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Scottish Widows Offset Mortgage

Scottish Widows is a well-established and highly regarded mortgage lender, particularly noted for its flexible approach towards contractors, including those on day rates or hourly rates. Whether you’re an IT professional or working in a non-IT field, Scottish Widows offers mortgage products tailored to meet the unique needs of contractors and freelancers.

Scottish Widows Offset Mortgage

Offset Mortgages: Ideal for Contractors

One of the standout features of Scottish Widows is its offset mortgage products, which are especially beneficial for contractors and freelancers.

This mortgage type allows you to open a linked savings account, which can be used to reduce either your monthly mortgage payment or the outstanding mortgage balance. 

You have the flexibility to choose based on your financial circumstances, making it a highly advantageous option for those with fluctuating incomes.

Contractor-Friendly Policies

Scottish Widows demonstrates a progressive approach to assessing contractor mortgage applications. They welcome applications from those operating through their own limited company or a payroll umbrella. Their contractor-specific policies are designed to make the mortgage process smoother for this group of workers.

Scottish Widows' Approach to Day Rate Contractors

IT Contractors

Scottish Widows does not impose a minimum daily rate requirement for IT contractors, making their products accessible even to those earning as little as £100 per day. They are particularly supportive of IT professionals, reflecting the demand for flexible financial products in this sector.

Non-IT Contractors

For contractors in non-IT fields, the lender sets a minimum day rate of £312.50 to qualify under their contractor mortgage criteria.

First-Time Contractors

Scottish Widows is also open to considering contractors who are on their first contract, provided they have at least two years of experience in a similar role. This flexibility ensures that even new contractors have access to competitive mortgage deals.

Contract Duration

The lender requires contractors to have a minimum of four weeks remaining on their contract. They understand the nature of short-term contracts and do not demand an excessively long remaining term. If your contract has less than four weeks left, you may be asked to provide proof of an extension or a new contract.

Employment Gaps

While continuous work over the past 12 months is preferred, Scottish Widows is accommodating of brief employment gaps due to holidays or breaks between contracts. However, longer gaps may require exploring other contractor-friendly lenders.

Gross Contract Value Calculation

Scottish Widows calculates the gross contract value using the following method:
  • Day Rate Contractors: The daily rate is multiplied by five days per week, then by 48 weeks to account for a typical working year.
  • Hourly Rate Contractors: The hourly rate is multiplied by the stipulated or default 37.5 hours per week and then by 48 weeks.

 

This straightforward calculation provides an accurate representation of your earning potential, without requiring a detailed review of the previous year’s average income.

Example Calculations

  • Day Rate: £350/day × 5 days × 48 weeks = £84,000 gross contract value.
  • Hourly Rate: £42/hour × 37.5 hours × 48 weeks = £75,600 gross contract value.

Required Documentation for Mortgage Applications

To ensure a smooth and efficient application process with Scottish Widows, having the following documentation prepared is essential:

  1. Proof of Identification (e.g., Passport or DVLA licence).
  2. Proof of Address (e.g., Utility Bill, Council Tax Bill).
  3. Current Contract, including terms, conditions, and a signed and dated copy.
  4. Bank Statements for the past three months (personal and business accounts).
  5. Direct Debit Mandate, Offset Declaration, and Telephone Banking Form (as required by the lender).
  6. For property purchases, proof of deposit or a gifted deposit letter (templates available upon request).

 

Having these documents ready from the outset will help expedite the mortgage process and improve the chances of a swift, favourable outcome.

Why Choose Mortgage Knight?

At Mortgage Knight, we specialise in navigating the complexities of contractor mortgages. With our in-depth knowledge of Scottish Widows’ contractor-friendly policies, we provide personalised advice and guidance throughout the application process. Trust our expertise to ensure your mortgage application is presented professionally and efficiently, maximising your chances of approval.

Let us help you secure the right mortgage for your needs, so you can focus on what you do best.