How Much Can I Borrow for a Mortgage in Derby?

How Much Can I Borrow For A Mortgage | MoneymanTV

Here at Derbymoneyman, we find the two questions First Time Buyers and Home Movers in Derby commonly ask us is ‘Can I get a mortgage in my circumstance?’ and ‘How much can I borrow?’. In this article, we will be discussing the second question as this has changed drastically in the past decade.

Historic rules for borrowing for a mortgage in Derby

Prior to the days of credit scoring, your local Building Society Manager would manually assess mortgages. To make the process more consistent and reliable, the 1990s introduced the idea of lenders carrying out more regular income assessments.

In order to lower the number of mortgages being accepted to people who couldn’t afford one, a lending cap was introduced. This prevented people from borrowing more than three to four times their annual income.

To receive more applications, lenders started to become more generous with this leading cap as well as their conditions. There were even some lenders who accepted customers a mortgage without any background checks such as payslips. This would eventually become the catalyst for the credit crunch in 2007. In the midst of the credit crunch, lenders were requesting a 20-30% deposit, which made it very difficult to obtain a mortgage as a first time buyer in Derby or if you were moving home in Derby.

Mid 2000s approach

In the early 2000s, lenders became flexible in their criteria a lot more, arguably being too generous in the amount they would be willing to lend their customers.

Depending on the lender, some people were offered self-certified mortgages. These type of mortgages meant you were not required to have a background check so as the customer, you could self certify your income, regardless if the buyer falsely inflated the amount they were declaring.

Due to many people carrying out self certified mortgages, the market fell. This began the infamous Credit Crunch of 2008, from then to 2010, these became a very difficult times.

This especially effected individuals who were wanting to take their first step onto the property ladder. At that time, stricter lending criteria was to be put in place due to lenders having to change.

Mortgage Market Review 2014

As the market made a recovery, the Mortgage Market Review (MMR) 2014 was created to provide an updated and sounder credit scoring system. The MMR was a set of requirements that lenders had to follow. Nowadays, lenders can determine if an applicant will be able to pay off their mortgage based on their financial state through the affordability calculator.

Lenders can use the calculator to receive a more meticulous insight into an applicant’s spending habits as well as net disposable income. A thorough assessment of your bank statement is carried out to ensure that if you can’t afford a mortgage, then you are not granted one as you could have been prior.

Deeper analysis

With this assessment, you will find that the majority of lenders will no longer go past 4.75 times your annual income.

As mentioned, lenders will look into your spending habits and the way they analyse these depends on your situation. For example, you may have to pay high childcare costs, have a large number of credit commitments and in some circumstances, you might be paying off your student loan. With this in mind, a mortgage lender will likely offer you less than your work colleague for example, who has fewer outgoings.

These days, there is a distinctive difference between lenders when it comes to how much or little they will lend to some customers. Now and again, lenders have been known to penalise low-earners. 

The reason for this might be that they are looking for that type of applicant. They may lend if they see pension contributions as a fixed outgoing, in particular, to customers who have a significant deduction, less than a private-sector worker.

With every lender comes a very unique lending criteria, and every customer has its own circumstance, in the case that you need to maximise your borrowing capacity to have a chance at buying your dream home.

Lender Variances

Lenders will always be competitive when it comes to price and lending criteria, however, they will avoid competing for the lowest rate as this will provide no profit gain for them. Furthermore, this will be highlighted through the difference between lenders and their maximum borrowing capacity. Different lenders target for different niches of clients therefore don’t feel it’s inevitable that one lender won’t lender to you as there will be another out there who would.

State benefits like tax credits are factors lenders will take into account for a mortgage. Some lenders may be more generous if you are for a self-employed mortgage in Derby. Increasing the amount they will lend can be done through extending the term of the mortgage to the maximum allowable.

How can a Mortgage Advisor in Derby help?

Seeking Mortgage Advice in Derby can be very beneficial. On behalf of the customer, our team will search the market to try and match you to various lenders criteria.

When it comes to knowing the maximum amount you can borrow for a mortgage and your repayments, book your free mortgage appointment online today to speak with one of our expert Mortgage Advisors in Derby. They are determined to make sure your process run as smoothly as possible and search through thousands of mortgage deals to find you the most suitable for your circumstances.

9 Questions to Ask When Buying A House in Derby

First Time Buyer Mortgage Advice in Derby

When it comes to the homebuyer experience, first time buyers in Derby like yourself can find it stressful. It doesn’t have to be that way. Listed below are nine common questions to ask when enquiring about a property that will allow you to make the most out of your house viewing and provide you with some peace of mind.

The 9 most common questions:

1. How much interest has there been in the property/development?

Buying a property can be one of, if not the biggest financial commitment in your life.Therefore, it’s perfectly acceptable to have a good think about whether or not you want to commit to buying a property.

You only have so much time to think about it due to the interest your dream property may be getting. It’s best to find out how many people have viewed your desired property to understand how much ‘thinking’ time you may have before making a final decision. Furthermore, if the property receives a lot of interest, you need to be ready to have a final answer as soon as possible. 

2. Is there a property chain?

A property chain can notably impact some areas of your mortgage process and in particular, how quickly you would be able to move in.

If there is no onward chain, it’s likely the moving process will be swift, especially if you are not part of a chain yourself. Another factor that could speed up the process is if you don’t need to sell your property first. This is because you will not be holding up the home buying process.

Remember to use this tactic when negotiating a price.

3. What comes with the sale?

Some previous homeowners like to leave items behind as a way to save on costs, which could be a big advantage for you. A washing machine, fridge, freezer are just a few they might include, or typically a shed if the property has a garden. 

On the condition the appliances work, it’s a benefit to new buyers as it saves them a bit of cash until they get something new and modern, however, you will have to factor in disposing of them should you not want or need the items.

If you buy a new property, you might have the option to purchase any extras that are brand new and there for you on your moving day.

4. Are the neighbours friendly?

Finding out what your neighbours are like can be a key component to consider when deciding on a property as a good or bad neighbour can make or break your experience. Furthermore, this is especially helpful if you’re moving into an area you are not exactly familiar with.

Deciding to move to new homes can be a risk initially because you won’t know what your neighbor will be like. First impressions are not always important, but it’s always handy to get on with them as you may both be living there for a long time. 

5. How much does it cost to run?

The amount spent on running costs can depend on where the property is in Derby. For this reason, it’s best to ask the right questions as well as doing some research. Topics to look into or ask your seller could be how much the council tax is or the average spend on utilities. As well as being good information to know, it also can help you budget for each property accordingly. 

6. Which way does the house face?

Questions like this can make a significant difference in the decision process because a south-facing garden can be a requirement for some. It’s perfect for relaxing in the garden in late summer evenings as well as reading with natural light. You may find that some locations pay for a more premium price in order to have a south-facing garden because it’s where the position of the sun is throughout most of the day. 

7. After moving in, how much work will be needed?

Here is another significant impact on your budget. Information to find out that may be essential to know include:

  • Making sure the property is energy efficient.
  • Sorting any damping issues (if any).
  • Changing the furnishing.

8. Are you open to offers?

A typical of the house-buying process is negotiating on a property price. Because of this, it’s key to be as prepared as possible to make an offer on a property that you like. If you are looking to improve negotiating on a property price and being one step ahead click here.

To get an idea of how low in price the seller would want to go, it’s best to chat with the seller or estate agent. Also, ask if any other offers have been made and rejected before your bid.

9. When can we move in?

When planning what you need to do before moving in, it’s best to set out the date of moving first. From this, you can plan out other jobs such as instructing a conveyancing solicitor, packing your belongings, and arranging a removal van to transport your belongings to the new property.

Moving Home Mortgage Advice in Derby

8 Factors to Help you Decide Where to Locate in Derby

Moving home mortgage advice in Derby

When considering ‘where to live in Derby’, there are many things you will look for. House hunting as a first-time buyer in Derby or as a home mover in Derby can be daunting. You will be looking at mortgage arrangements and the best mortgage deal available for you, and your finances for your new home. 

By now, you probably have a rough idea of where you may like to live, the type of house you would like. You will be considering the location, amenities and how much you get for your money. But how to decide which area you would like to live in? 

We’ve put together a few points to consider when choosing where to locate in Derby.

Things to consider when moving home to Derby

1. Where to live, Derby city centre or countryside

Depending on where you decide to locate in Derby will be one of the most critical factors. You will have to think about whether you want a city location or looking for a more countryside setting.

You need to consider this carefully, as the area will affect the commute to work, access to local amenities, shops and schools.

2. Transport links

We all generally have to consider some factors, such as how we get to work for many people. So access to primary transport links, railway or bus station, and motorway links will be necessary, especially if you don’t have your mode of transportation.

3. Schools, colleges

For those with children, an essential factor is usually the quality of the school in the area. There are some great schools in Derby, and it’s always worth taking a look at the school league tables if you have any doubts on which school to let your children attend.

4. Local amenities

What you are looking for in the area may differ depending on your lifestyle. Some of the things you may consider are the proximity of the nearest supermarkets, shops and maybe how close you are to the emergency facilities.

We recommend you make a shortlist, what you need and what you would like near you as a priority. When you find a house you are interested in, you can then compare it with your ‘wish list’ and see if it matches your needs.

5. Family & friends

Depending on your circumstances, this is a personal choice on whether you need additional support with the children, help with school runs and childcare. So it may also be that you would like to be in as close proximity to them as possible, or at least just a short distance away so that it’s possible to visit if you wish to do so.

6. Value for money

When you choose the ideal home, you need to set aside how far your money will go and what you get in a home for the amount of money you spend. So you may need to compromise on what you are can within your price range and budget.

7. Local community

Some tend to keep to themselves, and others prefer being part of a community. For best results, look at local websites or take a visit beforehand to get to know locals who will inform you on current events and what’s available

8. House prices – long term

Maybe you are purchasing a property having long term investment ideas and, as such, hope the property prices rise, on the off chance that you choose to sell in the future.

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What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Derby

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Derby will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Derby & those who are Moving Home in Derby. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

Why Should I Use A Mortgage Broker In Derby?

Why use a mortgage broker in Derby?

It’s no secret that we think going with a mortgage broker would be your best option, however that isn’t the only path you can take. Sometimes it is worth exploring your options. Generally speaking though, we find that most people opt to side with a Mortgage Broker in Derby. Let’s take a look though at the positives and negatives of both, allowing you to decide for yourself.

As a general rule of thumb, a mortgage broker (like Derbymoneyman) will charge a broker fee on top of the costs you are already needing to pay for. On the flip side, the majority of mortgage lenders won’t require this, leaving you with money still in your pocket.

On top of this, going to a mortgage lender directly will open you up to exclusive deals you can only get through going to them. This attracts business from both those looking to get a mortgage and even mortgage brokers. These are also only allowed to be offered by the broker itself and not just anyone in a branch without proper mortgage advice training or consumer protection knowledge.

Luckily in 2014 this was banned nationwide, only allowing for experienced and fully qualified mortgage advisors in Derby to provide any kind of mortgage advice and product recommendation. This took a while for people to get used to however, and some customers were left waiting for a month, sometimes even more.

Even today, this can still happen to some customers. This isn’t the best when you have already had an offer accepted on a property you like. It’s reasons like this that mortgage applications via mortgage brokers went on the rise. A part of our charm is offering a same day service, hoping to put you through with a qualified mortgage advisor in Derby as soon as possible, often within the same day unless the customer requests otherwise.

Fast & friendly mortgage advice in Derby

In the days before the 2010s, it was a lot harder to look as possible mortgage deal comparisons, whereas nowadays everything is now at your fingertips and easy to find out. The hardest part now is not comparing, but rather finding criteria that you match up with and features that can be tweaked to match your individual situation. It is still advised that you be wary though, as deals with the lowest fees often come with the highest arrangement fees.

Something else to look out for is affordability. You could find the greatest deal in the world with a lender, but if you can’t afford it, you won’t get it. This in turn ends up being a large factor as to why people opt to use a mortgage broker in Derby. Using our knowledge of lender criteria, we will do our best to find you an appropriate and affordable deal for your circumstances.

With regulations these days being a lot tighter (a lot of that being thanks to the Credit Crunch), mortgage applications are not as easy as they once were. For the inexperienced home buyer, it can be an overwhelming experience to go alone. Here are some possible hurdles that customers may find along the way:

  • I am receiving self-employed income.
  • Being a contractor or working under a zero-hours contract.
  • I am using a mixed deposit source, i.e. Gifted & Savings.
  • Opting for Let to Buy. Renting your current home to buy another.
  • I am struggling on the affordability front.
  • I have a poor credit history.

Mortgage lender versus mortgage broker

Over the years, Mortgage Lenders had gotten rather competitive with each other, trying to offer better deals than their fellow lenders. Due to legislation changes post-Credit Crunch, most of these changes are now in regard to the lending criteria.

Some of these examples include how much they are willing to the self-employed versus the employed, as well as leniency when checking previous credit report issues.

Your circumstances are completely unique to you. Whatever the situation, it is unique to you. When speaking to an experienced Mortgage Broker in Derby about your situation, it will be likely that they have encountered something similar in the past. Hopefully with their experience in play, you’ll end up with the most appropriate deal for you, along with lower interest rates.

Why a mortgage broker in Derby will benefit you

Our service is more than just mortgage focused. Even if the application is simple and straightforward, customers will often still rely on a mortgage advisor in Derby for more. Customers are welcome to discuss with us how much they are planning to offer on a property, and we can recommend services such as solicitors and property surveys. One of our most important services is running through any available protection with our customers.

Something else we pride ourselves on is the ability to be a responsive mortgage broker in Derby, offering out of hours and weekend appointments to all our customers. Our dedicated team of mortgage advisors in Derby are available 7 days a week!

A factor that gets overlooked regularly, is that most applicants seem to be busy and need the assistance of a mortgage broker to handle the mortgage proceedings and eliminate possible stress. Professional applicants can reap the benefits of this as well, as they have their own clients that they are able to charge their services to.

In the future, we could see lenders wanting to bring back more customers from mortgage brokers. In this case, it’s unlikely that they will invest in more staff, instead opting for a more technological route.

For anyone looking for a quick and easy process, who is comfortable doing things that way, it’s great. Mostly we find though, whether they are First Time Buyers in DerbySelf Employed in Derby, or looking to Remortgage in Derby, people prefer people and would much rather have human interaction and input in their mortgage case.

Getting Prepared For A Mortgage in Derby

Once the hurdle of saving for a mortgage is surpassed, the next step with your Mortgage Broker in Derby is paperwork. Here are some of our best tips on how to get ready and ahead of the game and speed up your process.

Up to date credit report

An up to date credit report is crucial and should be one of your main priorities. By doing this there will be no surprise of finding previously unpaid payments setting you back from a successful mortgage.

Our Mortgage Advisors in Derby look at what Lender is best for you, so it’s best to make sure all your information is up to scratch so that you’re put with the one most helpful towards your current needs. Certain things you can do to help yourself is to go onto the voter’s roll and make sure that credit cards you no longer use are discontinued.

Proof of ID

To show your Mortgage Broker in Derby that you are who you say you are, you’ll need photo ID. This can either be a Driving licence or Passport.

If your Driving Licence is being used for your proof of address, you’ll need to find another alternative for your Proof of ID. If you’re working within the country and using a Visa, then you’ll need to also provide this too.

Proof of address

As mentioned earlier, you will also need to provide a proof of address. This can be a Driving Licence if you’re using your passport. Otherwise, a utility bill or bank statement dated within the last 3 months will do.

Last 3 months’ bank statements

The bank statements you provide validate what your income is and provides an insight to your regular expenditures. This highlights the importance of thinking ahead and choosing wisely what you’re spending your money on. Some lenders won’t ask for your bank statements, but the ones who do want to make sure you’re on top of your finances.

Evidence of deposit

Your deposit is saved but you still have to provide evidence for this for anti-money laundering purposes and prove that you have everything in place for the deposit. A useful tip is to make sure your finances are stable and in one place, so the audit trail is easier to get over and done with.

Proof of income.

To prove to Lenders your affordability, proof of income will be needed. If you’re in employment then 3 months’ payslips will most likely be sufficient, although some lenders do like to see a recent version of a P60. Lenders will also take in other factors such as overtime, commission, bonuses and earnings from other employers.

If like many other applicants you are Self Employed in Derby, then you’ll need help from your accountant who will acquire your last 2 or 3 years proof of earnings. If you submit your own accounts, then we are happy to advise you on what you’ll need from the government gateway.

Budget planner

By planning your budget out, you will oversee where’s best to spend your money and what is what. It is best to include such items as council tax, utility bills and regular expenditures such as food and drink to see how much disposable income you will have leftover. If you’re having trouble with this then we are able to send you a template budget planner to get you started.

So, preparation is key to getting your mortgage sorted as quickly and efficiently as possible and will be easier by using the Mortgage Advice in Derby. The quicker you put time aside to gather all the essential information you need, the easier it is to speed up the process and getting closer to gaining a successful mortgage.

Buying a New House in Derby

Buying a new house is the biggest purchase you will probably ever make. For many, it can be a stressful time, but it doesn’t have to be. We’ve put together a shortlist of questions to ask the seller:

1. How much interest has been shown in the house

When buying a brand new house there is usually a higher demand. You may need to act quickly to ensure that you secure the plot. Try to find out how many have already viewed the house to find out if there is any other ‘competition’ with the house.

2. Is there a chain

If you have ‘no chain’, you should be able to move quickly, if you also a first-time buyer you will also be a desirable buyer to the seller as the sale could be completed quickly. This can provide you with an advantage during your ‘negotiations’

3. Included in the sale?

New homes can often come with ‘extras’ incentives to encourage you to buy the house. But also older homes can come with items unwanted or offered by the seller. It’s wise to check just to clarify, are things like cookers, fridges and carpets, for example, could be included in the sale (or offered at an additional price). Make sure you clarify as you may be left with unwanted items that you then need to remove and dispose of.

4. What are your new neighbours like

It can be best to try and find out a little about your new neighbours, (we have all heard stories about ‘neighbours’) so try to gain some insight into your new neighbours. On new building developments, this may be a little more difficult.

5. Running costs

Running a home has associated costs. Heating, lighting, council tax, water (newer homes tend to have a water meter).

These days people tend to be more aware of home running costs and will usually have some insight or ask about the running costs of the home. 

6. Garden

We don’t always have a perfect summer but many people like to spend time in the garden. If you like to spend time in your garden, then you may wish to check how well the natural light enters your garden and whether it’s south-facing etc.

7. Home improvements

Generally, when you move into your new home, you will often want to decorate to your own tastes, but what other work needs to be done. On older properties, you may have some ‘fixes’ or repairs to make. Or make improvements to energy efficiency, insulation, garden work etc.

8. Remedial fixes

When buying an older property, there may be items that need repair. If there are any issues identified you can request the seller fixes these before the sale goes through (or reduces the price). In the case of new homes, there can sometimes be some minor repairs required after you move in due to settlement etc, or simple faults you identify after you move in, but ensure you report these within any given time limits.

So when you are buying your new home whether its a new build or older property, be sure to ask the questions you need to know about the house, also remember to negotiate your buy price, don’t be too keen and offer to high to start with and remember to take into consideration other factors such as when you would be able to move in and that fits your expectations.

9. House buying costs

There are costs associated with buying a home, valuation fees, survey fees, legal fees, removal costs stamp duty (on properties over £125,000) etc,  as well as any possible house repairs. So be sure to take these into consideration.

We know that it can be hard understanding all of the different costs that come with buying a house. If you are confused or are a First Time Buyer taking your first steps into the mortgage world and want some help from an expert Mortgage Advisor in Derby, give us a call!

What Lenders in Derby Look For on Banks statements

Not all lenders ask to see bank statements as a matter of course, although all reserve the right to request them. Getting your bank statements mortgage ready. Mortgage customers can sometimes get nervous about their bank account when they come to provide statements ahead of applying for a mortgage. If you are considering applying for a mortgage sometime soon then invest some time in tidying up your account conduct now to give your future application the best possible chance of success.

Following the ‘Mortgage Market Review 2014’, where rules came into effect to ensure people take out a mortgage they can truly afford. Lenders began paying much more attention to customer’s outgoings. Back in 2014 when this was all brand new, lenders were more than keen in some of their deep analysis of outgoings.

You may recall some of the headlines at that time regarding “My mortgage provider wants me to tell them how much I pay for haircuts and eating out”. The availability of ‘statistics’ is greater these days and there is rich data available to lenders from the Office of National Statistics and other sources to estimate some of those outgoings.

Improve your chances with your mortgage application

Taking the first steps onto the property ladder as a first time buyer in Derby can be hard, so you need to know absolutely everything in order to improve your chances of being accepted straight away.

If you are applying for a mortgage and you are bouncing direct debits and incurring bank charges then any lender will not look favourably upon that, so if you fall into this category then you’ll need to work on getting things in order. Using an overdraft facility is usually ok, as long as you do not exceed your agreed limit. Even then, if it’s a one-off with a good explanation then it’s still possible that you will be accepted. Avoid bank charges, particularly for missed payments, bounced cheques etc.

Payday loans – If these appear on your bank statement, this will be a red flag to most major lenders as it implies you are not able to meet and manage your monthly budget and requirements. So aim to avoid these and balance your finances so you can demonstrate good solid financial management.

What lenders look for on your bank statements: red flags

Gambling payments on your bank statement? Gambling is something that viewed poorly by lenders. If it is very small amounts then it’s often ok. If you gamble more regularly than that it would be wise to address this before applying. It’s a good idea to get “mortgage-ready” before you find a property you are would like to purchase.  If you have any concerns about whether lenders may have an issue with anything on your bank statements we would recommend you contact us sooner rather than later to avoid the disappointment of having an application declined.

Contractor Mortgages and the Gig Economy in Derby

Contractor Mortgage Advice in Derby

The ‘gig economy’ has an ever-growing portion of the general public working within it. These people are working over short term contracts because of this it means they are not entitled to some benefits which employee’s might be such as sickness or holidays. The professions within this economy are varied ranging from both skilled and unskilled workers, with the highest percentage being in professional services.

Because of the basis of the gig economy, it’s marginally harder for these workers to get a mortgage as lenders perceive these people to be self-employed. If you’re working within this type of economy to give yourself an increased chance of gaining a mortgage is to build up a track record of self-employment. You’ll most likely need one year’s history to qualify for a mortgage unless your contract has gone on for a longer duration.

If a lender decides to view you as a sole trader you will then need to produce evidence of your net profit – this is the amount you have earned minus your expenses in which you may need an Accountant to help you with this.

If you have set up your own Limited Company then most Lenders will focus on the salary that you have paid yourself plus any dividends that are declared.

Flexibility

In contemporary times, Lenders are now becoming more flexible in the way they assess contract workers now that there are so apparent within the economy. If you have been operating this way for a while and are currently in a contract then they will consider your ‘day rate’ as a way to assess your income, depending on the industry.

The way in which Lenders will assess day rates will typically be that they will times the given rate by 5 then 46 weeks. They won’t include a full 52 weeks as Contract usually don’t work the full year and neither do they get paid holidays. This method works really well for IT contractors who tend to have a selection of contracts which they want to take.

Additionally, it is a good idea for any gig workers and self employed in Derby applicants to get organised ahead of time before they start the mortgage application process. Tax can be a bother, but lenders like to see a healthy level of sustainable earnings.

It’s also possible to get a mortgage on zero-hour contracts. Again, lenders will want 12 months’ earnings before you can apply and will consider taking an average of your earnings over a full year.

Contractor Mortgage Broker in Derby

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We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk

The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
Should you have cause to complain and you are not satisfied with our response to your complaint, you may be able to refer it
to the Financial Ombudsman Service, which can be contacted as follows

The Financial Ombudsman Service, Exchange Tower, London, E14 9SR
www.financial-ombudsman.org.uk

© 2022 Derbymoneyman

Derbymoneyman – 19 St Christophers Way, Pride Park, Derby, DE24 8JY.

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