Case Study: Securing a mortgage for newly self-employed client
Mr & Mrs F had started their search for a property without firstly taking financial advice from anyone, unaware that their current employment status would have a greater impact on their ability to obtain a mortgage than they had realised.
Mrs F: Teacher employed for 5 years
As a teacher, Mrs F had been employed in her current role for the past 5 years, with a stable basic income that was easily evidenced through monthly payslips.
Mr F: Newly self-employed IT consultant
Having worked for the past 10 years for a multi-national company in the IT industry, he had gained a vast level of knowledge and experience that he felt could now be best utilised by changing his employment status from employed to a self-employed contractor.
His plan was to secure 6 month contracts with various companies, charging a day rate that would result in not only an increase in his income, compared to that which he had received under his previous employed status, but it would also enable him to take back more control of his work/life balance.
Lender wouldn’t grant mortgage with only 3 years accounts
With a solid history of employment behind him and prospects looking good within the industry, Mr F saw no reason why his bank would not look favourably upon their situation. Unfortunately this was not the case.
Instead of looking at the contract that Mr F had secured previously and the new 6 month contract that he had lined up to start in the next 3 months, the bank requested that he provide them with 3 years proof of audited accounts or Tax Calculations and Tax Year Overviews, on which figures they would base the lending.
Of course Mr F was unable to provide such figures as he had only changed to being a contractor 3 months prior to applying for the mortgage. On that basis, the amount that the bank was willing to lend was considerably less than was needed to allow the couple to purchase a mortgage.
Using a mortgage adviser to access the whole of the mortgage market
It was at this point that Mr & Mrs F decided to discuss their predicament with the Estate Agent that was dealing with the property sale and were put in contact with Curchods Mortgage Services.
After an initial conversation with a Curchods Mortgage Adviser, whereby Mr & Mrs F were able to explain their situation and the consultant was able to gain a greater understanding of Mr F’s previous employment, experience in the industry and details of the new contract that he had recently secured, the task was to find and secure a lender that would look favourably on the couples situation.
By being able to access the whole of the mortgage market the consultant spoke with both ‘high street’ and specialist ‘self-employed’ mortgage lenders.
After a consultation with the potential lender Curchods Mortgage Services secured an agreement with the lender that based on the high number of years’ experience working in the IT industry, that Mr F could indeed meet the mortgage repayments with the lending criteria. This was based on a multiple of his daily rate shown on his current contract paired with Mrs F’s employed income.
The result was a successful mortgage application and offer and a swift exchange of contracts with a moving in date confirmed!
How can Curchods Mortgage Services help me get a mortgage?
Whilst securing lending for self-employed clients can in some instances prove slightly more challenging with some lenders, this most certainly is not the case with all.
As the case study above shows, by simply speaking to an expert mortgage adviser who is able to research the whole of the mortgage market and thereby approach a number of lenders on your behalf, it is indeed the best way to secure the most competitive mortgage products available to you, no matter what your employment status.
The self-employed should not feel that they are being disadvantaged by their entrepreneurial drive and ambitions to go it alone, but if you are experiencing any issues securing a mortgage application or would like some advice, please feel free to contact Curchods Mortgage Services team and they will be more than happy to help.
You don’t have to buy or sell through Curchods to use Curchods Mortgage Services to arrange your mortgage. 50% of the mortgages we arrange are for people not buying or selling through Curchods.
Call 01483 479070 or visit www.curchods.com/mortgage-services