Buy to let mortgage for contractor

[dogz]

Hi,

I’ve moved from the world of permanent employment to one of being a contractor. I’m contracting through a limited company. It’s going well but I’m looking to add to my BTL portfolio but am wondering if I’ll have issues obtaining a personal BTL mortgage due to a lack of 2yrs history and accounts

Are there lenders who look on this sympathetically and who should I approach? Next step might be to read the underwriting criteria of the usual suspects (accord, platform, TMW etc) but just wondered if anyone has any recent experience of this?

Thanks in advance!!

[Dan_M5]

you'll struggle without any accounts. May want to ask sarnie though

[Killer2005]

You'd usually want 3 years figures, alternatively 2 years with a projection for the third year.

Possible to do without if it was a good enough case (high credit score, experienced landlord etc etc) and could get 1 years figures.

[LivingTheDream]

Get yourself onto Contractor UK site - there's plenty of advice and links to companies that specialise in this.

CMME mortgages is one that springs to mind for example.

[Sarnie]

LivingTheDream said:

Get yourself onto Contractor UK site - there's plenty of advice and links to companies that specialise in this.

CMME mortgages is one that springs to mind for example.

CMME have increased their previous £750 broker fee it seems.........

"The £995 fee is payable on application, per application. This fee is payable when you wish to proceed with the recommendation made. This will follow a full application for a mortgage product that has been agreed with you as suitable for your needs, before any application is made."


£995..................PER APPLICATION............................WOW!!

They must laugh their socks off every time a client pays them a grand.....for every application!!

Companies like CMME have created a mystique around Day Rate Contractor mortgages..........there is NOTHING overly complex about Day Rate Contractor mortgages........they have access to NOTHING that any other broker doesn't.......they just want you to think they do......there's no extra work......the Broker just needs to know who will lend to this set of circumstances.........

What usually happens is that a client phones a few prime lenders like HSBC, Nationwide, Santander etc who will all say they won't lend against day rate contracts........client panics, goes on internet and ends up at companies like CMME paying a thousand pounds per application! It's simply extorting ridiculous fees out of clients who think they have no other options!

CMME also say that if you have adverse credit you will have to pay even more.......why would that be? You just have to find a lender who will accept it....but again, they are extorting more money from people who think they have no other options........doesn't sound very TCF/FCA compliant to me, financially penalising clients further for past issues??

Apologies OP, rant over...........just find yourself a good broker................or drop me a mail if you want a chat!

[LivingTheDream]

Just to be clear - I haven't used CMME myself so not au fait with their Ts & Cs

Just wanted to point out that as a contractor you don't necessarily need 3 yrs accounts etc. It can be quite simple to obtain a mortgage.

I haven't been through the process for a while though

[dogz]

My current broker thinks I’ll struggle with a lack of 2 years accounts - I disagree, so he might be getting binned

The Mortgage Works and Godiva seem to be ok based on their underwriting criteria so will give them a call and see

Loan required is quite small so need a mortgage with minimal upfront fees

Fingers crossed!

Our home mortgage is up at the end of June so just hoping I can keep things simple and move to a different product without having the underwriting hassle again. Lender is Barclays. Our LTV on this is about 55%

[Crasher242]

I used CMME about 3 years ago when we moved house - i was 2 months into my return to contracting, so had no previous books at all.
I did have, however, a 8 month contract so did have a good choice of deals to choose from (via CMME) - i didnt look to the open market too closely though.

To be fair, i think at the time their fee was reasonable (I think i got a discount via my accountants - maybe £500) as they took the hassle out of it all allowing me to carry on doing my own job.

[FredClogs]

I used cmme many years ago to set up my first contractor mortgage, they were fine £500 isn't nothing and I'm sure some I dependant brokers are better and cheaper it's just finding the correct one. Cmme are able with some providers to arrange lending based on contracts not audited accounts. Given where we are these days with the banks etc... You do have to pay appropriately for the risk.

Sarnie (of pH fame) is repeatedly cited on these boards as the man and he did get me a quite at my last remortgage that was very good and he was very swift and professional in his response.

[dogz]

I rang up Mortgage Works this afternoon and no income requirements are needed based on loan amount and it falling within higher stress rate test.

Looks like I’ve answered my own question 😂

[swatches]

Do lenders take into account day rate or will they only base it on money extracted from company?

If the company has made large pension contributions will they appreciate that these can be stopped and turned into income?

[Killer2005]

swatches said:

Do lenders take into account day rate or will they only base it on money extracted from company?

Depends on the lender. My previous did, current just treats as self employed and therefore on what has drawn from the limited company.

[hyphen]

Killer2005 said:

swatches said:

Do lenders take into account day rate or will they only base it on money extracted from company?

Depends on the lender. My previous did, current just treats as self employed and therefore on what has drawn from the limited company.

There is an industry around 'contractor mortgages' but in reality you can just apply as normal to any bank.

You are running a limited company, you have self assessments to show your income, company accounts and accountants reference. Standard stuff.

OP do you have a large deposit, or other assets to balance out your lack of accounts?

[Caddyshack]

I am a broker. Tmw have no min income requirement and most will not need 2 yrs accounts, many will use 1.

Can’t see you having any problems getting the btl mortgage. You also don’t need 2-3 yrs accounts if you are a contractor for a residential mortgage.

[Sarnie]

swatches said:

Do lenders take into account day rate

Yes.......

[Sarnie]

hyphen said:

There is an industry around 'contractor mortgages' but in reality you can just apply as normal to any bank.

You are running a limited company, you have self assessments to show your income, company accounts and accountants reference. Standard stuff.

OP do you have a large deposit, or other assets to balance out your lack of accounts?

The problem is that the Ltd company drawings are usually "tax efficient" and do not illicit the level of lending required, that lending against the Day Rate does.......

[Caddyshack]

Sarnie said:

hyphen said:

There is an industry around 'contractor mortgages' but in reality you can just apply as normal to any bank.

You are running a limited company, you have self assessments to show your income, company accounts and accountants reference. Standard stuff.

OP do you have a large deposit, or other assets to balance out your lack of accounts?

The problem is that the Ltd company drawings are usually "tax efficient" and do not illicit the level of lending required, that lending against the Day Rate does.......

Agree 100% with Sarnie.

Large deposit no longer offsets lack of accounts....you can put down £1m and it will not overcome a lenders criteria for income evidence.

[Sarnie]

dogz said:

I rang up Mortgage Works this afternoon and no income requirements are needed based on loan amount and it falling within higher stress rate test.

Looks like I’ve answered my own question ??

To clarify, TMW have no "minimum" income requirements but potentially not "no income requirements" at all.

From their lending criteria;

"Minimum income
There is no minimum personal income requirement, however, proof of personal income may be requested to support an application. This will be used with other information relating to the landlord and property, to validate that the loan will be used for its intended purpose."

And for Proof of Income;

Acceptable proof of income:

Landlord Type Income type Proof
Experienced Landlord Self Employed Tax Calculation & Tax Year Overview*
First Time Landlord Self Employed
Employed/Retired Latest payslip/pension statement
No Taxable Income 3 Months Bank Statement

• if SA302 isn't available, an accountant's reference can be accepted. Please contact us with the accountant's details so we can request this."

https://www.themortgageworks.co.uk/lendingcriteria...

Edited by Sarnie on Wednesday 23 January 22:55

[SignalGruen]

Sarnie said:

LivingTheDream said:

Get yourself onto Contractor UK site - there's plenty of advice and links to companies that specialise in this.

CMME mortgages is one that springs to mind for example.

CMME have increased their previous £750 broker fee it seems.........

"The £995 fee is payable on application, per application. This fee is payable when you wish to proceed with the recommendation made. This will follow a full application for a mortgage product that has been agreed with you as suitable for your needs, before any application is made."


£995..................PER APPLICATION............................WOW!!

They must laugh their socks off every time a client pays them a grand.....for every application!!

Used CMME a couple of years back for a BTL - had to pay the £750 prior to the mortgage being approved. Bank survey came back saying house was a HMO and thus they couldn't proceed. £750 down the toilet as CMME wanted more money to try another lender. Went with another IFA instead who charged me £350 once the mortgage application was done and dusted.

Edited by SignalGruen on Wednesday 23 January 23:05

Edited by SignalGruen on Wednesday 23 January 23:12

[Sarnie]

SignalGruen said:

Used CMME a couple of years back for a BTL - had to pay the £750 prior to the mortgage being approved. Bank survey came back saying house was a HMO and thus they couldn't proceed. £750 down the toilet as CMME wanted more money to try another lender. Went with another IFA instead who charged me £350 once the mortgage application was done and dusted.

Edited by SignalGruen on Wednesday 23 January 23:05

Edited by SignalGruen on Wednesday 23 January 23:12

It's the "each time" thats the worst part in my opinion.......the level of the fee is up to them to set and the client to accept or not........but to charge it every time, especially in this sort of instance is very short sighted of them and results in experiences like you had which is no good to them or you...............