Mortgage Tips for Freelancers

Here are five suggestions from us that can make a real difference to the success of your mortgage application:

1. Use a Freelancer mortgage specialist
It’s very easy to assume that you can get out there and find the right mortgage deal single handed. The problem is that most bank staff or call centre agents are not familiar with the contracting world. This means that you tend to fall outside of their ‘standard script’ when it comes to asking for things like employer’s details, proof of time employed and so on.

Our recommendation therefore is to find a mortgage broker that specialises in working with freelancers. This is why we have developed a relationship with our chosen broker, Contractor Mortgages Made Easy (CMME). This approach will save you hours of making calls or wandering around the high street trying to find a lender that doesn’t shudder at the word ‘Freelancer’.

CMME has negotiated specialist mortgage underwriting terms for freelancers with a number of large High Street lenders, enabling them to arrange a mortgage based on the contract you have, rather than on the number of years you have been working as a freelancer. This enables you to arrange a mortgage based on a multiple of your contract rate alone, so you don’t have to provide three years accounts or collect references. The only evidence you will need to provide to support your application is a copy of your contract, some ID and your bank statements.

By avoiding branch or call centre staff who are not trained to deal with your specific situation - and instead speaking to key mortgage underwriters that understand your status, through CMME – you can make sure that your mortgage application is fast and hassle free.

2) Aim for at least a 10% deposit
The 100% mortgage is sadly just a distant memory, and the best rates now available go to those people who have managed to save a deposit. 10% to 25% is ideal. If you have not managed to do this, or if you don’t have an existing property which is worth more than you paid for it, then there are still mortgages out there - but you will pay a higher rate. The more ‘equity’ that you can put into a new property in as a deposit the less risk the lender is taking on, and so they are able to offer lower rates, and hence lower repayments.

3) Keep your credit rating as shiny as possible!
Despite a good income and a sizeable deposit, you could still have a mortgage application refused if your credit rating is not good. Lenders are being far stricter at the moment, given the economic climate, so it’s best to avoid anything which may give them an excuse to say no. Which means it’s vital to keep your credit rating as ‘clean’ as possible. Even things like not updating the electoral roll when you move house, or missing a single credit card payment, can make all the difference.

4) Make sure your contract is up to date
You will need to have a copy of your signed contract to hand which is totally up to date. This must clearly state the length of your contract, and your current contract rate. Freelancer Mortgages Made Easy use this information to support your mortgage application, and to save you the stress of having to produce references and three years of accounts.

5) Know your limits
It’s vital that you are realistic about what mortgage repayment you can afford to pay each month.  The figure that a lender is willing to offer you, based on a multiple of your contract rate, could result in higher repayment figures than you can actually afford, based on other financial commitments you have. So be sensible. It’s also important to realise that interest rates can go up, and if you’re on a variable rate then repayments could cease to be affordable, especially if you’ve pushed it to the limit already. The expert advisers at CMME can help you to find a mortgage that suits your needs now, but also taken the future into account.

If you are looking to take that first step on the ladder, or to remortgage an existing property, then Freelancer Mortgages Made Easy will help you find a solution to suit your needs. Whether you want to find out the best rates available or help calculating how much you can borrow based on your contract rate alone, call 0844 44 88 800.