It is a known fact that when someone opts to go self-employed, a number of opportunities that many take for granted are closed off. Amongst a number of loans, allows and advances that are made unavailable, the largest and most significant example of this is applying for a mortgage. Now as anyone (employed or not) will know, applying for and being granted a mortgage is a painstaking and considerably meticulous process, where finances are laid bare, and of course salary is king. For anyone working as a contractor, this key factor in applying for a mortgage differs from the average employee, unfortunately making the availability of a mortgage rather slim.
This may come as a surprise, but actually a large number of contractors earn more day by day compared to a permanent equivalent, often making their financial situation stronger. Unluckily for contractors however, when it comes to achieving a mortgage, the fact that they may earn more money than an employee is overlooked, and because of a ‘lack of stability’, will often count for nothing.
The truth is that many contractors face numerous problems when applying for a mortgage, the reason for this being that the majority of high street lenders are geared towards lending to PAYE employees as opposed to limited company businesses. It is a shame that in the modern world many respected service providers do not cater to a wider audience, but it is the case that most financiers simply don’t understand how contractors work, therefore do not accommodate to their needs.
As a result of the lack of help within the housing market, contractors must seek the support of specialist self-employed mortgage lenders allowing them to exercise their right to buy. Despite this, in light of George Osborne’s ‘Help to buy’ scheme, whereby first time buyers are eligible to equity loans on new-build homes up to as much a £600,000, contractors are wanting more from the Government.
Commenting on blogs and forums, many professionals who offer their services via limited companies are vexed at the lack of options given by the ‘powers that be’. Their argument stems from the growing amount of opportunities laid out for ‘first time buyers’ or ‘younger homeowners’, when the small businessman is being left out. As professionals providing a valuable service to Britain’s workforce, contractors are saying that the fact that the housing market is out of reach is unfair.
Whatever your viewpoint however, the number of individuals opting into contracting and temporary employment is growing each year, and with an influx of limited company professionals entering the market, surely mortgages should rise to meet the demand. As for the Government’s stance on this, for now they seem quite adamant on the current mortgage laws, the Chancellor being firm on his position concerning temporary workers. For the future of contractor mortgages, with the recent lid lifted by high-street bank Halifax, limited company professionals can only hope that this trend continues throughout the market.