Umbrella Contractor Mortgage

How do I prove my income as an umbrella contractor? 

It will vary for every person. Sometimes we will want to see potentially three months’ or six months’ pay slips through the umbrella company. If you’ve got a contract where you’re invoicing, we will want to see the invoices and the original contract.

If you are paying your own tax, even though you’re in an umbrella company, we’ll want to see your SA302s, which are tax calculations. So it really depends on how you are paid.

Most importantly, we’ll need to know if you’re paying your own tax or if your employer pays it – that will indicate the method we will use to assess your income, and which documents are required to support that.

What’s the difference between umbrella and limited company mortgages?

If you’re applying for a limited company mortgage, you will be a director of that limited company. You’ll take a proportion of dividends and a salary. An umbrella contractor meanwhile, is almost always a self-employed individual working for another company.

The main difference is that with a limited company, we could look at the business and its net profits. With an umbrella contractor, we will be looking solely at you as an individual.

What are the benefits for umbrella contractors looking to get a mortgage?

To be honest with you, it is sometimes harder to be an umbrella contractor from a mortgage perspective. There are additional steps involved, because we need to verify this is a long-term form of employment for you, and that your work isn’t going to finish abruptly anytime soon.

The benefits are that you could continue doing what you’re doing without having to switch to an employed role, set up a limited company or start restructuring how you go about your current business.

How do I apply for a mortgage as an umbrella contractor? How can a mortgage broker help here?

The main thing I recommend is if you have an income that would be considered complex, go straight to a mortgage broker. Because umbrella contractors have a unique way of working and it’s not the standard, the mortgage will be assessed on you as an individual. We need to know how to structure that.

It’s very difficult to do that by going straight to a bank – every bank has a different way of viewing an applicant. Without having specialist knowledge of umbrella companies, it would be quite daunting to approach individual lenders and hope that their policy is different from the previous one.

Whereas, as brokers, we have our own ways of keeping in contact with banks and building societies. We will know straight away which lenders your case is more suited towards and how we’ll structure it for you.

Everything is individual, especially with contractors. You will always have a unique set of circumstances. We don’t often see two people in an umbrella company who have the exact same contracting set-up. So it’s always worth speaking to somebody first, before running any hard searches on your credit.

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