FAQs – Mortgages For Contractors

FAQs-  Mortgage for Independent Contractors

Can I get a mortgage as an independent contractor?

Yes, you can get a mortgage as an independent contractor. It’s just a bit tricky because there are so many factors involved when it comes to getting a mortgage. The first thing you should do is to contact a specialist contractor mortgage broker for specialist advice before starting your mortgage application.

How much can contractors borrow on a mortgage?

The amount of mortgage you can borrow as an independent contractor varies from lender to lender. Some contractor mortgage lenders will accept your mortgage application without taking much time but some mainstream lenders will not provide you with a mortgage. It is always better to contact a specialist contractor mortgage broker before starting your application.

How a contractor’s income is assessed for a mortgage?

A mortgage lender is not likely to use your previous year’s income when calculating your ability to pay back a loan. Instead, they may be looking at your current income. Your income may be lower than expected because of a change in your circumstances (for instance, you’ve moved house). If you’re planning to move home, make sure you tell your mortgage broker about this. They’ll then be able to advise you on how best to approach your new mortgage application.

If you are interested in knowing about the mortgage on commission income, you can read our blog.

What is a contract rate and how can a contractor use it to get a loan?

A contract rate is a rate agreed upon by both parties to a particular job. This could include hourly rates, daily rates, monthly rates, or even yearly rates. You would normally agree to these terms prior to beginning the project. However, if you are applying for a mortgage using a contract rate, you must ensure that you have been paid all outstanding invoices.

You can also apply for a mortgage based on your actual earnings. In order to calculate your actual earnings, you need to deduct out expenses that are associated with running a business. These include things like rent, taxes, insurance, utilities, marketing costs etc.

Read about Cis Contractor mortgage on our blog section of knowledge mortgages.

What are the examples of professional contractor mortgages?

Some examples of professional contractors are IT Contractors, Accountancy Professionals etc.

All the types of mortgages available for contractors are as follows:

1) Self-employed mortgage – A self-employed mortgage is one that is offered to people who are self-employed. The interest rates and repayment periods vary depending on the type of mortgage.

2) Mortgage for professionals – This type of mortgage is designed specifically for those working in the profession of accountancy, law, engineering, medicine etc.

3) Contractor mortgage for IT professionals – This type of contractor mortgage is designed specifically for IT professionals.

4) Mortgage for freelancers – This type of contractor is designed specifically for freelancers.

5) Mortgage for construction workers – This type of contractor provides loans to people who work in the field of construction.

6) Mortgage for plumbers – This type of contractor offers loans to people who work as plumbers.

7) Mortgage for electricians – This type of contractor lends money to individuals who work as electricians.

8) Mortgage for engineers – This type of contractor helps people who work as engineers.

9) Mortgage for architects – This type of contractor gives loans to people who work for architects.

10) Mortgage for interior designers – This type of contractor allows people who work as interior designers to borrow money.

Can I get a contractor mortgage with a bad credit score?

Yes, you can get a contractor mortgage with an adverse credit score but you may need to contact contractor mortgage advisors for specialist advice. Most mainstream lenders won’t approve your application if you have a bad credit score. But there are some companies which specialize in providing loans to people with poor credit. They will help you improve your credit history report before they lend you money. You can check your credit reports with the below link.

Can I get a mortgage for contractors as a sole with a bad credit report?

Yes, you can get a mortgage for the contractor as a sole trader with a poor credit record. If you have a poor credit record and want to apply for a professional contractor mortgage, you will need to contact specialist advice.