Getting a Mortgage as a Nascent Contractor
After a rollercoaster few months, and one really depressing meeting, our application for a mortgage has been accepted. We’re currently waiting to exchange contracts on a house in Brighton. Being a contractor has added complexity so I wanted to explain the process for any would-be contractors.
For context, I’ve told the story of this process below. But, feel free to jump to my recommendations at the end of the article.
After years of renting we were cursing ‘dead money’ (the common name given to rental costs), home inspections, grotty bathrooms, and one awful landlord (25 Stanley Street, Brighton); we were desperate for our own home. After our wedding, we began saving as much as we could afford for our deposit.
At the time, the media was focussed on the inaccessibility of mortgages to young people sans a sufficient deposit. We assumed it was pointless to apply so did nothing but continue saving. In reality, being over 30, married, and with a good job, reduces the importance of the deposit. It allowed us to consider staying in Brighton: we’d assumed a move back to Coventry was the only way we’d afford a house, and not a basement flat.
And, if the high street banks had their way, the above would be true.
On the back of my application for a business account, I was encouraged to come in for a mortgage meeting. I was told that I’d be able to get a mortgage and was very attractive to the bank. So we got our hopes up.
Two weeks later, after looking at houses on Right Move and talking about potential bathroom layouts, we met with a Santander mortgage advisor. My wife works full time for a Brighton agency so they loved her. However, when it came my time to talk career: ‘Oh sorry, I thought you had more than 2 years on your books’. Apparently all I needed was one month’s payslip to begin the process.
Quite why this was, given our details were forwarded after I’d just opened a business account, I’m not sure. However, I realise now this is part of a standard poor customer experience provided by Santander (I have business account problems but that’s for another blog post). We left that meeting deflated and didn’t really speak for a few days.
I was angry at myself for not considering a mortgage whilst in fulltime employment. The next day, I reluctantly began to consider closing my contracting business; my new, exciting future a failure.
A few weeks later, I was chatting with an ex-contractor friend at The Telegraph. It transpired that he’d been in the same situation as me. With only two months contracting, he’d found a broker that specialised in contractor mortgages, not available through the high street. I began to investigate potential brokers.
Eventually, a friend, and ex-client, recommended Brighton-based Mortgage Medics. So because of their proximity, and the recommendation, we decided to give them a call.
We filled in a background survey and Steve (Prole) was very clear, that as a contractor, we wouldn’t have access to the most competitive offers. And, because of this, we should expect to pay a higher interest rate. Accepting this, he quickly sorted us an offer from Halifax, with only a copy of my current contract, and letter confirming my working days.
I’d like to note that during our Santander meeting, the advisor frequently warned us about brokers and their fees. I can say that the Mortgage Medics fee was very competitive and I’d pay it twice over given the service we received.
This is by no means the end of the process. Each application is unique, for us we had to:
- Source a solicitor to carry out property searches
- Commission a home buyers report
- Follow up any issues contained therein
- Exchange contracts
But, we are very happy to be at this stage. And, I still have my business!
- Research, research and research. With a decent bit of research, we could’ve avoided the delay, and the heartache. For somebody whose job is 80% research, I’m more than a little embarrassed by this.
- Avoid high street banks if you haven’t got two years on your books. I think I dodged a bullet though, a life-time with Santander is not appealing.
- Compensate for number 2 with a good broker. I cited: