IT Contractor - mortgage

PRG123

Hi,

I am an IT Contractor, and trying to get a mortgage. But all the high street providers base there
Amount that they will lend on a percentage times salary + dividend.

Now for tax reasons both those figures are low on my 3 years accounts and it means I
Can't seem to get the mortgage I need.

Can anyone recommend a good broker or mortgage provider that calculates mortgages on daily rates
Or gross revenue.

Thanks

Pete

HappyMJ

Certainly possible have you looked at http://www.contractoruk.com/money/contractor_mortgages.html

PRG123

Thanks happy I will have a look..... Have you used them?

holly_hobby

As a contractor you will usually be based on the value of your contract and/or 3 yrs books (I assume you are Ltd Co which contractors generally are due to liability issues) - have you been a contractor since the IT contractor boom in v late 90s early 2000s, or more recently commenced this type of employment ?

I've been out of mge placement for a little while, but Halifax did used to look at IT/FS contractors - you get std single & 1 mulitples and they didn't allow joint multiples or affordability (which may have changed). I also recall that if you passed their credit score with an A or B - then proof of income wasn't requested - again my have changed, esp in respect of contractor status. (but my own mge is with Halifax, I am a FS contractor, and passed with an A/B score in 2008 - and no books or accountant contact was requested).

If both your salary and divs are low - where is your income coming from ?

Usually, you keep salary lowish and take the rest in divs (as lower tax bracket and no NICs payable on divs) - which is how my books operate under my accountant - if you are doing neither as you suggest I am baffled what you are living on, or are you just leaving the capital undrawn in your business account ?

Hopefully an active mge adviser will be along - Kingstreet is one knows his eggs, and he should be able to tell you who is currently active in the contractor market ! (hope its ok to blow your trumpet for you Kings. ! )

Hope this helps

Holly

PRG123

Hi Holly

Thanks for that I will check with Halifax.... When I say low, i mean around 50% (roughly) of my total gross income, rest is left in t business account. We are going to draw a far amount this tax year for our deposit.

Basically the total we are drawing x the percent that they use doesn't equal how much we need to borrow.

Yes it is a limited company .

Pete

HappyMJ

PRG123 wrote: »

Thanks happy I will have a look..... Have you used them?

Nope I got a mortgage with the Virgin One account at a time when they were not checking salaries/wages/accounts. I didn't have to prove anything effectively a "liar loan" that started all this mess we are in now.

PRG123 wrote: »

Hi Holly

Thanks for that I will check with Halifax.... When I say low, i mean around 50% (roughly) of my total gross income, rest is left in t business account. We are going to draw a far amount this tax year for our deposit.

Basically the total we are drawing x the percent that they use doesn't equal how much we need to borrow.

Yes it is a limited company .

Pete

You can base it on the contract rate. i.e £20 an hour times the minimum contracted hours i.e 35 times 44 (weeks) then times 3.25 to borrow about £100,000. Some banks will use different multipliers.

holly_hobby

Ok ... perfectly acceptable keeping monies in the bus, but can cause an issue when lenders just look at drawn income & divs & nothing else.

Self cert loans are history.

As I say Halifax did look at contractor mges - and based their assessment on the value of the contract itself. (so you will need to have knoweldge of scheduled (if any ) end dates etc, and if the current contract has previously been extended/renewed).

Thats the thing with specialist contract work, you have a scheduled end date with the Client of say 6 mths form commencement, and 2 yrs later your're still on the same contract and there's still loads of work with them !!

As you are looking at a specialist mge area, I would suggest having a quick appointment with a whole or market broker (before going near Halifax and messing up any app with them before a broker can liaise with them ) , they should be aware of who is in the contractor market and understands the salary and employment basis of specialist contract workers.

Your broker will do all the leg work for you, sound it out with the lenders/lender reps (BDMs) to get you a tacit agreement, subject to your submitting whatever the UW wants, present your case in the best possible light to the lender, and get the best deal from the particular lender itself.

There may be a fee, but when you have a non-std application a good broker is worth their weight in gold.

Hope this helps

H

PRG123

Ok thanks H - I've checked Halifax rules for IT contractor they say they will use gross but then say use self employed if multiple contracts, which falls back to the same as I have been quoted by other banks

We have a broker that has started looking for us, but not really sure if he is up to the job ( company is flower )

Pete

holly_hobby

Ah ... I see why you are having a problem

How many contracts are you working on at any given time ? How are they managed with the Clients ?

I usually work FT for one Client at any one time - its usually a stipulation of the contract

H

PRG123

I have four active contracts, and 2 dormant ones + two support contracts.

I also have another house that is mortgage free

PRG123

Managed by average days a week contracted so one client 2 days another 2 days and another one day per week.... On 3/6 month contracts + yearly support contracts