With Guest Blogger Tom Matthews from Coreco.
In today’s economic climate it has been interesting to see the changing work patterns of many of our clients over the past couple of years. There seems to be an increasing number of applicants who now work on a “non-standard” basis, (whatever “standard” means these days), whereby a permanent PAYE position gives way to either a self-employed or contractor basis.
Whereas it used to be the preserve of those in the IT specialist or media who work on various short-term contracts, now we are seeing a growing number of industries, from medical to finance to graphic design, taking this option.
For many it is a precursor to full self-employment and setting up a limited company, whilst for others it is simply an easier and more profitable way of working.
The issues for these growing number of contractors is that mortgage providers have struggled to understand these working patterns and offer mortgage loans to those who may not yet have 3 years accounts, or only have a defined contract period.
Many contractors may have approached a number of high street lenders and met with the same response, “sorry you do not meet our policy”. With an awful lot of lenders it is as simple as that – either you tick all of their boxes or they are not interested. Unfortunately for most UK lenders a short term contract, although potentially financially rewarding, just does not give them the long term confidence that a permanent contract does.
This can be extremely frustrating, especially if you are keen to wrap up the deal that will get your hands on the keys for your dream home. After all, arguably working on this basis with a level of flexibility and freedom can be just as secure, if not more so, than working on an employed basis, especially when redundancies seem common place.
The challenge is to find either a lender or an Independent Mortgage Broker (like us!) who will be able to remove all of these typical barriers to lending and take a more pragmatic approach; actually understanding your individual circumstances and what made your choice of employment so attractive in the first place.
The good news is that Coreco have proactively built up relationships with lenders who are able to understand this type of borrower and can assist in providing finance using a blank sheet of paper approach rather than the tick-box mentality that many lenders follow.
As an independent mortgage adviser we are not limited to a short panel of mortgage lenders like some other advisers. We have access to them all, whether that is on the High Street, broker only providers or Private Banking facilities for larger loans.
These specialist lenders will consider the combined salary and dividends you are drawing from your business, or work off a calculation of your day rate, that can suddenly mean that mortgage affordability is no longer an issue.
Knowing the lenders that will take the time to listen to your circumstances and provide reasons why they can lend to you, not just why they cannot, is a major step in the right direction and by highlighting this growing trend, we hope that more lenders will look to understand and ultimately lend to this sector of the market.
To speak to our bespoke Contractor Team please call us on 020 7220 5110 and ask for Tom Matthews.