Mortgages for Contract Workers

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gnf_ireland

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I would like to get a feeling regarding the possibility of getting a mortgage in roughly 6-9 months time. I appreciate it is difficult to estimate currently, but would be curious as to the thoughts of the informed people on this forum

I am a contract worker (Technical Specialist/Project Manager in IT), and have been in steady employment for the last 3 years in Ireland. The project I am working on is coming to a natural conclusion, and I am planning to take a 6 month sabatical and go do some travelling with my girlfriend. Prior to this role, I have been contracting steadily since 2002, although outside the country.

I would be looking to purchase a property of ~525/550K, and would put down at least a 30% deposit on it. Any costs, renovations and furnishings would come from my other savings. I have no loans at all, and credit cards are paid off in full every month. I am also a first time buyer

The questionable part on any mortgage application would be the contract nature of my employment. I normally work on 6 month rolling contracts, so I rarely have more than 6 months 'guaranteed' work at a point in time. Historically the projects have lasted much longer than this and I have shown the average duration of the contract is roughly 2 years. There is no reason to believe this will not continue, even in the current economic conditions.

Taking into account a reasonable adjustment for daily rate, I would expect to continue to earn a reasonable salary in the next few years.

I would want no more than a 20 year mortgage. What are your thoughts - Would I get a mortgage in the current climate in Ireland ? I would obviously only apply when I come back and have at least a 6 month contract secured.


If the answer is no, what do you think I would need to do in order to be in a position to obtain a mortgage ? Plase dont say take up a permanent job, as it would involve a reasonable salary cut to do so :)
 
Keep up the savings and buy for cash ;-)

When I applied for my mortgage it got delayed as I was 1 Year 11 months with my employer , I had to be 2 years - even though I had been with the exact same employer for nearly 3 years previously ! I had a break of 6 weeks trying something else and ended up going back , but my application was held until I was 2 years full time again !
 
OP, it will be difficult, but not impossible; but it's difficult, if not impossible, for most people! Banks will look for your P21 balancing statements from Revenue (or confirmed tax returns) to establish your trading history and income levels over the last three years. I'm self employed and NIB gave me a mortgage with little or no trading history. AIB, however, laughed me out the door. You are in a much better position than I was when I was applying so don't give up hope.

If you are not saving at the moment, then set up a regular savings account, even if it's just moving money around from one account to another. This seemed to count in my favour when I applied. The fact that you will also have savings to do renovations/fit out & you won't have to spend every last red cent you own to buy the place will also stand to you.

Your logic is strong and no (sane) bank would expect you to take a pay cut in order to get a mortgage.

I think you have a good chance. A lot can depend on who you get to talk to in the bank, but if you get the right person who sees your potential and respects your past working history, then it won't be any bother to you.
 
WaterSprite:
Tax returns are easy to provide, as will the company accounts for the previous 3 years. This clearly shows income levels etc for the last number of years

As I am about to head on a sabatical, I had just cancelled my regular savers account, and am in the middle of putting the deposit into a combination of fixed term and variable rate deposit accounts (9 month Investec one, 12 month Anglo and variable with Ulster Bank and TSB). Would you suggest keeping some additional funds in my current account and opening up another regular savers account, for the sake of it ? I can do this is you think it will make a difference, but surely the bank will see I am just moving money around ? I have had a series of regular savers accounts for the last 3 years

I could pay a larger amount on the deposit, but I do want to hold onto some of my other investments like stocks, funds and keep some cash available to me for the rainy day. I am happy to show any bank these, of course.

Does the fact I have ~75K in a pension fund make any difference to the application ?

I also have some funds abroad, from my years working there, but I am not keen to bring them home, both because of the remittance basis for taxation and also a good portion of it is in sterling and dont want to change back to euro just yet :) Again, I am sure the banks would take come comfort that the funds are there in cases of emergencies !

The reason I posted was because I was in TSB yesterday and enquired casually (without going into details) and the guy I was talking to said it would be exceptionally tough ! I had appreciated it would be hard, but not exceptionally tough !
 
If you're off for 6 months and can show regular savings before and after & you can get a good fixed rate on the lump sum savings, I'd probably not bother just setting up a regular savings account for the sake of it. I had money in Northern Rock (not fixed rate) and so just moved money around into a drip feed regular savings account - the bank seemed to like that, notwithstanding that it was *solely* moving capital around.

I'd explain to them, as you have to us, why you want to pay the level of deposit you do (which deposit is significant and will work in your favour). As with the paycut, there's no point taking money out of dollars or sterling if the exchange rate is crap. They will look at the value of your stocks and savings in FX and take all of that into account, taking a fairly jaundiced view of the stocks I'd imagine.

They won't take into account your pension fund I don't think (other than the fact that you put money into it on a regular basis) because you can't access those funds.

Don't mind yer-man in TSB; it's easy to make a throw away comment in response to a casual enquiry. Regardless, it doesn't sound like you'll be doing anything different between now and 6 months time, so I'd put it to the back of your mind and enjoy your time off. I doubt that it will be any less likely that you will get a mortgage in 6 months time (if you have a contract lined up) than it would be to get one today.

Other options to consider is if you have someone to go guarantor on the mortgage and/or if you are prepared to lodge e.g. 2 years' interest payments with the bank and give them a lien on that money in case you can't meet the repayments. Again, this will all be down to the person you talk to - some will have the imagination to see if it can work; others will just close their minds to the whole thing. It sounds like you are maximising the money that you do have, so that should show through to whoever you talk to.
 
Dont worry WaterSprite, it will be the last thing I think of during my sabatical. However, it may influence decisions when I come back, so was more curious than anything else

cheers for the advice
 
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