IT contractor mortgages
Cracking the Code: Getting a Mortgage as an IT Contractor
The IT sector is booming, with contractors playing a vital role in keeping businesses at the cutting edge. But when it comes to buying a home, IT contractors can face unique challenges securing a mortgage. This blog is your one-stop guide to navigating the mortgage maze as an IT contractor, packed with valuable tips and insights to help you land the perfect home loan.
Understanding the IT Contractor Mortgage Landscape
Traditional lenders often view IT contractors with a cautious eye. Their income can fluctuate, and they might not have the same level of employment history as a permanent employee. This can make it trickier to qualify for a standard mortgage. However, there’s good news! Specialist lenders understand the IT contractor market and offer mortgages specifically designed for your needs. Here’s what sets them apart:
- Considering IR35: These mortgages take into account your income after deductions if you operate under IR35 regulations, ensuring a more accurate picture of your affordability.
- Limited company income: They recognise income from dividends alongside your salary, providing a more holistic view of your financial health.
- Shorter contract history: They may accept a shorter track record of contracting work compared to traditional lenders.
4 Steps to Mortgage Success as an IT Contractor
1. Plan, Prepare, and Conquer
- Financial Fortress: Get your house (finances) in order at least two years before applying. Gather your tax returns, account statements, and proof of income (including dividends for limited company contractors).
- Credit Champion: A stellar credit score is essential. Ensure you’re registered on the electoral roll and maintain a clean bill of payment history. Avoid unnecessary credit applications to keep your score healthy.
- Documentation Duo: Prepare payslips, contracts, and a detailed contractor CV showcasing your skills and experience.
2. Saving Smarts: The Power of a Deposit
- Deposit Defense: The bigger the deposit you can save, the stronger your application. Aim for a minimum of 10-15%, but a higher deposit can significantly improve your interest rate and affordability.
- Saving Strategies: Explore options like Lifetime ISAs (LISAs) designed for first-time buyers, offering a government bonus on your contributions. Consider a high-yield savings account to maximise your deposit growth.
3. The Broker Advantage
- Mortgage Maverick: Don’t go it alone! Partner with a specialist mortgage broker who understands the IT contractor landscape. They have access to a wider range of lenders with products tailored for your situation.
- Application Ace: They’ll guide you through the application process, ensuring all the necessary documentation is presented effectively to increase your approval chances.
- Rate Renegotiation: A good broker can negotiate a competitive interest rate, saving you thousands over the mortgage term.
4. Contractor Considerations: Optimising Your Application
- Contract Clarity: Highlight the length and stability of your current contracts. If you have a proven track record of securing long-term contracts, emphasise this to showcase your income consistency.
- Limited Company Savvy: For limited company contractors, structure your finances strategically. Ensure you take a regular salary alongside dividends to demonstrate a steady income stream.
- Accountant Ally: Having a qualified accountant manage your limited company finances demonstrates responsibility and financial acumen, boosting your application’s credibility.
Beyond the Basics: Additional Tips for IT Contractor Mortgages
- Be upfront and transparent: Provide lenders with a clear picture of your income, contracts, and financial situation. Open communication builds trust and strengthens your application.
- Consider niche lenders: Some lenders specialise in mortgages for specific IT contractor sectors. Research and explore these options to potentially find more favourable terms.
- Be prepared for additional checks: Contractors might face more rigorous affordability checks. Be prepared to provide detailed income projections and evidence of a healthy financial buffer.
Why choose us
✅ WE’RE EXPERTS IN THE FIELD
Our team of brokers are specialists in helping individuals get mortgages and can help you understand the most suitable options available to you.
✅ WE CAN FIND GREAT DEALS AT SPEED
Access to over 70+ lenders so you will get the most suitable rates and terms available with many of these lenders not available on the high street as they’re exclusive to brokers.
✅ RELATIONSHIP
Real relationships with the lenders so we can get your application pre-approved if your situation isn’t straightforward. Plus your mortgage broker is there to answer all the questions you may have.
✅ RAPID SOLUTIONS
We’re quick, on our first call we will quickly establish your options and let you know the next steps so we can arrange everything promptly for you. If you prefer to speak face to face we can also arrange a video call.
The Bottom Line: Owning Your Dream Home as an IT Contractor
While navigating the mortgage market as an IT contractor can present challenges, it’s certainly achievable. By planning meticulously, building a strong financial profile, and partnering with a specialist mortgage broker, you can unlock the door to your dream home. Remember, with the right approach and the support of a knowledgeable broker, you can crack the mortgage code and celebrate that housewarming party!
Bonus Tip: Keep yourself updated on the latest mortgage trends and government schemes that might benefit IT contractors. Research Help to Buy schemes or other initiatives that could make homeownership more accessible.
Table of Contents
Making Your Contractor Mortgage Journey Smooth
Why use a mortgage broker video: https://www.youtube.com/watch?v=tB-NIdhpjiI
Step-by-step guide to the home buying process for a home-mover video: https://www.youtube.com/watch?v=arRG1G_vSK0
Step-by-step guide to the house buying process for a first-time buyer video: https://www.youtube.com/watch?v=gtmovFUd_lI
