At Coreco, we are always trying to push the envelope and work closely with our lending partners to offer schemes and products that really assist our clients.
Over the past few months we have had more requests than ever for assistance from prospective buyers who are working on a contract basis, whether with a city bank, a media company or as an IT consultant. We are well aware that the way we all work is changing dramatically, with more people than ever looking for more flexible working arrangements that contracting can offer.
However, we are also aware that in the past, when it comes to getting a mortgage, lenders have been slow to adapt to the change in working practices and often struggled to understand the merits of contractors, preferring the safe, tick-box route offered to standard employees.
The good news is that this is starting to change and as well as a range of other options from some mainstream lenders, Coreco were one of only three brokerages in the UK to first gain access to a new Contractor Mortgage scheme from Leeds Building Society.
As well as offering some competitive products, including a 2 year fixed rate at 3.19% up to 85% Loan-To-Value (5.4% APR), a 3 year fix at 3.29% up to 80% Loan-To-Value (5.2% APR) and a 5 year fix at 3.69% up to 75% Loan-To-Value (5.0% APR), these products also come with a very useful ability to offset.
This can be especially beneficial to contractors who build up funds that can be used to offset against the mortgage balance and reduce the amount of interest being paid. For more information around the workings of offset mortgages please follow this link.
These products are available for contractors who earn in excess of £75,000 per annum, (there is a separate range for those earning over £50,000 per annum) with experience of contracting for at least 1 year.
Your borrowing capacity is calculated by taking your day rate and, based on a 5 day week, multiplying this by 46 weeks to obtain an annual income. This is then used within their affordability calculations to confirm the level of borrowing you can obtain.
Of course this is not the only option available and the good news is that there are now a handful of lenders that are adept at lending to contractors and freelance borrowers with competitive rates.