A contractor mortgages is a mortgage for anyone who works as a contractor. They are not much different from ordinary mortgage products. How a contractor’s mortgage application is evaluated is not very different from how a full-time borrower is hired. But how income is calculated and proven distinguishes mortgage applications for contractors.
On the other hand, with the tightening of lenders’ restrictions, the difficulties for professional contractors to obtain mortgages have become more widespread. But given that some lenders may be more flexible than contractors, using a broker is highly recommended. A broker can ensure that you are paired with the lender who has the best opportunity to offer the best rates. It is also important to adapt the contractors’ needs and conditions to the products on the market. Therefore, there is a need for maximum compliance between them.
This article will mention 10 cases that help professional contractors get the mortgage they need easier and less time.
Improve credit score
Credit scores are calculated based on debt history, such as credit card accounts, and lenders often seek scores of 650 or higher. Some companies offer credit scores for free. In this case, applicants can correct the negative points in their credit reports.
Reduce the debt-to-income ratio
The debt to income ratio (DTI) is an important factor for lenders deciding whether to approve a mortgage. The resulting number (one per cent) is the DTI ratio. The lower the ratio (between 35% and 43% or less), the better the applicant will get a mortgage at the right rates and conditions and be eligible for mortgages from some lenders and banks.
Receive mortgage approval in advance
Pre-approval of the mortgage will increase the applicants’ chances to get the house they want while saving time. This requires referring to the lender and reviewing the credit score, calculating the DTI and analysing the applicant’s financial situation to get the maximum amount of money the lender is willing to lend to the applicant to buy a house.
Save for larger deposits.
The higher the deposit, the more likely the mortgage will be approved. Because in this case, the lender risk will be reduced, and better rates and conditions will be considered for the applicants. Therefore, professional contractors must do their best and save more.
Do not change jobs
Having a proven track record is a prerequisite for getting a professional contractor mortgage, and many lenders need at least six months in the same workplace for approval. Not changing the jobs reduces the borrower’s risk of not repaying the mortgage.
Preparation of financial documents
As part of the mortgage eligibility process, most lenders want to review the last two years of contractors’ income. Therefore, preparing these documents will probably take time, and the contractors must plan to collect these documents.
Use a specialist contractor mortgage broker.
The contractor mortgage underwriting process is complex. The reason for this is that the situation of no two contractors is the same, and as a result, there are different solutions. But a contractor mortgage broker can guide contractors to a contractor-friendly lender.
Also, brokers know which lender is best for applying for a mortgage. A contractor mortgage broker can help contractors understand rates, terms, features and insurance and is a financial advisor in arranging mortgages for contractors.
An expert contractor mortgage broker can advise professional contractors on what to do. Expert brokers deal with and are familiar with contractors’ friendly lenders. Because of this, their services can save a lot of time and money for applicants.
For contractors, getting a good mortgage can be a daunting task. This has been a difficult and time-consuming process for a long time. The knowledge and experience of AWS Mortgage specialist advisors will help you get a mortgage based on daily rates, personal assessments or limited company accounts. AWS Mortgage advisors have much experience in this field and have helped a large number of contractors to secure a contractor mortgage.
So if you have ever had a problem finding your mortgage. You can talk to AWS Mortgage advisors to help you find a contract mortgage that fits your needs and circumstances. AWS Mortgage advisors are eager to help contractors, and they can make the choice that suits them.