IT contractor mortgage

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droiderm
droiderm Posts: 778 Forumite
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in Mortgages & endowments
Hi everybody,

I am looking to get a mortgage this year, in around the summer.
Being an IT contractor it adds some complication, along with some other history I have . I declared bankrupt in 2007 (fully discharged and not on my credit file). As part of that was a voluntary repossession. There was equity and felt it was a good move at the time (may be not in hindsight).

I did secure a mortgage in 2013 with nationwide with the above issues fully declared.

However, additional complications are I am now "self employed" and it will be a relocation a few hundred miles away.

I have done research and have found some contractor friendlier lenders . Specifically leeds building society and halifax which I believe fit my situation.

I have been an IT contractor since September 2017.

The general concerns I have is my history above (no adverse credit since) and I am a contractor and relocating. I appreciate it's likely I will need to use a broker but any suggestions or advice would be appreciated.

Edit

We will have around 30 to 40 k for a deposit and possibly looking for 250k (at the upper end)
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  • csgohan4
    csgohan4 Posts: 10,587 Forumite
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    you really need a broker due to your prev bankruptcy to ensure you get the right lender for you
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • 5557223
    5557223 Posts: 45 Forumite
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    Get a good IT contractor friendly broker (ideally fee free). There are a few but most won't deal with you unless you are earning at least £325 a day.
  • DavidT67
    DavidT67 Posts: 389 Forumite
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    Halifax will want to see your last three SA302 Self Assessment tax statements and take your average annual income from those. Others may want three years accounts for your limited company or simply base affordability on your daily rate, (Length of contract and gaps are factored in. )
  • kingstreet
    kingstreet Posts: 38,764 Forumite
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    DavidT67 wrote: »
    Halifax will want to see your last three SA302 Self Assessment tax statements and take your average annual income from those
    Not the case.

    Halifax will work from gross contract value, as will others.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Gary123456790
    Gary123456790 Posts: 638 Forumite
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    I can recommend this broker https://www.cmmemortgages.com/

    My wife is an IT contractor with Ltd company, and we used the above successfully.
  • Silian
    Silian Posts: 165 Forumite
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    We recently got a mortgage from Halifax as IT contractors. I had less than 1 year accounts (and my partner less than 2) but as we both worked in IT beforehand they were happy with it. They also used our day rates (instead of the small salaries we pay ourselves) for our affordability.

    They only required:
    3 months business bank statements
    Signed contract
    3 months personal bank statements

    I can't comment on how the previous bancruptcy will impact things - best to go via a broker. You don't even necessarily need a contractor friendly broker (we used a normal one) - IT contractors are looked at favourably with some banks.
  • Guerillatoker
    Guerillatoker Posts: 625 Forumite
    edited 15 January 2019 at 1:49PM
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    I am currently in a similar situation dealing with CMME who are often advertised by ContractorUK, though their fees seem to be expensive (£995 on a first charge mortgage, I believe rates for second charge are bespoke). So far I have only heard/read good things and is the first Advisor to swiftly understand my tax situation (IR35).

    CMME are only interested in contract value, whereas most conventional lenders will complicate things by using accounts etc. In my situation (only 1 year accounts) that is much more preferable, but I don't know if that would be the same for someone who had 3+ years.

    However I will note that I have also been speaking to a local independent broker with much lower fees who has also been very helpful, just sound less hopeful than CMME. Unfortunately he has been away on a long weekend so I'm still awaiting his response having spoken to lenders.
  • sal_III
    sal_III Posts: 1,953 Forumite
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    I'm and IT contractor and got a mortgage from Nationwide through a broker (£500 fee) based on daily rate alone. No company accounts, just a copy of the current contract and 6m company bank statements. No averse history though. The whole process was online (phone and e-mail) so I was happy to pay the fee instead of losing a day pay, to attend a face to face appointment etc.
  • droiderm
    droiderm Posts: 778 Forumite
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    Gary123456790 wrote: »
    I can recommend this broker https://www.cmmemortgages.com/

    My wife is an IT contractor with Ltd company, and we used the above successfully.

    Thanks, the 995 fee puts me off but I may not have a choice:(
  • droiderm
    droiderm Posts: 778 Forumite
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    sal_III wrote: »
    I'm and IT contractor and got a mortgage from Nationwide through a broker (£500 fee) based on daily rate alone. No company accounts, just a copy of the current contract and 6m company bank statements. No averse history though. The whole process was online (phone and e-mail) so I was happy to pay the fee instead of losing a day pay, to attend a face to face appointment etc.


    I have read the nationwide lending criteria a number of times over the months and flip back and forth whether to see if I fit.
    If they class me as self employed I have no chance ( I don't have enough years accounts). If they class me as a "fixed term contractor " it's a chance.
    See the relevant bits at the bottom of this post.

    I jumped the gun a bit last night and applied for a DIP (it's probably 6 months until I want to do it properly, I know it was silly). I did it on the basis of being a fixed term contractor, annualising the day rate and taking 80 percent. It was referred requesting documentations but then accepted today without me sending any.

    I need to call them to check if I have made a mistake, which I now think I have:(

    Self employed applicants

    A self employed applicant may be:

    A sole traderA partner in a businessA director that owns more than 20% of the company*Sub-contractorsFixed term contractors!where they invoice through their own limited company or as a sole trader/partnershipFoster carers.

    Sub-contractors who invoice their employer

    Sub-Contractors who work via their own Limited Company, Partnership or as a sole trader are treated as self-employed.

    Where a Sub-Contractor is working as an individual only basic rate tax (currently 20% or 30%) is deducted by the employer; this is commonly seen as a CIS deduction on the payslip. In these cases the applicant should be treated as self-employed and cannot be treated as a Fixed Term Contractor.

    If a Sub Contractor’s employer deducts full PAYE tax and National Insurance, please refer to!employed fixed term contracts.
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