Will becoming an IT contracter affect my chances of getting a mortgage?

A

andagda

Guest
Hello all,

I'm currently investigating changing my permanent position for a contracting role with the same IT company.

Can anyone tell me the effect this would have on my chances of being approved for a mortgage if I decide to apply for one in the future?

I assume it makes it harder to get approval, but as someone pointed out to me a company can let you go at a month's notice at any time even if you're permanent, so it the job-security really that different?

Thanks.
 
In your first year as a contractor the bank will require a copy of your contract. If it is for a year or more then you shouldn't have a problem, any less and it might be difficult.
In subsequent years, a copy of your accounts and/or a letter from your accountant will suffice.
 
I was told to come back with a years accounts when i approached my bank. We got our mortage with one years accounts signed off by the account and a contract for the next year in place. That said, we went direct to the bank, a broker might be able to do something more.
 
Go see a broker and explain your situation...As long as you can prove previous employment (bank statements with money going in) and future contract (even if its short term) then you will be fine. Did this with a six year contract in hand....Try REA. Would recommend them for fairly painless mortgage approval!
 
Hi

I had a small bit of trouble getting a mortgage as an IT contractor seven years ago. Eventually got one from one of main banks without too much difficulty - one year's accounts, plus copies of accounts from my previous company in the UK.

It took a couple of weeks to get approval. Interestingly a junior (permanent) colleague of mine in the same organisation got loan approval after two hours.

The situation may have changed now as the banks are sitting on a pile of money that they need to lend.

By the way, if you have your own company, whatever institute you choose may offer you mortgage protection. Remember that you are effectively self employed (although Ltd company) and could not avail of the benefits of the policy anyway i.e. you cannot make yourself redundant or dismiss your self. An end of a contract does not count.

SM
 
I think you may be confusing mortgage protection with a payment protection option. MP is almost always required by mortgagors.
 
Bren

Maybe you are right. Insurance policies are standard to ensure that the bank recoups its money in the event of the death of the mortgagee. I was referring to the optional protection policies that can be bought which will pay the mortgage for a fixed period in the event of a job loss. I thought that these were called Mortgage Protection policies. I could be wrong. Point is, that they may be inappropriate for the self employed.

SM
 
That would be Mortgage Repayment Cover, the two are always confused. As self employed/limited company it won't pay out in most cases. It's the same with payment protection on credit cards etc...we don't take it cos it would be money down the drain.
 
You must log in or register to reply here.
Back
Top