Help! I’m a contractor, and I can’t get a mortgage!
The jury is still out over the state of the country’s (indeed the world’s) financial health. Without wanting to get too political, some say things are continuing to improve, others that we are on the verge of another recession, and there are those who believe we never really escaped the last one. Then there is the upcoming Brexit Referendum and the uncertainty that might bring – regardless of the ultimate outcome.
But all you want is a mortgage!
Here is the problem – not that any contractor really needs this to be spelled out for them. An employee walks into a bank with payslips and a deposit to see a mortgage ‘specialist’ who inputs the data, presses a few buttons and waits for their computer to tell them what to think. Nine times out of ten, even though they may earn considerably less than your average contractor, there is some sort of offer on the table.
Then, as Mr Employee walks out of the branch, excited at the prospect of moving home, you stand and shake the hand of the very same ‘expert’. After asking about your work, even before getting to your income, you hear a sound similar to that exuded by a dodgy builder before they tell you bad news. You see the computer that these ‘specialists’ use to generate the response they should give a mortgage seeker don’t care or understand reason or common sense.
This is, of course, a common frustration for contractors and freelancers, but surely there is a solution! Even a self-employed person has a slight advantage in that they can present three years of accounts, but tax-efficient accounting can often backfire there… If you can show a healthy profit, however, you might just be on to a winner.
Four practical approaches to getting a mortgage as a contractor.
Start planning today! Despite my earlier (ever-so-slightly sarcastic) reference to the bank’s mortgage ‘specialists’ you can form a relationship with your local bank – and ultimately they do want to lend you money if they can. They just need to justify the risk to the computer (or their branch manager). So, even if you do not need a mortgage now or next year, start the relationship today anyway. Get them involved in what you are doing, share your contract details, talk to them about your plans and keep them in the loop.
Get advice from others! There will be people out there who have secured mortgages as a contractor. Ask around, find out who they are and get introduced. Even if you get nothing more than the name of the person who helped them, it wouldn’t be a bad place to start.
Get advice from your network! The agency you use, your accountant, the person who sorts out your insurance or investments – all of these people will know somebody with the right information. Financial people and legal people, who you already know and trust, should be able to help guide you.
Find a specialist mortgage advisor! There are mortgage advisors out there who specialise in this sort of thing (no hint of sarcasm this time). All you need is an introduction to a few of them, preferably from people you trust, and then you can compare what they say.
So, what is your point, Paul?
The financial marketplace is, and always will be, a place full of rumour, mistrust, doom, gloom and promises of gold at the end of the rainbow. One thing is for absolute certain, though! There is always hope – so don’t give up and certainly don’t give up until you’ve even tried.
You just need to get in touch with the right people and start to ask the right questions!