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Getting a mortgage as a contractor – 6 tips to help you get on the property ladder

In this day and age, getting a mortgage is often far from easy, with lenders being wary of all but those they consider very low risk. As a contractor it can be even more difficult as banks and building societies struggle to get to grips with how contractors work and are paid. However don’t be too quick to give up on owning your own home if you are a contractor. Here are 6 ways you can position yourself favourably in the eyes of lenders to help you secure a mortgage and your own front door! 1. Get your paperwork in order If you are considering applying for a mortgage, it is essential to have your up-to-date contract to hand. Lenders will be interested in your contract rate and duration as evidence of your income and your long term prospects as a borrower. 2. Avoid long breaks between contracts As well as level of income, lenders are looking for consistency. For at least 12-24 months prior to applying for a mortgage, try to avoid taking breaks of more than a few weeks between assignments, as lengthy gaps in your earning history won’t go in your favour. 3. Aim for at least 10% deposit Unfortunately gone are the days of the 95 -100% mortgage. The best chance of approval and most favourable mortgage rates go to those who have saved a deposit of at least 10 - 25% or who have equivalent equity on an existing property. 4. Don’t overstretch your budget The figure that a lender is willing to offer you may result in higher repayments than you can afford. When you are applying for a mortgage be realistic about what you can pay each month, based on your existing financial commitments, bearing in mind that interest rates can fluctuate. 5. Know your credit rating Forewarned is forearmed. Even if you have a good income and can put up a sizeable deposit, lenders won’t touch you if they perceive you as high risk. You can find out your credit rating using sites such as Experian and and has loads of useful information on how you can improve a poor credit score. 6. Call in the experts Much of the challenge in securing a mortgage as a contractor is lack of knowledge and understanding from high street lenders. You will have a better chance of success by using a specialist contractor mortgage broker to mediate the deal. They will understand the way you work and will be experienced in negotiating favourable terms from lenders.

Why not turn to Marketplace?

When you are contracting, applying for a mortgage is just one of the areas where traditional financial products may not be the right fit. Liquid Friday has teamed up with a number of trusted providers to provide a range of financial products, services and free advice specifically for contractors, freelancers and independent professionals, including specialist mortgages from our partners at CMME.