Contractor Mortgage Options

[jimbo77]

Hi Experts,

Newbie to the forum here, but long-time contractor in need of some expert advice.

I have been contracting via an offshore EBT scheme for 5 years and I am now looking to buy my first home.

I am very happy with my payment provider and don’t want to change to a UK based scheme as this will mean a reduction in my take home pay.

How does this affect my chances of securing a mortgage?

Do these specialist contractor mortgages services really do anything that I couldn’t do myself?

Any help on this would be very much appreciated

Jimbo

[John Yerou]

Hi Jambo,

Technically you are an employee of the Offshore EBT provider/umbrella, so in theory you should only need to provide payslips and P60. However, In practice this only seems to confuse lenders because of the summary breakdown of earnings on pay-slips.

An experienced Contractor Mortgage broker will make use of contacts they have with senior underwriters to directly package your mortgage application so that the full earnings potential is taken into account

The good news for contractors is that there are a number of high street lenders that will provide you with a mortgage offer based on contract rates alone. The mortgage loan can be as much as 4-5 times annualised contract rate.

Whilst most mortgage brokers will charge you a broker fee there are still a number of brokers who, like ourselves, are able to deliver this service without cost to the borrower.

[Tony Harris]

You really have to be upfront with the lenders and declare your contractor status Jimbo as the alternative is that you could be applying for a mortgage having inadvertantly given false employment information and could even be accused of trying to committing mortgage fraud.

The EBT is obviously just a payroll/payment solution - they dont decide where and for how much you work for etc and they pay no employee benefits (nor do you want them to as thats the trade-off you have accepted all these years).

Your payslips will in turn show a tax efficiently low level of salary via PAYE and this will obviously flag up to the lender that you are not an employee in the true sense of the word.

The contract-based mortgages that we have helped negotiate over the past 10 years rely simply on you providing a copy of your CV (easy to provide), bank statements (which you will have) but crucially you will also require a contract with your name on it. In many cases this is where you may struggle because the contracts that are constructed by EBT solutions will often purposely not feature your name on the contract. It could thus be very difficult to tie you to your contract for mortgage purposes.

I think the first step will be to look at the details on your contract to see whether your name appears in which case we can use the 'contractor mortgage' route otherwise it may be a case of approaching your existing bank instead. Your own bank will have been able to see regular income over the past 5 years and could therfore be far more accomodating re the lack of traditional income proof or personalised contract.

[taj.kang]

Hi Jimbo,

This is a question that I am asked a lot.

Working via a EBT scheme can cause a multitude of problems when dealing with a vast majority of mortgage brokers and the lenders direct.

An experienced Contractor Mortgage Adviser will make use of contacts they have with senior underwriters to directly package the mortgage application so that the full earnings potential is taken into account. If your case is presented in the correct manner there are high street lenders that will provide contractors with a mortgage offer based on contract rates alone. The mortgage loan can be as much as 4-5 times annualised contract rate.