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Self Employed Mortgages
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Securing Mortgages for the Self Employed
Securing Mortgages for the Self Employed

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The specialist broker's role in securing mortgages for contractors

Have you been to see your bank about getting a mortgage as a #contractor, recently?

On a scale of 1 to 10, just how painful was it?

Yep. Thought so.

Look. That in-branch #mortgage advisors can't get their head around your true affordability is no surprise to us.

You have to face up to it: as a limited company contractor, your income and payment structure are special!

Yes, you might be earning more than ever. But your accountant ties most of that up in your company as retained profit.

A typical High Street mortgage lender uses outdated affordability formulae.

No matter how hard you point, gesticulate and bounce like a frog on your seat, they can only use what they see in the salary column!

Stop it with the masochism, already.

Find a #broker who both understands contracting and can also interpret your income to an amenable underwriter.

Give yourself a break: http://ow.ly/ts7M30ePtiR

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Has your Public Sector client switched your contract to PAYE payroll?

You sign up with an agency to supply your service, the skill you've honed to perfection, to the #PublicSector. They call you; you're hired. Ka-ching!

This is what you became a professional #contractor for. The work, the lifestyle: they're everything you hoped they'd be.
What you didn't expect was for this flying carpet to be whipped from beneath your feet.

Now, Public Sector clients decide the status of all their outsourced staff. With #payroll an easy option for them, the magic is fast disappearing from the client-contractor relationship.

So, does your public sector contract span the start date of the switchover, April 6th, 2017? Or has your new one started since?
Either way, check that your client hasn't inadvertently placed you on payroll. If they have, it's time to renegotiate.

In this post, we expand on the advice Chris Bryce (IPSE) gave after the shock announcement: https://www.freelancerfinancials.uk.com/ipse-warns-of-new-ir35-risk-with-automatic-switch-to-payroll/

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* Finance Basics Every Contractor Should Know***

For most professional #contractors and freelancers, engaging an accountant is as essential to their business as getting out of bed to travel to site.

Some contractors have found out the hard way and only hired a specialist accountant after attempting their limited company #accounts themselves.

Others have recognised that they've got better things to do with their time than slave over balance sheets at the weekend from the outset.

But we know from experience that, every year, some contractors and freelancers get curious. Rather than splash out on an accountant, they decide to try the DIY accounting method.

What they don't realise is how dynamic the laws that govern what are/aren't permissible expenses are.

They perhaps don't understand the full scope of IR35.

Even worse, they miss out on claiming certain tax reliefs that could bolster their income.

So, for those hardy few, we've put together this small, 10-minute read #guide to give independent professionals an overview of limited company finance:

https://www.freelancerfinancials.uk.com/related-services/contractor-finances/

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What contractors need to know before scouring the High Street for a mortgage

On one hand, banks have come on a pace these last few years. Online banking and banking apps are becoming the norm for many of us.

One area with which the High Street isn't yet up to speed is with the growing and varied ranks of the UK's self-employed. Moreover, the way banks work out #mortgage affordability for this dynamic sector.

I'm not talking sole traders or sub-contractors.

I mean professional #contractors, like NHS consultants, IT professionals and engineers in the Oil and Gas industry.

The way this latter group maximise their potential is by incorporating their own limited company.

This acts as a payment structure first and foremost, a way to deal on a B2B basis with other #professionals.

But as a limited entity, these companies' directors also avail themselves of certain tax breaks.

The sad fact is, most in-branch staff don't get these structures. Not surprising, as most professional contractors hire accountants to manage their books for them.

If you've faced rejection on the High Street, it's not you as a contractor. It's the way you structure your pay that's the issue.

Stress not; there's a better way: http://ow.ly/1r5030doC9L

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What contractors need to know before scouring the High Street for a mortgage

On one hand, banks have come on a pace these last few years. Online banking and banking apps are becoming the norm for many of us.

One area with which the High Street isn't yet up to speed is with the growing and varied ranks of the UK's self-employed.

Moreover, the way banks work out #mortgage affordability for this dynamic sector.

I'm not talking sole traders or sub-contractors.

I mean professional #contractors, like NHS consultants, IT professionals and engineers in the Oil and Gas industry.

The way this latter group maximise their potential is by incorporating their own limited company.

This acts as a payment structure first and foremost, a way to deal on a B2B basis with other #professionals.

But as a limited entity, these companies' directors also avail themselves of certain tax breaks.

The sad fact is, most in-branch staff don't get these structures. Not surprising, as most professional contractors hire accountants to manage their books for them.

If you've faced rejection on the High Street, it's not you as a contractor. It's the way you structure your pay that's the issue.
Stress not; there's a better way:

https://www.selfemployedmortgages.com/high-st-mortgage-lenders-and-limited-company-payment-structures-doh/

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What are contractor mortgages?

A #definition, in 50 words or less:

In the context of #contractor mortgages, a contractor is an independent professional. They work through a limited company on successive short term contracts.

#Mortgages for this type of contractor are the same as for everyone else. The big difference lies in how lenders underwrite contractor mortgage loans.

For a more in-depth answer, here's our guide:
http://ow.ly/vmon307bPch

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Remortgaging makes more sense than ever for contractors

They said we'd never vote to leave the EU. We did.

They said that Donald Trump had no chance of becoming President of the U.S. He will.

They said we'd never walk on the moon. OK - the jury's still out on that one.

But if 2016's taught us anything, it's that nothing's guaranteed.

The Bank of England's base rate is still historically low. And some are predicting that it may stay that way for years. And so it may, but…
…it also might not.

What I do know is that #remortgaging makes so much sense with the interest rate this low, everyone should at least look at their monthly payment and see by how much they could bring it down by switching mortgage providers.

If you've had the same provider for a few years and, as a #contractor, there you've stayed through some sort of loyalty or fear that you won't get another mortgage, it's time to rethink.

In fact, of any sector, you're probably more apt to save than others!

Over the last couple of years, #mortgage lenders' attitudes to contracting have shifted almost as much as the U.S. electorate's opinion did during the presidential campaign.

Don't miss the opportunity to #remortgage to a fantastic low rate; we think it's the best time ever to remortgage.

And in all fairness, this opportunity could still be here for you next year, too. But in the meantime, we'd just like to thank +Contractor Weekly for allowing us to highlight the opportunity remortgaging presents to contractors TODAY!

We all know what coulda 'n' shoulda happened in 2016. It didn't. Just sayin'
http://ow.ly/rIC9306uvcd

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When Halifax turned the world of contractor mortgages on its head

A little over three years ago, The Halifax Bank relaxed its #mortgagelending criteria for contractors.

Up until May 2013, you had to be an #ITContractor to even get around the negotiating table. Not just with Halifax, but with other lenders who'd championed the cause up to that point.

But in recognition of the UK's burgeoning independent workforce, The Halifax Bank instigated a seismic shift.

The hereto almost desolate landscape that post-Credit Crunch mortgages for contractors had become was uprooted.

An instantaneous flood of optimism irrigated that landscape, paving the way to the buoyant, bountiful contractor mortgage market garden we see today.

Looking back, I can hardly Adam 'n' Eve how much that decision of Biblical proportions affected how we work today. We have a lot to thank both the Halifax and, I guess, recession for » http://ow.ly/1DZd302Vd6Q

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Do I need a self-employed mortgage or a contractor mortgage?

On the High Street, you will find banks and building societies who, in theory, say they cater for contractors looking to buy a home.

Now, if you're a limited company #contractor, you're much better off using your contract day rate upon which to base your affordability, not your accounts.

And there lies the rub.

Most High Street mortgage providers have to try to fit you into their preordained lending model, namely taking your net salary after tax.

Not to put too fine a point on it, we all know the disparity between a contractor's day rate and what their accounts say they 'take home'.

It's by no means illegal. But if you're drawing low salary and dividends while retaining your profits within the business, the net figure a High Street bank will use is tiny and in no way reflects what you can afford.

But all's not lost.

There are #ContractorFriendly mortgage lenders who consider retained profits in their calculation and who use your contract day rate as the basis of their calculations.

Not that you'll find the underwriters who appraise a contractor's #mortgage application in this way in branch.

For one, you have to approach head office to reach them.

Then, because of how involved a contractor's payment structure can be, those underwriters will only deal with specialist mortgage brokers who know how to appraise a contractor correctly in the first instance.

Mortgage lenders have come a long way since the economic bubble burst all those years ago.

But as a contractor, you remain a specialist subject when it comes to appraising you for such a big financial commitment.

Elusive, they are. But when you start off on the right path, you can discover a mortgage loan that befits your income and status.

Big hint! Start here: http://ow.ly/guL9302SZ6o

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You have an awesome lifestyle as a contractor. Safeguard that status!

It's a big step, going out into the world as a #contractor, accepting the burden of running your own limited company business in the process.

Not only have you got to keep one eye on continuations or new contracts, but you've got branding, marketing and accounts to keep on top of, too.

With so much going on, it's easy to overlook the things you took for granted as an employee.

While you had someone else as your boss, sick pay and death in service benefits were just another part of your employment contract, overseen by your employer.

But now you're going it alone, you're responsible for protecting the business and the lifestyle you've worked so hard to build up.

It would be a crying shame if a prolonged bout of illness sidelined you, jeopardising all that hard work.

You may be sitting there thinking,
"I'm okay - I took out extra cover as an employee and I'm bringing that with me."

First, well done for taking the step of adding extra security to your life.

But if your previous #income protection policy covered you as an employee, it's highly likely that you'll only get a benefit based on your contractor salary (if at all!).

Don't rest on your laurels. Make sure that your income #protection plan does just that: protects your income.

If it doesn't, you need bespoke contractor protection cover. Here's the lowdown: http://ow.ly/DcEx302NRfF
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