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The message comes as Contractor Financials celebrates its busiest ever month, having helped some 299 contractors and freelancers secure mortgages.
Tony Harris MD and founder of Contractor Financials and his team provide specialist mortgage advice and services to the freelancer community and have helped some 22,000 contractors and freelancers since the company was set up in 2002.
They have an ongoing arrangement to offer financial services, including mortgages, to Shout99 readers and Tony Harris is a long standing member of our Ask An Expert panel.
Contractor Financials has taken issue with recent research from IPSE which had key findings:
- Two in five self-employed people (38 per cent) who are interested in getting a mortgage are concerned they’ll never get one because they work independently;
- Forty five per cent of independent professionals believe mortgage providers do not want them as customers
- Sixty three per cent think mortgage providers expect them to jump through more hoops than employed people
- Sixty one per cent think mortgage advisors do not understand their financial situation
- Sixty one per cent believe it’s more difficult to supply the financial information required when applying for a mortgage if you’re new to independent working
Dispel the myths
Commenting on these findings, Tony Harris said: “I am pleased to be able to dispel the myths highlighted in IPSE’s study as far as our professional contractors clients are concerned. We negotiated our first annualised contract based underwriting with a high street lender fifteen years ago.
"Since then other lenders have followed suit and now banks and building societies recognise contractors as very strong candidates for mortgages. With contract based underwriting, freelancers can avoid the need to provide three years’ worth of accounts or rely on SA302’s or umbrella payslips because the lender will base mortgage affordability on a multiple of their annualised contract rate alone. This means that contractors can secure a mortgage from day one of their first contract. There are now a wide range of lenders to choose from on this basis.
“Contractors should simply speak to a specialist firm to secure a contractor mortgage because approaching a lender direct or dealing with a less specialist adviser is likely to force you down the accounts route because the adviser may not fully understand your unique employment status.
“If a self-employed applicant doesn’t have a formal ‘contract’ in place that states how much they will be paid and for how long, they will then need to use company accounts, SA302s or umbrella payslips to prove their income. Typically, lenders will need to see between one and three years accounts.
"Unfortunately, this can limit the amount that the applicant can borrow because the lender will assess affordability based on net income, however there is no reason why the lender will shy away from lending to you simply because of your self-employed status. We have helped hundreds of freelancers and self-employed IPSE members to secure a mortgage and many are surprised by how open minded lenders can be.
"The key is to prepare your application properly and ensure that you are giving yourself the best chance of acceptance. This will help to ensure that your application ticks all the right boxes before it lands on a mortgage underwriter’s desk.”
For more information...
....about the mortgage service which Contractor Financial offers to freelancers and contractors, see here.
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Susie Hughes © Shout99 2015
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