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FAQ: Everything contractors need to know about

mortgages
The High Street is a hostile place for contractors and freelancers looking for a mortgage. But its not
always the bank or building society itself thats in question.
Many mainstream lenders offer competitive mortgages for contractors and freelancers. Yes, they do.
Not that youd notice if the usual High Street response is anything to go by.
And therein lies the problem: the contradiction. The root of the problem is the underwriting criteria.
The manner in which contractors work needs special attention, unafforded in branch.
In the case of most lenders, the only staff who can give these requisite levels of attention are
underwriters. And you wont find them in your High Street branch on a sunny Saturday afternoon in
July.

Contract based underwriting: whats all the fuss about?

This process, one weve helped many lenders understand, is called contract-based underwriting. It is
(and will remain) alien to most staff youll meet at your local branch.
Have you ever asked an in-branch adviser about securing finance based on your contract earnings? If
so, youll know that blank look; in silence, it screams, its not gonna happen.
Yet you know one of your peers has a mortgage with that bank. You return an equally fixed glare, not
believing what youre hearing. Then scratch your head and walk out, ready to take umbrage with your
colleague on Monday morning. Or on you Facebook app on the way back to the car.
Its this contradiction, lenders who do but say they dont, that confuses contractors the UK over.

Your personal guide through the contractor mortgage wilderness

To smooth the path, weve put together an all-encompassing FAQ. It lists answers to the questions our
potential customers ask on a frequent basis. Weve put them in chronological order here, to walk you
through the entire process.
Well start with the basics, from how lenders categorise the self-employed. Then go right through to
completion, with ample stop-offs along the way.
The questions below provide a link to the detailed information. For the short and sweet answer, see
directly beneath the question, here.
Sitting comfortably? Then well begin
1. What Are The Differences Between Freelancers and Contractors (and does it matter)?
In the real world, how you class your service may not matter so much. For a mortgage
lender, perception is everything!
2. Why High Street Mortgage Lenders Let Contractors Down (time and again);

Lord, weve tried to reason with mainstream lenders. Some will deal with contractors,
others not. But even those that do are unlikely to offer contract-based underwriting inbranch.
3. Woohoo! Ive Won My First Contract. Now, How Long Before I Can Apply For A Mortgage?
Whether its your first day or youre a seasoned pro, we can help. Using your contract as the
base of your application opens doors!
4. Im Near The End of My Contract; Can I Still Get A Mortgage?
Our relationships with underwriters give us some leverage. But there are ways you can help
yourself if your contracts near completion.
5. Do I Really Need Three Years Accounts For A Contractor Mortgage?
On the High Street, in all likelihood, theyll ask for 2-3 years accounts. Through a specialist
contractor mortgage broker, though? Absolutely not.
6. Can Umbrella Employees Get Contractor Mortgages?
Yes, Umbrella employees can access contract-based underwriting. But whatever you do,
dont try to use the payslips Umbrellas issue!!!
7. What Documents Do Lenders Need To Process My Mortgage Application?
Underwriters who understand contracting dont need many documents. Well package
those necessary in a way that best highlights your affordability. And thats so not by using
your accounts.
8. How Do Standard and Contractor Mortgages Differ?
The terms of mortgages for contractors and permies are similar. Its how brokers highlight
out how much you can afford thatll make the difference.
9. My Last Mortgage Was Self-Cert; What Do Contractors Do Now?
Self-cert has gone, and good riddance! Heres why we think self-certification was never
right for contractors, anyway.
10. My Credit Rating Is Not The Best. Can You Help?
Few mainstream lenders offer bespoke contractor mortgages. Even fewer deal with adverse
credit. Finding a contractor-friendly lender and one unopposed to poor credit? Weve
found a couple of needles in the haystack for you.
11. How Much Deposit Do Contractors Need To Find?
Contractors need no bigger a deposit than permies. There are, however, advantages for
putting more down.
12. Dont Lenders Charge Contractors Higher Interest Rates?
In a word, no. However, your deposit (see 11) may impact the interest rate you pay over the
long term.
13. How Much of a Mortgage Can I Get Using My Contract Rate to Work Out My Affordability?
The rule of thumb is 4-5 x your annualised salary, but there are many factors. Only by
making an enquiry can we determine the precise amount you can borrow.
14. Does Getting a Decision In Principle Make a Difference?

From a bargaining position, a decision, or agreement, in principle is a powerful weapon. But

do be aware that its not the same as a firm mortgage offer!
15. Contractor Mortgages: The Keys To The Door In Double-Quick Time
Due to High Street lenders ineptitude, were used to processing mortgages in haste. But
because underwriters need so few documents, 4-6 weeks is all a contractor mortgage
often takes to complete.
16. Once My Introductory Rate Finishes, Can I Remortgage as a Contractor?
Many homeowners settle for the long-term interest rate once the introductory fee ends.
Mindful of early repayment charges, we can advise if remortgaging using your contract is
the right thing for you.
17. What are the Current Stamp Duty Rates for Contractors?
Our brief overview and table of the current Stamp Duty Land Tax rates.
18. Do Contractors Need Life or Income Protection Cover?
From day one! Contractors dont receive the benefits that employers offer staff.
Contractor must protect their livelihood themselves.
19. How Do I Apply for a Contractor Mortgage?
Once you realise how much you can borrow, youll want to get started. Well walk you
through the
step of mortgage application.
20. What Makes C&F Mortgages So Special?
There are many reasons why C&F is different. Were not affiliates. We are FCA accredited,
award-winning mortgage brokers. We only serve independent professionals. We explain
why thats important to us, to you and to our lenders!
21. Wont I Be Better Off With My Current Bank?
Even if youve banked with High Street for years, the relationship counts for little. Your
application will go to an underwriter who doesnt know you from Adam. Always, always
use a specialist broker for contractor mortgages.

Mortgage Types Available for Contractors

First Time Buyer
Home Mover
Remortgaging
Buy to Let
Help to Buy