A Freelancer’s Guide to Getting a Mortgage
Paul Swain is a freelance UX Consultant. He learnt first-hand how difficult it can be to get a mortgage as a contractor, and has a few useful tips to share with anyone else who might be in a similar position. To read the full post click here
At the time, the media was focussed on the inaccessibility of mortgages to young people sans a sufficient deposit. We assumed it was pointless to apply so did nothing but continue saving. In reality, being over 30, married, and with a good job, reduces the importance of the deposit. It allowed us to consider staying in Brighton: we’d assumed a move back to Coventry was the only way we’d afford a house, and not a basement flat.
And, if the high street banks had their way, the above would be true.
On the back of my application for a business account, I was encouraged to come in for a mortgage meeting. I was told that I’d be able to get a mortgage and was very attractive to the bank. So we got our hopes up.
Two weeks later, after looking at houses on Right Move and talking about potential bathroom layouts, we met with a Santander mortgage advisor. My wife works full time for a Brighton agency so they loved her. However, when it came my time to talk career: ‘Oh sorry, I thought you had more than 2 years on your books’.
I was angry at myself for not considering a mortgage whilst in fulltime employment. The next day, I reluctantly began to consider closing my contracting business and taking a full-time position. I began considering my new, exciting future a failure.
A few weeks later, I was chatting with an ex-contractor friend at The Telegraph. It transpired that he’d been in the same situation as me. With only two months contracting, he’d found a broker that specialised in contractor mortgages, not available through the high street. I began to investigate potential brokers.
We filled in a background survey and our broker was very clear, that as a contractor, we wouldn’t have access to the most competitive offers. And, because of this, we should expect to pay a higher interest rate. Accepting this, he quickly sorted us an offer from Halifax, with only a copy of my current contract, and letter confirming my working days.
This is by no means the end of the process. Each application is unique, for us we had to:
- Source a solicitor to carry out property searches
- Commission a home buyers report
- Follow up any issues contained therein
- Exchange contracts
- Research, research and research. With a decent bit of research, we could’ve avoided the delay, and the heartache. For somebody whose job is 80% research, I’m more than a little embarrassed by this.
- Avoid high street banks if you haven’t got two years on your books. I think I dodged a bullet though, a life-time with Santander is not appealing.
- Compensate for number 2 with a good broker.
For more insight into figuring out the murky world of mortgages when self-employed, this blog from Sally Jenkinson could also come in handy – http://bit.ly/1gC7Ooc