Being a contractor can be a great way of earning more money for your skills and expertise. Whether you choose to be a self employed contractor paying your own tax and national insurance or an employed one, being a contractor can allow flexibility with your work and the potential to earn a significant amount more than you would if you were a full time PAYE earner. However, when it comes to mortgages, getting a loan as a contractor can be difficult. Normally because of the minimum contractor mortgage criteria, meaning the minimum length of time that a contractor has been working for and also the length of time they have left on a contract.
Minimum Contractor Mortgage Criteria
Like with most lending, banks are extremely cautious with who they agree to lend money to, so as to limit the risk of losing money. That’s why many lenders won’t lend money to people who have had serious money struggles in the past, or have had a property repossessed. When it comes to employment or self employment, lenders want to be absolutely sure that the person borrowing the money has a stable income and can afford the mortgage payments.
Because of the flexibility of being a contractor and the somewhat unstable nature of the job (as contracts are not usually permanent roles), lenders want to see some sort of history of earnings as a contractor or a lengthy contract duration remaining. A history of contract working can illustrate to a lender that a borrower has earned a consistent living as a contractor and is likely to continue this way, and a lengthy amount of time left on a contract can potentially illustrate to a lender that consistent income will be received.
Nottingham Building Society Contractor Mortgage Criteria
Contractor mortgage criteria varies from lender to lender with some saying that you need a minimum of 1, 2, or even three years history as a contract worker. Some say that you need to be working with the same employer for a minimum of 6 – 12 months. And others say that your current contract needs to have at least 6 – 12 months remaining on it. In extreme cases a lender may ask for all three pieces of criteria to be satisfied before they will lend. However, some lenders are much more flexible. One of these is Nottingham Building Society.
Nottingham have made changes to their contractor mortgage criteria, reducing the minimum length of time a contractor must have worked on fixed-term contracts in total, to be considered for a mortgage. They will now consider borrowers who have been working on fixed-term contracts for a minimum of 12 months in total, with no minimum time required on their current contracts.
So if you were an IT contractor for example, you would only need to have been working as a contractor in IT for 12 months and it doesn’t matter how long you have been in your current contract. You must however have a minimum amount of hours specified in your contract because zero hours contract workers are not accepted by Nottingham Building Society. Contractors working through an umbrella company are also acceptable using 46 weeks income for affordability purposes.
Speak To a Specialist Contractor Mortgage Advisor Today
If you are a professional contractor, don’t risk going direct to the wrong bank. Speak with one of our specialist contractor mortgage advisors today to see how we can help you to find the best mortgage deal out there. Our initial mortgage consultations are completely free of charge. We will charge a fee is you decide to proceed with a full mortgage application through Oportfolio, which you can discuss with your advisor.