Hubby out of contract, do you think we could get a mortgage?

ellie27

My husband is a contractor, has his own company from which he pays himself a salary and dividends.

In the last 7 years he has had 3 contracts, all roughly 2-2.5 yrs long each, with up to 3 months off in between the 3 contracts. He has no contract at the moment.

His company has earned on average £100,000 per year in the last 3 years. He has all the accounts to show this. From this he is paying himself salary/dividend of around £40,000 per year - which he will still be able to do even if his company is out of work - again he has all the paperwork to show his salary/dividends.

I have 2 young children, only work 3 days per week so earn £21,000 per year.

We are looking to move house soon. We would have around £120,000 deposit. We have not found our ideal home yet, it may be we are looking for a mortgage in the range of £130,00-£200,000.

Hubby thinks we would have no problem getting a mortgage as soon as he gets a contract. He seems to think soon as he has a contract we could apply for a mortgage (using a broker he thinks) Surely he would have to be in a contract for a certain length of time before the banks would allow to lend? Or are banks really looking at his personal salary/dividends and if they are consistent then thats all that matters?

Confusing!

He has been out of contract for 6 weeks now. If he is still without a contract in a couple more months could we possibly still apply for a mortgage?

Any thoughts at all would be appreciated.

Many thanks!

Thrugelmir

Much will depend on the length of the new contract.

Salary/dividends is only relevant if the Company has income. With no income then there's nothing to distribute. Then there's nothing to service a mortgage with.