IT Contractor Mortgage
Dom Keating and Ross Brown talk us through the mortgage process for IT contractors.
Podcast approved by The Openwork Partnership on Monday 15th May 2023.
Are there specialist mortgages for IT contractors?
There certainly are specialist mortgages for IT consultants and contractors. These aren’t generally available through the high street banks, so you need to contact a specialist broker if you work in this area.
Having said that, many high street lenders will accept contractors on a standard mortgage, so there’s not always a need to go down the specialist route – unless there’s other issues involved.
Often IT contractors are treated as self-employed, and so lenders would look at your income for the last two years. Many lenders will also want you to have had at least two years’ trading.
How your contracts work will inform which lenders we would approach. So while it’s not as specialist as it might sound, a broker can really help you make sure you can find the right mortgage to suit your circumstances.
What criteria do I need to meet? How do I prove my income as an IT contractor?
It’s predominantly the self-employed route for an IT contractor, so most lenders ask for a two year trading history. Some, however, will work off a minimum of 12 months’ history.
They can also look at you as a day rate contractor. Lenders usually want you to be currently contracted and not to have too many long gaps between contracts. They might set the maximum void period where you’re not in a role at six weeks.
Some lenders will go up to 95% Loan to Value if you can show a strong, reliable trading history for at least 12 months, or two or three years for some lenders.
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What if I have a limited company?
The only real difference is around the income that you’d need to prove. Instead of your SA302s or your daily rate, you’d probably need two years of trading accounts. That’s the full accounts from your accountant or an accountant’s certificate.
But having a limited company certainly wouldn’t stop you going down this route – you can still have an IT contractor mortgage, no problem at all.
How do I apply for a mortgage as an IT contractor?
For IT contractors looking to get a mortgage the easiest way is through a broker. Here at Yellow Brick Mortgages we’ve got more than 60 advisors. There’s plenty of experience within the company so just get in touch.
We’ll run through a fact find as part of our initial consultation with you, to talk through your situation. Hopefully we’ll get an application up and running if you’re in a position to move forward – or we will give you advice on what you need to do and how long to wait until you’re in a position where you can get a mortgage.
That’s something we pride ourselves on, that even if we can’t get you a mortgage on day one, we’ll advise and support you on the road to buying a home.
What else should we consider when getting a mortgage as an IT contractor?
Generally you’re treated just as a normal contractor, although potentially your income can be assessed based on your day rate. As long as you’ve got evidence of that, perhaps on a contract, invoice or bank statement, it might give you a better affordability assessment.
It’s just something else that can be considered, but depends on your contract and what you’re doing at the time – so that will be assessed as and when we speak to you.
There are some lenders out there who will look at your daily rate and multiply that by a set number of weeks to calculate an annual income – and that can vary. Some lenders will factor in 46 weeks of that income rather than 52.
But again, that’s exactly why you should use us as a broker. Every client’s situation is different and obviously once we have the details we’ll be able to position you with the right lender.
Your home may be repossessed if you do not keep up with your mortgage repayments.
Approved by The Openwork Partnership on Monday 15th May 2023.