Working On A Contract Basis? New Mortgage Products Abound!
14.11.14At Coreco, we are always trying to push the envelope and work closely with our lending partners to offer schemes and products that really assist our clients.
Over the past few months we have had more requests than ever for assistance from prospective buyers who are working on a contract basis, whether with a city bank, a media company or as an IT consultant. We are well aware that the way we all work is changing dramatically, with more people than ever looking for more flexible working arrangements that contracting can offer.
However, we are also aware that in the past, when it comes to getting a mortgage, lenders have been slow to adapt to the change in working practices and often struggled to understand the merits of contractors, preferring the safe, tick-box route offered to standard employees.
The good news is that this is starting to change and as well as a range of other options from some mainstream lenders, Coreco were one of only three brokerages in the UK to first gain access to a new Contractor Mortgage scheme from Leeds Building Society.
As well as offering some competitive products, including a 2 year fixed rate at 3.19% up to 85% Loan-To-Value (5.4% APR), a 3 year fix at 3.29% up to 80% Loan-To-Value (5.2% APR) and a 5 year fix at 3.69% up to 75% Loan-To-Value (5.0% APR), these products also come with a very useful ability to offset.
This can be especially beneficial to contractors who build up funds that can be used to offset against the mortgage balance and reduce the amount of interest being paid. Find out more information around the workings of offset mortgages.
These products are available for contractors who earn in excess of £75,000 per annum, (there is a separate range for those earning over £50,000 per annum) with experience of contracting for at least 1 year.
Your borrowing capacity is calculated by taking your day rate and, based on a 5 day week, multiplying this by 46 weeks to obtain an annual income. This is then used within their affordability calculations to confirm the level of borrowing you can obtain.
Of course this is not the only option available and the good news is that there are now a handful of lenders that are adept at lending to contractors and freelance borrowers with competitive rates.
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Written by Andrew Montlake
Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.
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