IT Contractor Mortgage

IT Contractor Mortgage (Part 2)

Continuing the conversation on mortgages for IT contractors with Carly.

How does the length and stability of an IT contractor’s work history impact their mortgage application?

Stability of employment is really important. Lenders will be looking for 12 months in a contracting role in the same field. If your contract has been renewed with the same employer, that’s great.

Lenders will want to see a minimum length left on a contract, which is often three months. If you have less than three months left, some could accept confirmation from your employer that the contract is due to be extended.

Are there any restrictions on the type of properties that can be purchased with a mortgage as an IT contractor?

The type of property being purchased is not affected by the applicant’s income. Each lender has its own criteria about which properties it will lend on – so it really does depend on the individual lender.

Can I still get a mortgage as an IT contractor if I have bad credit?

Yes. It’s always worth getting in contact with us to find out about the options. There are lenders that specifically offer mortgages for impaired credit – they may, however, ask for a larger deposit.

How does the remortgaging process work for an IT contractor?

There’s no difference. Income is assessed in exactly the same way as it would be for a new purchase.

What steps can an IT contractor take to improve their chances of getting approved for a mortgage?

Make sure all your paperwork is in order. Renew your contracts in advance and make sure you’ve got a copy – and that it’s signed.

Also, if you could show stability of employment, that could be really important. Lenders ideally want to see 12 months of contracting employment in the same field, with no gaps longer than six weeks.

Ideally, you will also have more than three months left on your contract. But if you’ve got less, a guarantee from your employer that the contract is due to be renewed would suffice.

Are there any tax implications or considerations that IT contractors should be aware of when applying for a mortgage?

We’re not in a position to give tax advice, unfortunately, so I would recommend you speak to a solicitor or an accountant.

How does the affordability assessment work for IT contractors, given the nature of their income?

There are different types of contracts, which could have an effect. If you’re a day rate contractor, lenders will use your day rate and multiply that by the number of days that you work a week, and over a year – so that could be 48 weeks or 52 depending on the lender.

Otherwise, lenders will assess your pay over the last three months and use your P60 to verify that.

Are there any specific mortgage products or schemes available to support IT contractors?

So many lenders will offer mortgages to IT contractors – you’ve got so much choice that
there shouldn’t be a problem finding them.

Plenty of lenders, including high street lenders, will accept IT contractor incomes so there are no specific products or schemes. If you meet the criteria, as discussed earlier, you should have no problem finding a mortgage.

What is contract-based underwriting and what does it mean for mortgages for IT contractors?

Contract-based underwriting helps IT contractors show they could afford a mortgage based on their contracting work – it’s a way of simplifying the mortgage process.

Contractors are assessed on how much they’ve previously earned and how much they’re likely to earn in the future, to decide if they could afford a mortgage.

Lenders also consider how long the contract lasts. If the contractor keeps getting work and the industry they work in is steady, plus they have a good history of finding work, it shows they are reliable.

How can a mortgage broker help with IT contractor mortgages?

It’s always worth getting in contact with a mortgage broker as we know the market. We know which lenders look more favourably on this type of income.

We could find the right deal for your unique circumstances. Finding these on your own would be very time consuming – it would mean repeating your details multiple times to different lenders. Let us make it a simpler, less stressful process.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.