How can I fund a mortgage if I’m a contractor or self-employed?

You bravely struck out as an independent contractor or a construction sub-contractor, you’ve built up a successful business through hard work and professionalism and now you’re in a position to put a deposit on a house.

But despite all that, your high street bank refuses your mortgage application and your family could be about to lose out on that dream home.

High street mortgage caution

It’s not surprising that banks are warier since the 2008 financial crisis, but some high street banks have been accused of being overly cautious and of cherry picking, turning down perfectly good applicants for more lucrative customers.

Although banks claim that eight in ten mortgage applications are accepted, it’s still a kick in the teeth when you’re rejected by the bank you’ve been loyal to for years.

The top reasons high street lenders turn down borrowers are:

• Poor or non-existent credit history
• Too small a deposit (10% or less)
• Insufficient employment or self-employment history

In the latter case, lenders often want proof of two years of consistent self-employment before agreeing to a loan, and this can be problematic for a self-employed contractor.

So what can you do?

Have you considered a mortgage broker?

If you need heart surgery, you don’t go to your GP, and the same principle applies in financial matters. Not everyone is in the same financial boat and if your circumstances fall outside the criteria for an off-the-peg high street product, you need a bespoke solution.
That’s where a professional mortgage broker can help. A broker explores your financial circumstances and can search the entire market for an appropriate lender.

Specialist mortgage lenders for contractors

Some lenders specialise in helping IT contractors and professional contractors who charge more than a certain day rate, offering a larger mortgage than would be expected, based solely on their contract day rate.

Other lenders help the owners of limited companies or business partners to extract the maximum mortgage loan possible from company accounts. Some only require one year’s full accounts at the time of application.

Brokers aren’t tied to one provider and have access to the whole lending market, so they can point you to the right lender. They should also know the specific requirements of a particular lender and can speak to them on your behalf, saving time on unsuccessful applications.‍

Clayton-Welch Associates

Clayton-Welch Associates offers professional knowledge of the entire mortgage lending market to people who’ve had past difficulties with mainstream mortgage lenders. We help clients to find the right mortgage for residential, buy-to-let and commercial properties.
We rely on referrals for our business, so customer service is at the forefront of everything we do. We are passionate about getting you the result you want and we accompany you through every step of the way to a successful mortgage application.

To find out how we can help you move into your dream home, contact Clayton-Welch Associates.

FCA does not regulate commercial mortgages and we act as introducers for it.