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Mortgages for Contractors Still a Challenge for Many

A new study has found that contractors and the self-employed face challenges in getting mortgages. Research from Nottingham Building Society found that one in eight independent contractors were being rejected for first-time or re-mortgages. This is despite nearly half (48 per cent) of contractors earning about the same or even more than in their previous permanent job.

 

Given the increasing number of contractors in the UK, this represents a significant number of people being denied the chance to own their own home with a mortgage. According to the Office for National Statistics, the number of self-employed in the UK has risen to around 4.69m, with an increase of 182,000 in the three months to March.

 

There’s evidence this isn’t necessarily a legislation issue. A review conducted earlier in the year by the Financial Conduct Authority (FCA) found that mortgage firms have positively applied the responsible lending requirements, which came into force as part of the Mortgage Market review. The review specifically said that there is no evidence that the rules have prevented firms lending responsibly to groups such as independent contractors.

 

Instead, it’s likely to be a problem of inexperience. Mortgage lending to contractors can be intimidating for those who are not used to dealing with this section of the workforce. Lenders will assess your application for a mortgage based on how long you’ve been employed and how long you’ll be employed in the future. So for a contractor whose contract is coming to an end, with no guarantee of the next contract, lenders often just find it easier to decline the application. The way the application is presented to the lender can make all the difference, so using the skills of a specialist mortgage broker who knows how best to present a contractor’s finances and situation when applying for a mortgage can make all the difference.

 

That’s why Contracting Scout only works with mortgage brokers who truly understand the contracting world and the unique challenges contractors face when looking for a mortgage. If you’re hoping to buy a property and want to deal with people who understand how to do this as an independent contractor, get in touch with us today.

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