Contractor Mortgages Bad Credit
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Contractor Mortgage With Bad Credit
Securing a mortgage when you’re a contractor can feel daunting, especially if you attempt it on your own. You know you’ll be asked to jump through a few hoops to prove your income and affordability.
But what if you’re a contractor looking for a mortgage with bad credit? How will you qualify for a mortgage deal if your credit rating is poor?
You may have already had a mortgage application declined by a high street lender and could be wondering what you should do next?
Well – all is not lost. Engaging an experienced Mortgage Broker to help you find a specialist lender means applying for a contractor mortgage with bad credit, could be easier than you think.
Can I get a contractor mortgage with bad credit?
You’ll be surprised to find there are specialist mortgage lenders who accept mortgage applications from contract workers with a low credit scores.
When lenders assess your application they will look for assurance that you can afford to keep up the repayments on your mortgage. Provided issues flagged on your credit file are older than two years certain lenders will welcome your mortgage application.
Having a contract work history longer than 12 months will also work in your favour. It’s worth noting that specialist lenders only deal with applications via Mortgage Brokers.
How can Mint Mortgages & Protection help me?
We specialise in helping Self-Employed contract workers apply successfully for mortgages.
We know the market well and deal with a range of specialist lenders that accept applications from clients we introduce. During our initial discussion we will:
- help you calculate how much you can afford to spend on a property, according to your income, expenditure and deposit
- compare specialist lenders’ interest rates and fees
- select a lender to approach
- help you compile your documents, complete and submit the application form for you
- liaise with the lender on your behalf.
All you need to do is send us an email or pick up the phone. A member of our friendly team will discuss all the options with you.
Why is the deposit amount critical if I have bad credit?
Being a contractor and having an adverse credit report means you pose a risk to a lender.
That’s because as a contractor, your income can be irregular and your credit history shows issues with past financial commitments.
So having a large deposit of between 15% to 20% will offset that risk. This means a lender will feel more confident about making you a mortgage offer.
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What if I’m declined for a contractor mortgage?
If you have had a mortgage declined, it doesn’t mean you won’t be able to get another one. Every lender has their own set of criteria, so there will be others we can approach.
Being refused a mortgage will show up on your credit report, so it may be wise to wait before re-applying. In the meantime you can focus on improving your credit score and saving for a higher deposit.
How can I improve my chances of getting my bad credit contractor mortgage application accepted?
Taking time to prepare in advance and increase your credit score before you apply will definitely improve your chances. Here’s some practical advice to help you make a start.
Improve your credit score
You may not know why you have a low credit score. There may be a mistake or something simple you can correct.
- register with Experian or Check My File to find out why there are flags on your report
- explain why there are flags on your record at the outset
- if you have any outstanding debt, pay it off
- check your name and address on the Electoral Roll. If it’s wrong, correct it as lenders use this to check you are who you say you are
Improve your affordability
- if you operate your contracting work through your own limited company, increase the dividend you pay yourself
- instead of calculating your income using your day rate, ask your accountant to prepare your annual accounts so you can use these to prove your profits
- If you’re registered as a sole trader, ask your accountant to prepare your latest self-assessment accounts and request your last two years’ SA302 and SA100 forms from HMRC
- have your deposit ready – aim for 15% to 20% of the property selling price
- gather evidence of past, current and forthcoming contracts as proof of consistent income.
- take minimal time off between contracts in the lead up to applying for your mortgage
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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