Self-employed Mortgage Question

ChonkyChops

Hello!
Since January 2020, I have been contracting to an American company, working remotely. Prior to this, I worked in the same industry (web design) for around 13 years, full-time and employed by various UK-based businesses. 

I recently fell in love with a property, and contacted a mortgage advisor to see if we could port our existing HSBC mortgage to this new home, as well as borrow some more to cover the higher price of the new home.

I’m not long off the phone with our mortgage advisor who has said that HSBC may not allow me the option of taking up this mortgage with them as I am only “self-employed” for 9 months. 

Is this normal? Is there anything that can be done, as opposed to waiting until I have accounts during this self employed time for 2 years?

My salary in this current role could basically pay our new monthly mortgage over 2 times over per month. Would that still not matter, even though in the US companies eyes, I’m a full-time employee to them? They just don’t have a UK-based base of operations that handles taxes etc, so they class any international employees as contractors. 

monetxchange

I'm in a not dissimilar position - self employed contractor for one company only, employee in all but tax and benefits status. You'll be seen as self employed regardless. Definitely instruct your advisor or a skilled broker to do a proper investigation and search for you on this.

Hopefully it'll be easier if you're porting but it's a minefield out there for SE at the moment. My monthly income some months could pay the mortgage 7 times over but yet they still have to go on some arbitrary figure of tax returns from two years ago! See if there's a lender that'll also look at least few months business bank statements or can do a snapshot of day rates. The reality is you'll need to start thinking in terms of profits instead of salary, because that's actually what you're making for tax purposes.

amnblog

This is about whether a Contractor is ‘self employed’. Most Lenders consider treat them as such and look for a long track record.
Other Lenders treat Contractors as a special case and work off of the day rate. With a previous extended track record in a similar role there should be a Lender that will consider you.
Speak to a good mortgage broker.

Thrugelmir

Whatever you consider yourself to be , you remain a contractor. US companies are hardly renowned for their friendly HR policies. Keeping you at arms length unfortunately suits them down to the ground. 

csgohan4

completely normal and due to tighter mortgage regulations introduced a while back. Generally 1 years accounts would be the minimum but as above there may be some lenders that go on day rates. 

Lenders now are more cautious with self employed due to the current pandemic and understandably so

ChonkyChops

Thanks for the replies so far!
One thing I have noticed in my seemingly endless searching for answers is that Natwest have an interesting approach to contractors. According to their lending criteria:

Contractors
For PAYE contract workers, we require one year's evidence (for example, two six-month contracts or four three-month contracts) and a contract in place for minimum of a further three to six months.
 
For self-employed contractors who earn more than £75,000 pa we’ll calculate their income as their average weekly contract income multiplied by 46, provided they can confirm evidence of:

• their latest 3 months’ consecutive personal bank statements for their main account (not required if their main account is with NatWest or RBS)         

• where significant business expenses are identified on the application, 3 months’ consecutive bank statements (personal or business) detailing these

• a copy of contract(s) to encompass a 12-month period, with a minimum of 6 months’ contract(s) already completed immediately preceding the date of application.

• they have taken no more than a six week break between contracts in the 12-month period

• the tax position is paid and up to date.

For me, as someone that is a self-employed contractor since January 2020 that is fortunate enough to earn above £75k, am I right in reading from this that I can supply my current contract which will run indefinately (because I'm only working for one company) and that that shows I have already completed 9 months of that contract?

Or is the first paragraph in the quote above still applicable to me also? It kinda reads like the first paragraph is different circumstances from the 2nd one.

917700

ChonkyChops said:

Thanks for the replies so far!
One thing I have noticed in my seemingly endless searching for answers is that Natwest have an interesting approach to contractors. According to their lending criteria:

Contractors
For PAYE contract workers, we require one year's evidence (for example, two six-month contracts or four three-month contracts) and a contract in place for minimum of a further three to six months.
 
For self-employed contractors who earn more than £75,000 pa we’ll calculate their income as their average weekly contract income multiplied by 46, provided they can confirm evidence of:

• their latest 3 months’ consecutive personal bank statements for their main account (not required if their main account is with NatWest or RBS)         

• where significant business expenses are identified on the application, 3 months’ consecutive bank statements (personal or business) detailing these

• a copy of contract(s) to encompass a 12-month period, with a minimum of 6 months’ contract(s) already completed immediately preceding the date of application.

• they have taken no more than a six week break between contracts in the 12-month period

• the tax position is paid and up to date.

For me, as someone that is a self-employed contractor since January 2020 that is fortunate enough to earn above £75k, am I right in reading from this that I can supply my current contract which will run indefinately (because I'm only working for one company) and that that shows I have already completed 9 months of that contract?

Or is the first paragraph in the quote above still applicable to me also? It kinda reads like the first paragraph is different circumstances from the 2nd one.

You have found a lender and looked the criteria on their website. Give them a call, or make an appointment, their mortgage advisor will answer you directly.