If you work as an IT contractor, you may not feel confident about getting a mortgage due to not having a fixed income. However, just because you don’t earn exactly the same amount of money year after year it doesn’t mean that you can’t buy your own home, and there are definitely options available for you.
Here, we take a look at how to get a mortgage as a contractor and some of the steps you can take to ensure that your application is successful.
Can I get a mortgage as a contractor?
The simple answer to this is yes, as long as lenders believe that you can afford to make the necessary repayments. Mortgage offers are calculated based on what lenders think you can afford to ensure that you’re not a risky applicant, and if you’re not taking home a consistent amount each month it can be tricky for them to work this out. However, as long as you can provide all of the information required in order to prove that you can make mortgage payments there will be lenders that will consider your application.
What will I need for my mortgage application?
For your mortgage application, lenders will want to see proof of income and any expenses and costs that go out each month. The amount a lender thinks you can afford can be worked out in a number of ways. For example, if you’re paid a day rate this will be multiplied by the number of days you work in a week and then by the weeks you work in a year. Lenders will typically assume you work 46-48 weeks per year to allow for time off between contracts and annual leave.
Lenders will also need evidence that you have job security, so it’s helpful if you have contracts or agreements that show that you’re working on long-term projects or have new projects lined up. The more information you can provide the better, as this will not only increase the chance of you being approved for a mortgage but means you won’t delay the process through having to find invoices, bank statements, and other documents as they’re asked for.
Is there anything I can do to increase my chances of finding a lender?
As with any mortgage application, there are things that you can do to increase your chances of finding a lender. Firstly, try not to take too much time off in the year leading up to applying for a mortgage. As mentioned previously, lenders usually expect you to be working between 46 and 48 weeks per year, and any more than this could make you look like a risky applicant. You should also take a look at your credit score before applying for a mortgage as there may be things on there that you can fix if you have a low score. For example, you should make sure that you’re on the electoral role for your current address.
Being able to offer a large deposit is another way to increase your chances of getting a mortgage offer. Although you can get a mortgage with a 10% deposit, if you can offer a 20 or 25% deposit you’ll not only look like less of a risk but will often benefit from lower interest rates too. Taking out a joint mortgage with someone on a fixed income can also help, as can opting for a guarantor mortgage if required.
How do I find the best contractor mortgage for me?
The best way to find your perfect mortgage as an IT contractor is to speak to a mortgage advisor who will be able to provide you with all of the information you need. With so many mortgage lenders available, some of which specifically offer mortgages to contractors, it can be overwhelming to do the research yourself or to know exactly what’s required from you.
At Choice Mortgage Solutions, we offer a whole range of services specifically for contractors to help you to find the right mortgage for your needs. From helping you to collate the right paperwork to finding excellent interest rates, we’re on hand to ensure that everything goes smoothly and that you fully understand the mortgage process and what’s expected from you.
If you’re hoping to get a mortgage as an IT contractor, contact us today to find out more about how our knowledgeable team can help you.