One of the questions we are frequently asked is whether, as a contractor, you need to have been contracting for a set period of time in order to obtain a mortgage.
Lenders historically have preferred borrowers who have a stable source of income, and as a contractor, they will want to see that you have a consistent track record of earning a steady income. Lenders will look at your employment history, your income over the past few years, and your future earning potential to determine whether you are a good candidate for lending.
If you have only recently started contracting, or if you have a history of fluctuating income on zero hours contracts, lenders may be hesitant to approve you for a mortgage via the traditional routes. However, if you can demonstrate that you have a strong financial track record, a solid income stream, and a reliable client base, you may be able to secure a mortgage even if you are relatively new to contracting.
The key is in dealing with a specialist mortgage broker who truly understands how contracting works, how it differs to standard employment, and crucially who has the relationships with contractor friendly lenders in order to get your situation assessed fairly.
If you have been a contractor for a number of years but have taken a break until recently, it may still be possible for you to get a mortgage, but there may be some additional challenges.
Lenders will want to see that you have a consistent track record of earning a steady income, and a recent break in your contracting work could make them more cautious about lending to you, due to having concerns over your ability to maintain the mortgage in times when you are out of contract.
A specialist lender, however, can have this considered compassionately, as the benefits of contracting are explained to them and they can see that the only reason you are out of contract is through choice and lifestyle, rather than the inability to find new work.
Having a current CV showing your experience and expertise will mean that your broker is able to demonstrate your employability to the lender and ensure that you are not penalised for having a lifestyle that your experience affords you through working as a contractor.
In summary, while full-time employees may have an easier time getting a mortgage than contractors, by dealing with a specialist mortgage broker who understands contracting, you can ensure you are not treated unfairly by lenders when it comes to underwriting decisions, and you can unlock the borrowing power that your contract deserves.