Umbrella Companies & Contractor Mortgages
How easy are Contractor Mortgages to get for Umbrella Companies Contractors?
Are Contractor Mortgages easier to get via the Limited or Umbrella Companies route?
Getting Contractor Mortgages for Umbrella Companies contractors
Contractor Mortgages are easier for Umbrella Companies contractors
Umbrella Companies Contractor Mortgages options
Two Options
When starting freelancing the contractor has two main options, firstly to incorporate and work through a limited company or secondly to get the cover of a Contractor Umbrella Company over his or her head.
The contractor will look into which option is best for him or her and it usually involves what their role is at their client company and whether they are likely to fall under IR35 or not.
Also, some contractors are more temperamentally suited to one or the other as some don’t mind doing their own book keeping and VAT returns whereas others want to concentrate on what they do best and that is contracting and don’t want the hassle of running a Limited Company as well.
Another Factor
However, there is one other factor that they wouldn’t normally take into consideration and that is, if they are going to buy a house, or change houses, which route would make it easier for them to get a mortgage?
Contractor mortgages are a lot more difficult for a limited company contractor to get in order to buy a house as they don’t have an employer that the mortgage company can go to that they can ask for details of salary etc.
What usually happens is that they have to produce three years worth of accounts if they want to get a mortgage.
There are specialist firms who deal in Contractor Mortgages which can make it a little easier however, it us usually easier for an Umbrella Company contractor to get a mortgage.
Employees
Many of those contractors are treated as employees of the overall company and so the mortgage companies can get a reference etc. from the company itself.
Also, the Limited Company contractor can save usually £10,000 a year in tax from claiming for all sorts of things like expenses in travelling etc.
Although that is good for the contractor financially it is not good for him in trying to get a mortgage as the contractor usually pays him or herself as little as he or she can in order to take as much as possible in dividends or leave the money in the company.
That means when the offer comes in from the mortgage company the amount offered will be a lot less than for a contractor in a brolly who declares more of his or her income.
Therefore, when a contractor is taking the initial decision as to what type of contractor he or she wants to be they should also take into account whether they are likely to buy a house soon and how important that will be to them.
For more information on umbrella company, contractor mortgages and umbrella companies. Please visit: http://www.itcontractor.com/
Processing your request, Please wait....
