Subcontractor Mortgage

What deposit is required for a subcontractor looking to get a mortgage?

The more deposit, the better, in most cases – but there isn’t a minimum or maximum deposit required. You could apply with the same rates, restrictions and allowances as any other applicant. So the minimum deposit is generally 5% with some lenders.

You sometimes have to be a First Time Buyer for that to apply, but it depends on the lender. Youcould put down as much deposit as you want.

What percentage of income can subcontractors typically borrow for a mortgage?

The way it will be calculated varies from person to person, but once we’ve got that annualised figure, the bank will generally multiply this by 4.5% to calculate how much you could borrow.

It could be higher – up to 5.5% – or a little bit lower. It depends on the circumstances. To be safe, use an income multiplier of about 4.5%, but speak to a broker first, because the way you’ve annualised your income may not be the way the bank does it.

Can subcontractors use self-employed status for mortgage applications?

Yes, as long as you’ve got two years worth of tax calculations, we should be able to use that without any problem.

Are subcontractor mortgages subject to higher interest rates than regular mortgages?

Not necessarily. They could be if we have to go to a specialist lender for any reason. Maybe you’ve been contracting for a shorter period of time – there could be increased rates for that.

But these are not mortgages specifically designed for subcontractors or contractors in general. Higher rates might just apply if there are niche circumstances that need to be considered.

Is it possible for subcontractors with adverse credit history or bad credit history to obtain a mortgage?

Yes, it is. You will probably need to have a year or two’s work under your belt. With adverse credit, you will be expected to have a higher deposit, generally about 15% or more.

Do subcontractors need a specific length of service to be eligible for a mortgage?

Yes, generally a minimum of a year, or two years to be safe, to access the main high street banks. Two years will just give us a solid indication that this is a long-term form of employment that you could maintain and receive a stable amount of income from.

How can subcontractors improve their chances of obtaining a mortgage?

Having solid tax calculations done by an accountant will always make life a little bit easier, if we’re going through the route of assessing you as self-employed.

Making sure that your contract is up to date and signed is also important. Sometimes we do see contracts that haven’t been signed by both parties.

We may also want to see your CV to show your experience in this line of work.

What else do we need to know about mortgages for subcontractors?

The main thing is, as always, speak to a broker if you’re not sure. We will always be able to point you in the right direction – and if it’s not something you’re able to do immediately, we will help you figure out a way to structure things, so that you’re eligible for a mortgage sooner rather than later.

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