Working as a contractor certainly has a number of great benefits; being your own, boss, the variety of working on different contracts and of course, the financial power of being a contractor. These are the reasons that you went into this type of employment, so you don’t need any convincing about the great aspects of contracting.
The negative factors of working as a contractor are less publicised but if you have ever tried to arrange a mortgage then you will know exactly what we’re talking about here. Working as a limited company complicates the way that your accounts are seen by most banks, which means that obtaining a mortgage can prove to be quite difficult.
As a contractor, you pay your accountant to make your accounts as tax efficient as possible but this makes it more problematic to prove your actual salary and this is why high street banks are reluctant to provide mortgages to contractors. Banks can also see you as high risk due to the fact that there is no guarantee of work and contracts can often be cut short when a business decides it needs to reduce costs or if a project finishes earlier than planned.
Due to these factors, you may be offered a mortgage with higher interest rates or need to put down a much larger deposit than if you were in permanent employment. This is despite the fact that you have worked as a contractor for years and always had a steady, constant income. It doesn’t really seem fair, does it?
Fortunately, there are a number of companies that specialise in providing mortgages for contractors. Going down this channel can remove a lot of the pain of trying to get an in branch advisor to understand how your accounts work and you shouldn’t have to waste time convincing them that your daily rate ensures that you meet the criteria that is set out in the same way that you would if you were in standard employment.
Contractor mortgage specialists will be able to find you a good deal and many will provide your mortgage based on your daily rate, rather than the evidence shown in your accounts. You can help to ensure that your mortgage application gets accepted by making sure that your credit rating is high, which is a key determiner in whether a mortgage gets approved. In addition to this, you are generally more likely to get a mortgage approved if you can show that you are working on a long contract, so apply when you are starting a new contract rather than when one is coming to an end.