I’m sure you’d agree that flexibility is one of the main things that makes freelancing so attractive. Being in control of what projects you work on and when is amazing when the work is streaming in, but can really cause cashflow issues if opportunities dry up. This is why one of the biggest obstacles we see freelancers facing is getting finance.
We know just how tough it can be to get a loan or a mortgage as a freelancer. That’s why we’ve partnered with CMME who are experts in providing mortgages for independent professionals (freelancers, contractors and self-employed professionals), so we can help you realise your freelance goals for 2018.
If you’ve struggled to get a mortgage or are keen to learn more about how to get one then read on.
How do I get a mortgage if I’m a freelancer?
If you’ve found it almost impossible to get a mortgage then you might be one of the growing number of freelancers who prefer renting than attempting to buy their own home. But are freelancer mortgages really that hard to come by?
As a freelancer, contractor or self-employed professional, it can certainly look like a tough proposition to secure a mortgage but there are many things you can do to position yourself favourably in the eyes of potential lenders.
CMME has put together a list of handy tips to help you secure a contractor mortgage:
1. Ensure your contract is up to date
Make sure you have a copy of your most recent contract/s to hand when putting together your mortgage application. It’s important to be able to show lenders not only how much income you have, but also how long you’ve got remaining on your contract/s.
2. Avoid lengthy breaks between contracts
One of the main perks of being a freelancer is that you’re in control of when you work so can decide how many breaks you want and for how long. However, it’s important to be aware that if you’re considering getting a mortgage then you should avoid taking breaks of anything more than 6-8 weeks. This is because lenders want to see consistent income and contracts stretching back 12-24 months prior to your mortgage application – long gaps between income are not viewed favourably.
3. Be realistic about your repayments
A common mistake many professionals make when searching for a freelancer mortgage is being unrealistic when it comes to estimating their repayments. It’s really important when putting your mortgage application together that you make sure the repayments you commit to are going to be affordable for you.
4. Have at least a 10% deposit
Most lenders will require you to have a good-sized deposit when you apply for a contractor mortgage. Not so long ago it was possible to secure a mortgage with just a 5% deposit, but those days are gone now. Ideally, you should aim to have at least a 10% deposit ready to pay upfront.
5. If suitable, look for mortgages that allow additional payments
Some freelancers may find themselves with more money than they need on a regular basis thanks to high-value or frequent flows of work. If this sounds like you, you should try to find a mortgage that allows you to pay chunks off in addition to your regular monthly repayments. This will enable you to take maximum advantage of your position and pay-off more of your mortgage quicker.
6. Give the high-street lenders a miss
Securing a mortgage from a high-street lender is where the difficulties start for many contractors. You may find that your initial application is accepted in principle due to their very light and superficial credit checks. However, once you’ve placed an offer on a property, high-street lenders will often do a more in-depth review of your finances, and then withdraw at a later stage.
Instead, we suggest that you do your homework and look for specialist lenders. Companies that are experienced specialists when it comes to contractor mortgages are much more likely to produce favourable results. Also, using a professional mortgage broker within this field can prove invaluable.
To find out how much you could borrow or to find out what you need to do to become mortgage fit, click here.
Twine are not authorised to offer regulated mortgage advice. Twine are introducers to CMME.
CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: Albany House, 5 Omega Park, Alton, Hampshire, GU34 2QE. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.