You’ve probably encountered countless people cautioning, “You’ll struggle to secure a mortgage because you’re self-employed.” It’s natural to assume your options are limited. But that’s not the case—it’s all about choosing the right mortgage and presenting your earnings accurately, and that’s where we step in.
Understanding How Contractor Mortgages Work:
Contractor mortgages function akin to standard mortgages—borrow the needed amount to buy a property, make monthly payments with interest, and eventually pay back the mortgage within the chosen term.
However, it’s far more intricate than it sounds! Numerous variables come into play, including:
Diverse interest rates Various charges Specialised mortgages for specific situations Borrowing across different periods Varied repayment structures Lenders’ individual affordability assessments We’re here to guide you through this complexity.
Available Mortgage Types for Contractors:
A multitude of financial products cater to your needs, including:
Repayment Mortgages: Pay back borrowed capital and interest monthly, owning the home outright at the contract’s end (usually 20-30 years). Buy-to-Let Mortgages: Suitable for renting out properties rather than living in them. Interest-Only Mortgages: Pay only the interest monthly, needing to repay the capital at the contract’s end, now deemed high-risk and more challenging to obtain. First-Time Buyer Mortgages: Designed for first-time buyers, with potential government incentives. Flexible Mortgages: Offer flexibility in repayments—pay more or less as per your financial situation. 95% Mortgages: Suitable for those with a small deposit (five percent). Offset Mortgages: Link your mortgage and savings, reducing the interest you pay. Cashback Mortgages: Offer cashback on agreeing to the deal, but some deals may not be as appealing. Capped Rate Mortgages: Variable rates with a cap on the maximum interest increase, providing security. Discounted Rate Mortgages: A reduction on the lender’s standard product (SVR mortgage), though subject to fluctuating rates. Tracker Mortgages: Rates move in line with a nominated interest rate (e.g., Bank of England base rate). Variable Rate Mortgages: Lender’s basic mortgage with fluctuating rates—often not recommended. Fixed-Rate Mortgages: Popular for stability, offering a set mortgage rate for a period. We’ll navigate these options to find the right mortgage for your unique situation. Call us today for a free, no-obligation discussion.
Give us a call for a tailored quote to suit your contractor position and circumstances. Get in touch or call us to speak with one of our expert mortgage brokers on 02081437777.
Let Us Help You Pick the Right Mortgage!
Types of Mortgage
Choosing the right mortgage is one of the most crucial decisions you will make when buying a property. Your choice will shape your financial future, so it’s essential to find a mortgage tailored to your specific needs, whether you’re planning to live in your new home or rent it out.
At Mortgage Knight, we understand that no two situations are alike, especially if you are self-employed or have unique financial circumstances. The key isn’t just finding a mortgage, but finding the right mortgage—and that’s exactly what we help you do.
With expert guidance and personalised advice, we ensure you secure a mortgage that fits your life, your plans, and your budget.
What You Need to Know About Contractor Mortgages
Understanding contractor mortgages might seem complex, but it’s straightforward once you break it down. While they operate like standard mortgages; where you borrow funds, make monthly payments, and repay over time; the details can get tricky. Interest rates, fees, and specialised mortgage options vary, and lenders assess affordability differently.
Different Types of Mortgages
As a contractor, you have access to a variety of mortgage options designed to suit different needs and circumstances. Understanding the different types can help you choose the best fit for your situation.
Whether you’re buying your first home, investing in property, or seeking flexibility in payments, there’s likely a mortgage type that aligns with your financial goals. At Mortgage Knight, we’ll guide you through these choices to find the perfect mortgage for you.
Repayment Mortgages
You repay both the capital and interest every month, ensuring that you own your home outright by the end of the term. This type of mortgage typically spans 20-30 years. It offers predictable monthly payments and clear long-term ownership.
Buy-to-Let Mortgages
Designed for purchasing properties that you intend to rent out rather than live in. These mortgages often have different criteria and interest rates compared to standard residential mortgages. They can provide a steady rental income and potential for property value growth.
Interest-Only Mortgages:
You pay only the interest each month, with the capital repayment due at the end of the mortgage term. This option is considered high-risk and can be more challenging to secure. It’s important to have a clear plan for repaying the capital at the end of the term.
First-Time Buyer Mortgages
Tailored for those buying their first property, these mortgages often come with special benefits and potential government incentives. They can make the home-buying process more accessible and affordable. Ideal for those new to the property market.
Flexible Mortgages
Allow you to adjust your monthly payments according to your financial situation. You can pay more when you can afford it or reduce payments if necessary. This flexibility can help you manage your finances more effectively.
95% Mortgages
Suitable for buyers with a small deposit, as low as 5% of the property’s value. These mortgages make homeownership more accessible for those with limited savings. They often come with higher interest rates to reflect the increased risk.
Offset Mortgages
Link your mortgage with your savings account, reducing the amount of interest you pay by offsetting the savings against the mortgage balance. This can lead to significant savings over the term of the mortgage. It offers a way to make your savings work harder for you.
Cashback Mortgages
Provide a lump sum of cash upon agreeing to the mortgage deal. This can be useful for covering additional costs or improving your new home. However, some cashback deals may have less attractive terms overall.
Capped Rate Mortgages
Feature variable interest rates with a cap on how high the rate can go. This offers protection from sharp rate increases while still benefiting from potentially lower rates. It provides a balance between stability and flexibility.
Discounted Rate Mortgages
Offer a discount on the lender’s standard variable rate, which can result in lower initial payments. The discount is typically temporary, and rates may fluctuate after the initial period. Ideal for those looking to save on interest in the short term.
Tracker Mortgages
The interest rate tracks a specific benchmark, like the Bank of England base rate. Payments will rise or fall with changes in the benchmark rate. This can be advantageous when rates are low but may lead to higher payments if rates increase.
Variable Rate Mortgages
Feature interest rates that can change at the lender’s discretion. These mortgages often have fewer initial conditions but can lead to unpredictable payment amounts. They might not offer the long-term stability that some borrowers prefer.
Fixed-Rate Mortgages
Offer a stable interest rate for a set period, such as 2, 5, or 10 years. This guarantees consistent monthly payments and helps with budgeting. Ideal for those who value predictability and plan to stay in their home long-term.
How Mortgage Knight Can Transform Your Mortgage Experience?
Finding the right mortgage can be overwhelming with so many options and variables. That’s where Mortgage Knight steps in—offering expert guidance to simplify the process and match you with the perfect mortgage.
Our dedicated team ensures you understand every detail, from interest rates to repayment options, so you can make informed decisions with confidence. Trust us to turn the complexities of mortgage shopping into a smooth and successful journey towards home ownership.
