C
ontractors and freelancers enjoy flexible working hours and can decide how much they want to earn in a given period. However, they face challenges when applying for a contractor mortgage. This is because lenders don't have an easy way of gauging the level of risk in contractors. Since contractors are not usually at any earning level, they often have to pay higher interest rates on their mortgages.
What Do Lenders Consider?
When you apply for a contractor mortgage, the lender will need proof of regular and sustainable income. The banks will check your history and current state as a contractor. Many banks require you to have worked for 12 months as a contractor and still have another 6 months of contractual work ahead of you. Sometimes, the bank will be lenient if you have remained in the same sector even after getting into contractual work.
Like regular mortgages, you will need to show your bank statements so that the lender knows how much money comes in and goes out of your account.
It is important for you to maintain a good credit rating as well. Make sure you make your credit card payments on time. Also, it is important for you to make your debt payments when they are due. If possible, pay more than just the minimum.
Conclusion
Contractors can have a hard time buying mortgages. To ease the process, you should apply for the mortgage when you have at least one year of contractual work behind you, and another 6 months ahead of you. Once you fulfil the lender's requirements, you will be able to get the mortgage and buy the house you've always wanted.
What is a Contractor Mortgage?
Contractor mortgages are just like regular home loans, except that they are offered under different conditions. This article covers the ins and outs of these mortgages.
