Are IT contractor mortgages hard to get?
An “IT contractor mortgage” doesn’t exist as such; it just refers to how a mortgage lender will assess your affordability for a loan. So you can access the same products and interest rates as employed applicants, it may just be more challenging to secure a deal.
As an IT contractor, you may find that lenders have far stricter criteria, as contractor income can be perceived as volatile. They will certainly scrutinise your credit history, as they would any applicant, but they may also ask for a higher deposit, require more detailed proof of income, and look into the stability of your contracting work.
Additionally, lenders may examine the length and renewal history of your contracts, industry stability, and your overall contractor experience. The good news is that nobody can deny the strength of the IT industry, so lenders will likely be satisfied with your future job prospects.
Finding a suitable lender for contractor mortgages can be hard work, which is why consulting with a mortgage broker like Goldmanread is a good move. We understand the nature of self-employed income and are experienced in helping IT contractors get a mortgage. We can streamline the application process by approaching the right lenders, increasing the likelihood of a competitive deal.
What do mortgage lenders look at?
Let’s take a look at how mortgage lenders typically assess self-employed people. Remember, there are hundreds of lenders out there with differing criteria, and as your mortgage broker, we can steer you towards a contractor-friendly lender.
Your annual income
Determining how much you can borrow depends on your annual income as an IT contractor. Some lenders have a minimum income threshold based on annual income. However, some lend money based on average income over several years or use your lowest yearly income from a certain period. Some specialist lenders may even allow you to borrow based on your day rate, multiplying it by the number of working weeks.
Proof of income
Lenders typically ask to see contracts, tax returns, and bank statements. Full business accounts are often required to provide a comprehensive financial health overview. Many lenders ask for a minimum of two years’ worth of accounts, but certainly not all of them.
Your business structure
As a self-employed IT consultant, you may operate as a sole trader, limited company or through an umbrella company. Different lenders have preferences for different employment structures, so it’s important to approach those that specialise in your specific type.
For example, some lenders (usually traditional banks and building societies) will only consider salaried income and dividends when calculating affordability for a limited company director. However, some specialist lenders will also consider a share of net profits, which can significantly increase how much you can borrow.
The time remaining on your current contract
The longer you have left on your current contract, the better – some lenders ask for up to 24 months. If your employment contract is short and nearing its end, certain lenders may require proof of its renewal. Additionally, they may review your past employment history to ensure that you have been able to secure new roles without any significant gaps. Naturally, longer contracts with higher values are viewed more favourably.
Your credit score
A good credit history will provide reassurance to lenders, as it would for any candidate. That said, it is sometimes possible for self-employed applicants to get a mortgage with bad credit.
Our mortgage services for IT consultants
Mortgages for IT contractors
As an IT contractor, you may operate as a limited company or through an umbrella company, which can stand you in good stead with many lenders. We can guide you towards specialist lenders who appreciate the nuances of IT contracting and will assess your income most favourably.
Proof of a stable income, a consistent history, upcoming contracts and the likelihood of future work can help strengthen your application. As your mortgage broker, we will help you put together your mortgage application with the correct documentation to give you the best chance of being approved.
Mortgages for permanently employed IT consultants
For IT consultants in permanent employment, getting a mortgage can be more straightforward than for an IT contractor due to perceived job stability. As your mortgage broker, we can leverage your permanent employment status to secure you a competitive mortgage.
We will present you with a range of options from a wide network, including high-street lenders, banks, building societies and specialist lenders. We’ll also take care of the entire mortgage application process to ensure it goes as smoothly as possible.
Mortgages for freelance IT consultants
As an IT freelancer, you benefit from flexibility and independence. Unfortunately, when it comes to mortgage lending, your variable income can sometimes be a hindrance. But there is no need to lose hope: there are lenders that are more comfortable with diverse income streams and flexible work arrangements.
Being able to demonstrate a steady stream of income, maintaining good financial records, and having a diverse client base can enhance your eligibility. As your mortgage broker, we’ll guide you towards lenders which cater to self-employed individuals and help you to present your earnings in the most favourable light.