Umbrella Contractor Mortgages

Successful Mortgage Applications For Contractors

If you’re a contractor running your contract work through an umbrella company and receiving a PAYE salary, then you’ll be expecting your mortgage application process will be pretty straightforward.  After all, isn’t that one of the reasons you chose to work through an umbrella company in the first place – to keep things simple?

As a private or public sector contractor starting out on your own for the first time, working through an umbrella company, takes away all the hassle of starting up your own limited company.  

Why Choose To Be Employed By An Umbrella Company?

For a monthly fee, an umbrella company carries out all the administration relating to your income, such as generating your payslip and paying your PAYE, claiming your expenses, and making your National Insurance Contributions (NICs).

As an ‘employee’ of your umbrella company, you enjoy a regular income which is paid directly into your bank account.  You don’t need to worry about filing limited company accounts or paying your tax by the January deadline, because your umbrella company takes care of all of that for you.  

You’re also shielded from the IR35 ruling and benefit from the tax savings that come with it.  However, when it comes to securing a mortgage offer, as an umbrella company contractor, things may not be quite as plain sailing as you’d hoped. 

This is where we can step in to help – As a regulated contractor mortgage broker we can help you get all your ducks in a row before introducing you to our range of specialist lenders that you won’t find on the high street.

Here’s our simple key to unlocking umbrella contractor mortgages.

What Is An Umbrella Contractor Mortgage?

An umbrella mortgage is simply a loan offered to self employed contractors who run their contract work through an umbrella company instead of through their own limited company.  

A contractor applying for a residential or buy to let mortgage may find it hard to show regular high street lenders how much they actually earn because their proof of income is different to conventional employee payslips.  

Will I Be Able To Get A Contractor Mortgage?

While attaining a contractor mortgage offer may not be as straightforward as applying for an employed mortgage, it isn’t impossible – provided your application meets the lender’s risk criteria.

Before you start your application though, you need to know what information and proof of income a potential mortgage lender will expect to see. 

And this is where using a specialist contractor mortgage broker comes in.  

Why Engaging A Contract Mortgage Advisor Is The Key To A Successful Mortgage Application

Working with a specialist mortgage adviser can help you achieve a successful mortgage application in so many ways. They will:

• give you a list of the information you need to gather, and
• check all your documents beforehand and pinpoint any gaps
• help you calculate the amount you can borrow
• open doors to specialist mortgage lenders
• complete the application forms on your behalf
• assist your application from start to finish
• save you hours and hours of time, stress and frustration

In fact, some specialist lenders will only consider applications that come via a contractor mortgage adviser, because they will have prepared their client’s application beforehand, with all the right information, which takes less time and effort than dealing with you directly. 

So, with some expert advice and guidance, a little preparation beforehand and access to a select choice of specialist lenders who understand how contractors who work through umbrella companies are paid, you could breeze through your mortgage application.

How Do I Prove My Income?

Proving your income as a contractor running your business through an Umbrella Company isn’t as straightforward as a regular employee working nine to five, five days a week.  While an umbrella company can simplify the way you are paid, proving your annual income is harder because the payslips generated by your umbrella company don’t give a full picture of how much you earn.

Some contractor mortgage lenders will, however, be happy to accept more than one method of earnings proof, such as:

• copies of your current and previous contracts based on your hourly rate
• payslips from a recent employer
• guarantees of future contracts based on your hourly rate
  
  

These will help the lender understand your contract rate, or the day rate you charge and how many days you are contracted to work for your current client and potentially future clients. 

Boosting Your Street Cred 

Others ways to boost your credibility with a lender is to:

• shore up your credit score and sort out any unpaid debts – use a credit rating company like Experian
• make sure your correct name and address is on the electoral roll 
• think about how much you can put down as a deposit – more than 10% will be viewed favourably by a lender

Pick up the phone now for a quick chat about the type of mortgage you’re looking for and to find out how we can help you tailor your contractor mortgage application and find the right contractor mortgage lender for you.