What does the Base Rate increase mean for your mortgage?

Today, the Bank of England has increased the base rate from 0.5% to 0.75%. This is only the second time in a decade they have increased the rates and it is the highest level since March 2009.

What does an interest rate rise mean for your mortgage?

  • More than 3.5 million residential mortgages are on a variable or tracker rate.
  • The average standard variable rate mortgage is 4.72%.
  • On a £150,000 variable mortgage, a rise to 0.75% is likely to increase the annual cost by £224.

Sources: BBC, UK Finance, Moneyfacts, Nationwide Building Society, August 2018

Should I switch my mortgage?

There are a number of factors that affect whether you should switch your mortgage.

If you are currently on a standard variable rate or tracker rate, you should consider looking to switch to a fixed-rate mortgage. A fixed-rate mortgage means you know your exact monthly mortgage payment without the worry of whether the interest rate might increase.

If you are currently on a fixed-rate mortgage, we can review this mortgage up to 3 months prior to expiry. It can be with your current mortgage lender or with a new lender – depending on what best suits your personal needs.

Are you paying too much on your mortgage every month? Speak to our expert advisers.

What would you do with the money you save? You could pay your mortgage off quicker, a home improvement, or book a last-minute holiday.

With expert knowledge, we often have access to exclusive deals and lenders that are not available on the high street. We scour our panel whilst considering your personal circumstances and presenting the most suitable solution for you. Super Contractors has access to a comprehensive lender panel and it is our duty to ensure that we provide a competitive deal for you.

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Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products. The Financial Conduct Authority does not regulate some forms of Buy to Let.

Skipton announce new contractor mortgage policy

Skipton Building Society today have launched their new contractor mortgage policy.

Their previous policy saw self-employed contractors assessed in the same was as any other self-employed customers using either an average of the last 2 years net profits

With effect from 25th June 2018 they will assess self-employed contractors using their daily contract rate multiplied by 5 (days) multiplied by 48 (weeks).

Potential customers must meet the following criteria:

  • Minimum two years’ experience in chosen profession.
  • Minimum of 1 year’s contract history.
  • Minimum income (using daily rate) of £50,000.

This adds to the growing list of contractor mortgage lenders that Super Contractors has access to.

Gordon Hunter, Managing Director of Super Contractors, says:
“We at Super Contractors are delighted to now have access to Skipton’s new contractor mortgage scheme. We are excited to add them to our panel of contractor friendly lenders. This can only bring good things for our contractor clients.”

For more information about mortgages for contractors, speak to one of our expert mortgage advisers – freephone 0800 211 8700 or fill in our online enquiry form

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Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of fee will depend upon your circumstances and be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

7 Contractor Mortgage Myths – BUSTED

Everyone seems to be an expert on the contractor mortgage market. Jump on the forums and you’ll find people commenting on everything from “self-certification” to “sub-prime” mortgages. This information can be confusing and may not be accurate. We’ve heard too many contractors retell their colleague’s mortgage horror stories.

Don’t always believe what you read on the internet, speak to a specialist with experience in the contractor mortgage market. Read on for our top 7 contractor mortgage myths – BUSTED.

  1. Contractors need to have at least 3 years of accounts to get a mortgage

    Wrong. Contractors can get a mortgage based on their day rate. You don’t necessary need those elusive 3 years accounts that you’ve heard. Working with contractor friendly lenders means we may be able to arrange a mortgage based on your current contract, rather than the number of years you have been working as contractor.

  2. Contractors must have been contracting for at least six months

    False. Contractor friendly lenders can help if you’ve just taken the jump from a permanent position and have only been contracting for as little as one day.

  3. Contractors are labelled as high risk by the banks when it comes to getting a mortgage

    Untrue. Mortgage lenders who understand contractors and freelancers will not necessary see you as any more high risk than a full time employee. You may be able to borrow around 5 times your day rate. If you have a poor credit rating and no deposit, then absolutely – you could be a liability to them. But that would be the exact same for a permie.

  4. Contractors need a mortgage deposit of at least 50%

    Nonsense. At the moment you would need at least 5% of a property’s value to get a mortgage. Obviously having a larger deposit will make you less risky for mortgage lenders and as result they’ll generally offer you more competitive mortgage deals with lower interest rates – but it’s definitely not mandatory to have at least 50% deposit.

    Looking to get a mortgage as a contractor? Speak to expert advisers at Super Contractors

  5. Lenders will always charge contractors a higher mortgage rate than permies

    Rubbish. Contractors will receive generally the same interest rates as permanent staff. With higher daily rates compared to employed colleagues, you may even receive lower mortgage rates, as you may be in a better position to put more savings aside providing a larger deposit.

  6. Contractor must have self-certification to get a mortgage

    No, no, no! Self-certification mortgages are something of the past. They were originally aimed at self-employed and contractors who had trouble proving their income to secure mortgage borrowing with their bank. The FCA put an end to these type of mortgages back in 20091. Now, with many contractor friendly lenders and specialists available who understand your financial status – there is no need for these “self-certification” mortgages.

  7. Contractors need to jump through more referencing loops for a mortgage

    Garbage. You do not necessarily need references to get a mortgage. As long as you have the 5 essential documents you need to get a contractor mortgage and you speak to a contractor specialist who knows the criteria of contractor friendly lenders, your mortgage can be processed at a significant speed.

At Super Contractors, we specialise in contractor mortgages. My team understand the financial status of contractors and work alongside head office underwriters who are contractor friendly to get our clients the mortgage they need.

For more information about getting a mortgage as a contractor – speak to our expert mortgage advisers on 0800 211 8700 or fill out our online enquiry form

References:
1. Last major seller of self-certification mortgages pulls out, Nov 2009 http://www.theguardian.com/money/2009/nov/04/platform-ends-self-cert-loans

Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

5 Documents For Your Contractor Mortgage

You’ve made the decision to leave the relative safety of a permanent position to become a contractor, but are wondering how it will affect your mortgage. It all comes down to your financial status as a contractor.

It’s not personal. The mortgage application and approval processes for larger lenders has, in the main, been created for regular employees not contractors.

Many mortgage lenders are happy to work with specialist brokers who understand the financial status of their contractor clients. For a contractor, working with contractor specialist provides two key benefits; potentially access to more mortgage products and a dedicated adviser who deals directly with head office which can help to speed the up the mortgage process.

Here is the low down on the 5 essential documents you will probably need to provide to secure a contractor mortgage based on how long you have been contracting.

Long term contractor

  1. Suitable ID
  2. Copy of current and previous contract
  3. Copy of CV
  4. Last three months bank statements
  5. If accounts are ready then two years books showing three years figures (not essential but advantageous)

New to contracting and need high Loan to Value (LTV) i.e. 90%

  1. Suitable ID
  2. Copy of contract
  3. Copy of last three years P60s
  4. Last six months bank statements
  5. Copy of CV

New to contracting

At least one day trading as contractor:

  1. Suitable ID
  2. Copy of current contract
  3. Last three months personal bank statements
  4. Copy of CV

At Super Contractors, we specialise in contractor mortgages. Our advisers understand contractors financial status and work with head office underwriters who are contractor friendly. This includes presenting the limited company contractor remuneration model of low salary high dividend to the lender.

For more information about getting a mortgage as a contractor, call 0800 211 8700 or fill out our online enquiry form.

Your property may be repossessed if you do not keep up repayments on your mortgage

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

London Help to Buy – What You Need to Know

The London Help to Buy scheme is an equity loan provided by the Government. The Government can lend you up to 40% of the cost of your new build home. You will need a minimum of 5% deposit and a 55% mortgage to make up the rest.

For this scheme you must have a mortgage, which will be a first charge, as the equity loan can only be a second charge. The equity loan is for a maximum of 25 years or before if the property is sold or the mortgage is redeemed, whichever term is the shorter of the two.

You will not be charged any interest on the 40% loan for the first five years of owning your home. However, a management fee of £1 a month will be applicable from the date of purchase. From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI (Retail Price Index) inflation plus 1%.

Example: 40% Equity Loan for a home purchased for £400,000

If the home in the example above sold for £500,000 – you would get £300,000 (60% from your mortgage and the cash deposit) and you would pay back £200,000 on the loan. You would need to pay off your mortgage with your share of the money.

Who is eligible?

  • London Help to Buy is available for first time buyers and homeowners looking to move.
  • The home you want to buy must be a new build, advertised as Help to Buy by a Help to Buy registered developer, with a maximum price of £600,000.
  • You must have a minimum deposit of 5% of the full purchase price.
  • The maximum income multiple for a Help to Buy purchase is 4.5x your household joint or single income. The mortgage taken must be on a repayment basis and can’t be interest-free.
  • You can’t part exchange your current home to buy a new home under Help to Buy.
  • You must not own any other property at the time you buy your new home with a Help to Buy equity loan.
  • You will not be able to sublet a home purchased under London Help to Buy.

Terms & Conditions apply. For further information see visit Help to Buy Government website

For more information on the London Help to Buy scheme, speak to our expert mortgage advisers. Freephone 0800 211 8700 or fill in our online enquiry form.

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Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

Interest Rates: The Impending Increase

No Jokers here, what would an increase in interest rates mean for your mortgage?

The Bank of England has announced that it is keeping interest rates at 0.5% but has also hinted at increasing the base rate soon [1].

They did say rates would need to rise “earlier” and by a “somewhat greater extend” than they thought at their last review in November.

The BBC states that around 8.1 million UK households have a mortgage, and of those almost half are on either a standard variable rate or a tracker rate [2].

Those on a standard variable rate or a tracker rate would be most affected by a rate increase, as interest rates on those types of mortgages would likely match any increase by the Bank of England.

Economists think the next rate rise could come as soon as this May. [3]

Swoop in & Secure a Low Rate

If you haven’t reviewed your mortgage recently and not taken advantage of the record-low fixed rates, you may want to consider it now.” says Super Contractors’ Managing Director Gordon Hunter. “Securing a fixed rate deal could be your answer to avoid the impending increase. It all depends on your circumstances and whether a switch is right for you at this moment.”

Super Contractors can search for contractor remortgage deals on your behalf with major high street lenders who will consider (subject to terms) a day rate contractor.

Speak to our expert mortgage advisers about switching mortgage

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Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

[1] This is Money, Feb 2018, http://www.thisismoney.co.uk/money/news/article-5363197/More-quarter-indebted-Britons-fear-rate-rise.html
[2] BBC, Feb 2018, http://www.bbc.co.uk/news/business-42986729
[3] Money Marketing, Feb 2018, https://www.moneymarketing.co.uk/bank-england-holds-rates-hints-increase-soon/

4 Contractor Financial Jobs You Shouldn’t Put Off in 2018

With 2018 well and truly here, getting in shape is one of the top new year’s resolutions. But you shouldn’t just focus on physically and mentally getting in shape – let’s look at financially as well.

Here are our top 4 contractor financial jobs you shouldn’t put off in 2018.

  1. Self-Assessment Tax Return

The self-assessment tax deadline is looming. You only have until the 31st January to fill in the online self-assessment tax return. Contractors should get in touch with their specialist accountants if they are struggling to fill out the tax return form.

Please note Super Contractors does not offer advice on taxation matters. You should contact your accountant or other suitably qualified person to confirm whether this product is appropriate for your circumstances.

  1. Remortgaging

In November last year, the Bank of England increased the base rate from 0.25% to 0.5%*. The first increase to the base rate in 10 years.

With this increase, mortgage lenders have started increasing many of the lower rates that many contractor borrowers have been enjoying. By reviewing your mortgage, you could secure your mortgage onto a new competitive fixed rate while they still exist (2, 5 or even some 10-year fixed rates are available).

Super Contractors can search for contractor remortgage deals on your behalf with major high street lenders who will consider (subject to terms) a Day Rate contractor.

Speak to one of our expert contractor mortgage advisers about reviewing your mortgage.

*BBC, November 2017 http://www.bbc.co.uk/news/business-41846330

  1. Life Insurance

A new year gives you the time to look back at changes in your life. You may have got married, had a child, a new home or even be earning a higher day rate than you were previously. With changes in your life, you should update your life insurance to reflect these changes.

Updating your policies to include things like critical illness cover, which could pay out if the worst were to happen and you are diagnosed with cancer, have a stroke or even have a heart attack.

Other policies include income protection, which comes to the rescue in the event that you are forced to hang up your cape due to injury or illness. It matches your monthly outgoings until you return to paid work or retire.

As a contractor you need to ensure you have protection in place as unlike regular employees you’re not covered by regular workplace insurance policies.

Speak to our expert contractor protection advisers about updating your life insurance.

  1. Your Will power

If the worst was to happen, you’d want to have your estate and financial planning sorted out.

Without having a will in place, there could be a potential disaster in terms of distress caused to families, unnecessary legal fees and money lost to the taxman. Without the proper legal documentation your dependents future could be decided by the local authority.

You wouldn’t want to leave it too late.

Please note Super Contractors does not offer advice on wills. You should contact a suitably qualified person to confirm what is suitable for your circumstances.

Get yourself in good financial shape this year, speak to our expert mortgage and protection advisers at Super Contractors.

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Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

Remortgaging – Is Now the Time to Switch Mortgage?

Today (2nd November) the Bank of England voted to increase the base rate from 0.25% to 0.5%. Mortgage rates now look like they could be set to increase from the record-low mortgage rates that many contractor borrowers have been enjoying.

Over the past month some mortgage lenders have slowly started to increase their rates, including Barclays who have increased the cost of its two-year fixes by up to 0.2% [2]. Also, Halifax have increased by 0.2 percentage points [3].

About 4 million people have fixed rate mortgages [4]. Although, no one currently on a fixed rate mortgage will see any changes until their existing deal expires.

Swoop In & Secure a Low Rate.

If you haven’t reviewed your mortgage recently and not taken advantage of the record-low fixed rates, you may want to consider it now.” says Super Contractors Managing Director Gordon Hunter. “Securing a fixed rate deal could be your answer to avoid the impending increase. It all depends on your circumstances and whether a switch is right for you at this moment.”

Super Contractors can search for contractor remortgage deals on your behalf with major high street lenders who will consider (subject to terms) a Day Rate contractor.

For more information on switching your mortgage, speak to one of our expert contractor mortgage advisers.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

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Source:

  1. CNBC, September 2017 https://www.cnbc.com/2017/09/29/bank-of-englands-mark-carney-uk-on-track-for-rate-hike-in-relatively-near-term.html
  2. The Guardian, October 2017 https://www.theguardian.com/money/2017/oct/13/remortgage-now-cheap-fixed-rate-deal-interest-rate-rise
  3. Financial Times, October 2017 https://www.ftadviser.com/mortgages/2017/10/02/halifax-is-latest-lender-to-raise-mortgage-rates/
  4. BBC News, October 2017 bbc.co.uk/news/business-41523941

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Your property may be repossessed if you do not keep up repayments on your mortgage.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

Buy to Let Property through LTD Company – Pros V Cons

Setting up a new limited company.

Some lenders will accept new, existing, or a subsidiary limited companies. However, some lenders will insist on a new limited company being setup. This is so you can prove to mortgage lenders that you have set up a new company with the sole intention of that company being used to invest in property and nothing else.

Standard Industry Classifications (SICs)

Some lenders insist on the company to be setup with one of the following SIC codes.

  • 68100 – Buying and selling own real estate.
  • 68209 – Other letting and operating of owned or leased real estate.
  • 68320 – Management of real estate on a fee or contract basis.

There are other mortgage lenders that are more lenient and don’t require these codes.

The company applies for the mortgage and the income of the directors is then assessed. There’s not yet a lender who can do Ltd Company Buy to Lets and assess you as a contractor, and as such it’d be a case of using the Company Accounts.

Taking money out of the company

There are other questions and costs to consider when setting up a limited company, for example how is the money in the company passed to the individual? The money can be taken out of the company as a dividend, but from April 2016 only the first £5,000 of dividend income is tax free. Any dividends taken out above this amount this will either be charged at 7.5% for a basic rate taxpayer, 32.5% for a higher rate taxpayer, or 38.1% for an additional higher rate taxpayer. This tax is after the corporation tax at 20% has been paid. *

The money could be taken as a salary, but the company would have to operate PAYE and pay Employers National insurance contributions. In some cases, this can work out more expensive than paying dividends. *

*Information above from Loan.co.uk, June 2017

Interest rates

Interest rates charged on mortgages to companies have historically been higher than to individuals. Comparing rates charged between individuals and companies should be considered as well as the tax implications.

Due to the complexities in this area we recommend that Landlords seek proper professional advice before making the decision to move to a limited company structure. The information provided in this guide is of a general nature. It is not a substitute for specific advice on your own circumstances. We recommend obtaining specific professional advice from a tax and legal adviser before you take or refrain from any action.

For more information about buy to let mortgages, speak to our expert mortgage advisers on Freephone 0800 211 8700 or fill in our online enquiry form.

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Your property may be repossessed if you do not keep up repayments on your mortgage.

Lifetime Finance Group Limited does not offer advice on taxation matters. Please seek expert advice from a tax specialist.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.