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Freelancer Financials
Contractors Best Friend For Financial Advice
Contractors Best Friend For Financial Advice

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Mortgages from Broker who Actually Understand the Way Contractors Work

The government has requested outside help by way of review so that they can understand the way self-employed people work.

Fair play. It's a sign of good leadership. But it the budget is anything to go by, they need all the help they can get because they haven't got a clue.

Sadly, that's the situation with High Street banks when it comes to appraising contractors for mortgages.

Even more sad Is that it needn't be that way. Many mainstream lenders offer what's called "Contract-based Underwriting".

It uses your annualised contract rate to get you a mortgage based on what you're really worth, your income.

The problem? It's underwriters who deal with these applications, not in-branch staff.

For years, we've built relationships with those lenders and their underwriters. Now, we're able to offer you not only competitive mortgages, but access to them without going through an affiliate.

We are accredited brokers; we know how you work, how the underwriters work and, most importantly, how best to show your potential to those underwriters.

Even if you've not been messed around on the High Street ike so many contractors before you, don't risk it. Get a mortgage that reflects what you're truly worth:

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Getting a mortgage as a contractor: the route one journey

There are two ways you can get a mortgage as a contractor:

A specialist contractor mortgage broker, awesome if you need someone who:

- can give you a quick decision and turnaround (usually 4-6 weeks from application to completion, if that!);

- understands you and gets to know you as a person;

- gets the way you work and pay yourself;

- can interpret all that, including your TRUE affordability, and present it to an equally savvy underwriter at a lender’s head office.

The High Street, great if you:

- have got months to wait;

- a hard nosed outlook;

-little fear of rejection, and

- decent walking shoes;

- What’s it gonna be?

Option 2, the High Street? You’ll spend hours - even days - trudging the pavements, and what for? Your quest will culminate in a fruitless search for an in-branch advisor who understands the nature of professional contracting, day rates and retained profit.

Or Route 1: one call to our experienced advisors, self-employed professionals themselves, who know the way you work inside out. Plus, they’ve got direct lines to underwriters who’ll assess you on what you’re worth: your gross contract rate

I’ll leave it with you.

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The Definitive Guide to Contractor-Friendly Lenders and their Criteria
If you've been to a High Street lender and they've given you the bum's rush, you already know that getting a mortgage as a contractor is an uphill struggle.
But why is that? Why, when you earn so much, are their mortgage offers derisory, if they offer you one at all?

It's all to do with risk and how they perceive contractors in their risk calculation.
To work that out, mortgage providers have a list of lending criteria that contractor applicants must meet.

Now, there's no one template issued by the FCA or other regulators. Providing they don't abuse any lending guidelines, banks and building societies can pretty much write their own rules.

Fair enough. But how do you as a contractor know how each lender assesses you if they won't give you that information on the High Street.

Well, the good news is that most lenders these days do have a contractor policy.
The bad news? Most only go through specialist brokers, and won't let in-branch staff loose with such specialist lending criteria.

Back to the good news: we are one such such broker, with access to all mortgage lenders in the UK.

As such, we've produced a definitive guide to all contractor-friendly mortgage lenders in the UK and their criteria.

Don't get caught out! Check what lenders look for in you before you call us once you've matched the best lender to your situation.

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Offset Mortgages offer a "Golden Opportunity" for Contractors

Before the economic bubble imploded, Virgin Money were doing an amazing job of integrating offset mortgages into mainstream lending.

Then 2007, and eventually…

Mortgage lenders were left with latex on their faces.

#Offset mortgages became less de rigeur, more rigor mortis, thanks to Responsible Lending.

But the climate's changing again, moving the #mortgage market more towards a contractor's lifestyle.

More of our newer lenders offer offset mortgages products to our community right off the bat.

The time's right for this juncture, too.

Savings, even in ISAs, are earning diddly-squat. #Contractors are looking at their retained profits wondering what the heck to do with them.

Our new article looks at research from Accord Mortgages and Yorkshire BS and highlights the huge benefits for contractors today.

Did you know that some lenders let you offset up to THREE savings accounts against your offset mortgage balance?

Now there's a thought to leave you with:

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Optimal Salary and Dividend Levels for Ltd Co Contractors, 2017/18 Edition

What's the difference between a #contractor and an employee…
…apart from the Gucci suit compared to the Primark one, I mean?

For a start, it's the way contractors:
• take on specialised work;
• bill for their services at considerably higher rates;
• receive their income, i.e., through a limited company payment structure.

Incorporating a #LimitedCompany's only the first step, though.

There are a whole load of fees, expenses and insurances that contractors have to pay that employees don't. So why bother?

Well, the way contractors access and extract their income works a lot differently than for PAYE. But that alone isn't enough to warrant a BMW over a Skoda.

There are smart ways to pay salary, even smarter ones to draw dividends. It's these traits that make the difference.

To that end, we've compiled the best salary/dividend split for contractors for this tax year into one guide, including examples.

Do you, as a contractor, feel there's something missing after you've drawn your dividends and salary?

Then there probably is.

Don't give the #tax man an unnecessary payday. Learn the optimal way to access your income instead:

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Accord Mortgages Targets High-End Contractors with Über-Competitive Rates

We're mega-excited about Accord Mortgages involving Freelancer Financials in its pilot for contractor mortgages.

To celebrate, we've compiled a definitive guide to outline who qualifies for their mortgages: [URL]

Too busy to read the guide? No problem. Here's an overview of Accord Mortgages' contractor mortgage lending criteria.

To qualify for an Accord contractor mortgage, you must:
• be a limited company contractor, either through a PSC or umbrella;
• earn at least £400 per day or £75,000 a year; umbrella contractors may be exempt from this threshold*;
• have at least 10% deposit;
• have been contracting for at least 12 months as an independent professional;
• have three months left on your current contract or show two years' contract income history;
• have two years' contracted income as an umbrella contractor earning <£400/day threshold.

In return, the lender offers you:
► access to some of the best contractor mortgage interest rates;
► use of 80% of your full, 52-week annualised income as the base of your mortgage affordability;
► a multiplier of 5.49 for mortgages < £500k, one of the highest on offer anywhere;
► a respectable multiplier of 4 for mortgage loans > £500k;
► fast and safe mortgage applications, as intermediaries will have a direct line to Accord's underwriting team:

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NatWest is the latest of the "Big Four" to join the contractor mortgages fold

Yes, it's been a long time coming. But at last, we can offer contractors mortgages through NatWest bank.

In one guise or another, many of the biggest mortgage lenders in the country now have a foothold in our industry.

Halifax, we know, have been the go-to mortgage lender for contractors, carving out a model that accommodates contract income but also stays in line with Responsible Lending.

But now, NatWest have joined the party with a similar view of the UK's dynamic contracting industry.

Like Lloyds group mortgage lenders, the aforementioned Halifax and Scottish Widows, level of entry to NatWest mortgages is high.

Don't earn in excess of £326/day? Then NatWest isn't the lender for you, sorry (but we do have other lenders in our portfolio with no minimum income level).

But if you do earn >£326/day and have 12-month contracting history/contract cover?


You can potentially secure a mortgage with one of the biggest names on the High Street.

A bit cryptic? Don't worry. We've written NatWest's complete contractor mortgage lending criteria in a handy guide for you:

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Signing a fixed term contract needn't write off home ownership dreams

So there you are, earning a regular income. Yes, you're an employee, not a contractor.

But, equally true: it's only a short fixed term contract you're on (in comparison to a mortgage term).

Given this conflicting circumstance as far as traditional borrowing goes, how do lenders assess risk based on your job security? Moreover, your perceived lack of it.

If you hit up Google for a search, you'll see the same story over and over again.

Money advice forums are littered with questions like:
"I'm on a full time wage, my partner on a fixed term contract.
"Based on our joint income, we can afford £XXX for a mortgage. Easily.
_"But we've been to our local branch and, even though we bank with them, they won't factor my partner's income into their calculation because it's not a permanent contract.
"Anyone got experience of this? What can we do to get a mortgage using both my full time and my partner's fixed term contract income?"

The invariable answer for Forum admin?

"See a specialist mortgage broker!"

And that's just about the best advice you can get if you're in that position.

There are banks and building societies willing to underwrite joint applicant #mortgages where one party is on a fixed term contract.

Maybe surprisingly, some lenders can underwrite mortgages on the merits of a fixed term contract alone. Heck, there are even mortgages for zero hours #contracts, now.

But the problem remains: you won't get access to these underwriters on the High Street.

As with professional independent contractors, #fixedterm and zero hours mortgage underwriting is a specialist niche.

Underwriters don't want to pick through the bones of every fixed term contract applicant. Instead, they prefer to deal through brokers who understand the specific niche from whence such applicants came.

There are added securities in place to protect short term contract workers now.

These rights will only improve as more workers and employers favour this way of working.

In the meantime, here's some more fixed term contract mortgage advice from one such specialist broker:

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Low Deposits No Longer Barrier to Entry for Home-Buying Contractors

Before the credit crunch, contractors - in fact, almost anyone - could buy a home using the (now defunct) 'self-cert' mortgage.

You'd see a property you wanted to buy, self-certify your earnings to show that you could afford it and, as long as you had a substantial deposit, the mortgage to said property would be yours.

Yep – in hindsight, you can see the flaw in it, I see it and I don't doubt that many IFAs who granted mortgages often had reservations about an applicant's true affordability.

But house prices were rocketing, everyone was buying and/or selling and self-cert just worked because it kept the process flowing.

The lack of proof of income was also why it got abused and why, in the end, the FSA killed the product stone dead once the housing bubble popped in the late noughties.

Since that time, contractors have struggled to secure competitive mortgages on the High Street. Even moreso a mortgage that used their best asset - their day rate - as the basis of their affordability.

The good news is that the mortgage market has come a long way, learnt from Responsible Lending guidelines and, through the help of vetting through brokers like us, can offer mortgages to contractors that do make the most of their contract rate.

Even better, lenders don't expect the handsome deposit they once commanded when calculating affordability using other means.

Without doubt, the bigger a #deposit you can muster, the lower your interest rate will be on the balance of your #mortgage.

But if getting on the property is your main aim, yes, even a #contractor can buy a home with as little as 5% deposit.

Our updated article has much more for you:

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Leeds Bldg Society Rolls Out Pilot Contractor Mortgage Program(s)

It's great news when we see a major High Street lender open its doors to contractors, albeit tentatively.

It's even better news when they tell us that we're to be a part of that trial.

You can read the full scoop on our updated blog post, here:

If you just want an overview of what's on offer at Leeds BS, I'll try to summarise it here for you.

What's behind Leeds BS extending its mortgage range to the contracting sector?

Martin Richardson sums it up succinctly in a sentiment that's been the backbone of our own drive to entice more lenders to use contract-based underwriting as the basis of mortgage affordability. He says:

”We realised that, while the number of professional contractors is growing, they currently have very limited choice when it comes to securing a mortgage.

"We are keen to broaden this choice and have looked at the difficulties contractors encounter through traditional underwriting and how we might overcome these."

To that end, Leeds is now offering #OffsetMortgages for contractors. Amongst the range are versions of their 2-, 3- and 5-year fixed rate mortgages.

And as of Spring 2016, they're also relaxing their criteria for #InterestOnly mortgages.

Interest rates vary, depending upon the deposit a #contractor has to put down. Those minimum deposits are 15% for an offset mortgage and 25% for Leeds’ interest only mortgages.

If those sound like numbers (or mortgages) you can work with, do check out our full post, which also includes Leeds' complete lending criteria for independent contractors and professionals:
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