What is a contractor mortgage? Why might it work for you?

Buying a house or property is a huge decision. It’s even more of a challenge if you are self-employed or are a contractor. You probably know all too well it can be a headache as you won’t have a regular income to demonstrate you can pay the mortgage repayments. However how can you get a mortgage? We tell you more about what contractor mortgages are and how you can benefit from them.

What is a contractor mortgage?

First we need to know, what is a contractor mortgage? It’s a type of mortgage designed to suit the needs of contractors and the self employed. You would need to do some research to find the right mortgage broker who can provide the right loan for you. Many can help you with just an indication of your daily or weekly contract rate. By choosing specialist brokers and not general mortgage brokers, you will be able to find the right broker and mortgage.

What are the rules of thumb when taking out a contractor mortgage?

Have at least 15-20% of your chosen property as a deposit value. Since the recession, we have not seen anything like 100% mortgages to cover the cost of the whole property. Having more money as your deposit means you will have less debt and a lower percent to pay as part of your mortgage repayments.

Ensure your credit score is high. This will improve your chances of getting a contractor mortgage. If your credit score is low, have a bad credit history, a history of paying credit cards late or paying the minimum balance, it could hinder your chances of a good contractor mortgage. Click here !

Make sure your contract rate and current contract is accurate and up to date. You need to have the length of current contract clearly stated and your rate that you are being paid. This is to ensure you can get the best contractor mortgage broker rather than have to produce three years’ worth of references which you may not have.

You need to also be financially responsible. You need to understand and acknowledge how much you are able to pay back per month. You also need to take into account things like a variable rate and inflation which could fluctuate at any moment. Whilst the broker will do their best to arrange a repayment which is affordable you should also be as honest and tell them how much you can pay. It is a two way street.

Conclusion

A contractor mortgage is a special mortgage designed for the self employed or contractor in mind. It takes into account that they don’t have a regular income and uses their contract, daily or weekly rate to configure a mortgage sum. They are also able to sort out a repayment plan for them. However, in order for this to be successful, the contractor must have all their paperwork and current contract up to date and accurate, have a good credit history and a good percentage saved as a deposit payment.  Visit this site for more information : mortgagebroker247.com.au