Contractor Mortgage Options

Freelancers, contractors and consultants often find it tough to secure decent mortgages simply because their style of employment does not meet the criteria deemed necessary by most financial institutions. This is one of those areas that people new to contracting and freelancing are often unaware of - the disadvantages of not having a rigid income stream.

Most banks and building societies unfairly penalize contractors or anyone classed as 'self-employed' because they write them off as a possible repayment risk. This has been a constant source of frustration for the contracting sector particularly when the majority of freelancers earn a far higher salary than their counterparts in fixed or regular employment. And often, even if they do decide to offer the contractor some kind of mortgage, it will be a mortgage based on self-certification. This might seem fair, but such self-certification mortgages are normally only offered with extremely high punitive interest rates or charges.

There are however a new breed of mortgage lenders and brokers now coming to market who cater specifically towards the freelance sector. Such companies look at the positives of the contractor employment status and higher salary and do not try to exploit them. They will offer mortgages that are not tied into the old and expensive celf-certifiable mortgages and will instead use a form of income verification that they have already negotiated with lenders. Such a system allows contractors to borrow based on an annualized multiple of their contract rate, and with a minimum of deposit (although more can be used if the contractor wishes).

Most reputable companies that broker such contractor mortgages will stick to this formula. Look out for annualized contract rates, low deposits, competitiveness with national rates and little, if any, broker fees. Steer clear of self-certification mortgages with punitive charges and high rates and these days you'll find as a freelancer it is possible to find a decent mortgage as a contractor.

The Bedouin Group offers Contractors Umbrella Company alternatives and contractor mortgages so they can increase their take home pay.

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