One of the main reasons behind the company's philosophy was to ensure that contractors were not penalised for being more entrepreneurial than permanent employees when it came to securing their mortgage funding. In fact, we have always felt it was hugely unfair that contractors had to rely on self-certified options. We have worked hard to establish more cost effective options.
Many contractors prior to the credit crunch relied on self-certified mortgages, where little or no checks were conducted by lenders on income verification, however you paid a higher rate of interest. Since the onset of the credit crunch, these types of mortgages have been removed from the market.
Lenders have increasingly become risk averse
They are all looking to lend to those they perceive as low risk. In the eyes of the lender, contractors do not fit this criteria. The reason for this is two-fold:
- Firstly, contractors are unlikely to be able to prove the right level of income to support the level of funding, using the lenders standard criteria for income assessment. For example, if your daily rate is £500 per day, and you are looking to purchase a property at £350,000, and you run a limited company, but only salary and dividends of say £45,000 this is likely to restrict your lending to a maximum of £225,000.
- Secondly, lenders are concerned if your current contract comes to an end, how you will continue to afford the mortgage.
Our solution to help contractors secure a mortgage
As an organisation we are proud of the fact that we have campaigned for a more flexible approach by lenders when looking at mortgages for contractors. We have managed to overcome both these issues with a number of lenders by utilising bespoke underwriting terms for contractors.
Are you interested in obtaining a contractor mortgage, but do not know the documents that are required to secure your dream home?
When you make the jump from a permanent position to contracting, you will undoubtedly be concerned about the impact this will have on your chances of securing a mortgage.
CMME makes the process of applying for a contractor mortgage easy.
We work with an ever increasing number of lenders who work with specialist brokers like ourselves, who have a complete understanding of the financial side of contracting.
We get to know your contracting status, and by choosing to use the services of a specialist, you can be sure that your application is presented in the best possible light, thereby minimising the risk of decline.
So there’s no reason to be concerned with securing a contractor mortgage.
But what documents do I need to secure a contractor mortgage?
There is a common misconception in the marketplace that contractors are required to put down a larger deposit than permanent employees.
In fact, contractors have the opportunity to access the same rates and minimum deposit requirements as permanent employees. However, a higher deposit allows you to access improved interest rates and wider product ranges.
A contractor needs to provide a copy of a current contract and CV, as we are able to show the lender your current earnings and your experience as a skilled professional. This way we avoid any issues regarding affordability.
2 or 3 years worth of trading accounts are not required either if you don’t have them, as we can potentially be able to help contractors with a limited company that have little or no trading history.
The documents that you will need to secure a mortgage as a contractor will differ slightly depending on how long you have been contracting.
If you are a new contractor, lenders require suitable identification, a copy of your current contract, a copy of your CV, and 3 months of personal bank statements. Some lenders also require last year’s or two P60s, and for high LTV you will need to provide 6 months of personal bank statements and credit reports.
For an experienced contractor, lenders require suitable identification, a copy of your current or previous contract, your CV and 3 months of personal bank statements. If they are available, you can also provide your business accounts.
We work exclusively with lenders, and have built strong relationships so you can secure your dream home. Not only can you save more, potentially borrow more, with no company accounts required, CMME are your number one choice for contractor mortgages.
Contact us today to see how we can help.