Mortgage for IT contractor

Star1

Hi

My husband currently works in IT. Although he has a permanent job at the moment, he is thinking about resigning and becoming a contractor. As he deals in a lot of the hiring at his current work, he know's that there's a very high demand for his specific skills / experience at the moment and that he could get a great deal more money

The only thing we are worried about is that we would like to upgrade our house soon, which would require a bigger mortgage. Would it be possible to get a mortgage as an IT contractor? Would he have to show so many months / years of steady work in the meantime?

If it helps, we would be getting a joint mortgage. I work full time in a permanent job. We would be looking for a mortgage of approx 3 times joint salary with 25% deposit

Many thanks

Star x

olly300

You wouldn't be able to get a mortgage at the moment until you have at least 2 years of audited accounts. (Some require 3) This is due to stricter lending criteria. A couple of years ago it was fine just to show your present contract to get a mortgage as this was then extrapolated for the entire year.

The best thing to do is to upgrade now, make sure you have savings to pay your mortgage and other outgoings for the next 6 months then your husband should go contracting.

Star1

I thought you might say that!

Obviously we would need to sell our current house first, and realistically that won't happen until March (given that the markets close down over xmas etc), so I guess I'll just have to tell him to be patient! He's gagging to leave his current job though

Star x

chewback

There are some lenders that will lend on multiples of his daily rate and do not require 2 years accounts. As long as he has experience in his field they will be OK.

luckyfool

chewback wrote: »

There are some lenders that will lend on multiples of his daily rate and do not require 2 years accounts. As long as he has experience in his field they will be OK.

Options are very limited in this area (one of the main lenders who do/did this recently withdrew the option with no notice). I am only aware of one lender still doing it, its all down to underwriter discretion, and their policy can (and almost certainly will soon) change with little or no notice. If the OP's husband does quit his permanent position to become a contractor there is no guarantee that this option will be around by the time they need the mortgage. In fact my bet would be it will not. There are lenders that will also consider lending with 1 yrs accounts, and given that the lender offering to lend on a multiple of the daily rate would require that he has been contracting for a minimum of 12 months neither is suitable unless they can afford to wait 12 + months before applying.

Star1

Thanks guys

We will need to think about this one, as I'm hoping to be on maternity leave in 12 months! So I guess it's either moving quickly and him resigning afterwards, or waiting until I get back from maternity and moving then.

Would I be able to get a mortgage immediately after returning from maternity, even though I wouldn't have 3 months payslips? I could obviously get a letter from my employer stating my salary. We would want to move asap to be near to childcare (aka my parents!)

luckyfool

Lending based on your after maternity salary is widely available once you are within 3 months of returning to work (prior) and there are one or two lenders that will lend even early on in your mat leave. Beware though that lenders will potentially enquire about childcare plans if you return to work full time/or almost full time and will take into account any childcare costs within their affordability calculation. i.e. There is no issue at all using your salary once you are back at work even if you do not have 3 full months payslips, as long as you have been continuously employed with same employer during the maternity leave.

Thrugelmir

Star1 wrote: »

As he deals in a lot of the hiring at his current work, he know's that there's a very high demand for his specific skills / experience at the moment and that he could get a great deal more money

Personally I wouldn't take the risk of jumping ship, increasing the mortgage and starting a family concurrently.

Decide your priorities in life.

I would jump ship and save the extra money (or reduce the current mortgage balance) while the opportunity is there. Then reappraise the situation at a later date. Nothing lasts for ever.