiply by 52 weeks for the year, or else you’d have no time off.
So the day rate is eight hours, multiplied by five days, over a forty-six week period.
As an example, if the hourly rate is £50 per hour, your day rate would be £400. Over a 5-day week, that’d be £2,000, and over a forty-six-week period, your annual earnings would be £92,000.
You can borrow up to a multiple of 4.5X that amount, so in this example, you would be able to remortgage up to £414,000.
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It is very different from anywhere else, as there’s absolutely no automation. Your business is dealt with professionally and personally by a trained expert in the contractor finance market, which is very rare with large banks. The contractor market is such a small niche that there’s relatively few larger providers that will train their staff up on dealing with contractors. It’s mostly automated decision making.
Decisions are made by the underwriters of each of the lenders we’re partnered with. Each of them has their own criteria that your application needs to satisfy to be approved. Our brokers keep up to date with all changes, so they’re always in a position to know which lenders among our select panel are in the best position to approve your remortgage application.
The standard lending criteria the majority look for are these:
1) You have a sustained day rate. Not necessarily at the eight hours per day. For you, it may be six hours, so we’ll work with a day rate based on your average billed hours per week.
2) Your contracting work is consistent. The lenders we work with understand there’s going to be gaps in your billed work. It’s generally acceptable to have up to 4-week gaps, which some lenders extend to six weeks.
3) The duration that’s left on your current contract. If it’s due to expire, applications can be considered on merit either by providing evidence of a contract renewal, or the potential. We understand that busy contractors don’t always agree on every contract as there can be multiple options at once.
4) The structure of your work, for example whether you’re within IR35, operating through an umbrella company or trading through a Limited Company.
5) Your current CV as that’s evidence of the industry you specialise in and the amount of experience/expertise you have in your field.