Why is it so hard for contractors to get mortgages?
Getting mortgage for contractors has always been a hard nut to crack. The basic reason, which makes this task difficult to achieve, is related to the financial status of a contractor. Contractors are not considered as a regular employee, hence financial institutions are reluctant to approve their mortgage application. However, the overall scenario is now changed, as a large number of people are attached with contracting and are earning a significant income. There are few guidelines, which will help you to gain acquaintance with contractor mortgage and how to get it approved without any hassle.
Contractor mortgage elaborated
The contractor mortgage is specifically designed for contractors taking into consideration there irregular income pattern. It serves as an opportunity for contractors to get their mortgage approved which is otherwise a difficult goal to achieve. A seasoned mortgage broker pays due heed to different aspects like, contracting experience, retained profit and average contracting period while submitting a mortgage application. Moreover, it is also an important fact that whether a contractor is managing its finance through limited or an umbrella company.
Eligibility criteria for contractor mortgage
The good thing about this type of mortgage is that every contractor is eligible to apply. There is a variety of mortgage products, devised for contractors to suit their financial status. The contractor having bad credit history and those who have just started contracting can obtain the facility of contractor mortgage. This kind of contract-oriented mortgage is highly adaptable and encircles every contractor irrespective of the type and duration of contract.
Does contractor mortgage cost extra?
The contractor mortgage costs almost the same as other financial institutions except the amount charged by a broker, who arranges the mortgage for a contractor. You can easily find independent financial advisors offering their services, online or in your respective area. It is advised to be vigilant regarding the rates offered and chose the company charging minimum fee. In this way, you can compare the total sum of expenses incurred with those available on high street. The Halifax Mortgages for instance offers 1.99% initial rates for a period 2 years with 60% loan to value. Similarly, Coventry Mortgages offers 2.10% initial rate for lifetime with 60% loan to the actual value.
Why mortgage broker is necessary
In the prevailing circumstances, it is beneficial for a contractor to hire the services of a mortgage broker in order to get his mortgage application approved. A mortgage broker will outline the total earnings of a contractor while presenting the application. In addition, he can manage to get a mortgage approved irrespective of the contract type and payment method. The contractor is relieved from providing account details of previous financial years, which is mostly demanded by high street lenders. The mortgage broker knows the market trends and he will intimate you about the success or failure of your application prior to its submission. This particular advantage of a mortgage broker will help a contractor to maintain good credit history as a refused application can minimise the chances of mortgage approval in future.