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For a Contractor, finding a good mortgage can involve a little more research and consideration than for a standard employee. If you operate under an Umbrella Company we can help you explore the options and find a mortgage that works for you.
What is an umbrella mortgage?
There aren’t any specific umbrella mortgages, because Contractors are usually eligible for standard mortgage products on the market. The key is to find a lender that understands contracting and what it means to work for an Umbrella Company.
Not all high street lenders can offer good deals for Umbrella Contractors. It might help to find a specialist lender – which is why it can be a great help to have a Mortgage Broker like The Mortgage Co on your side.
Can I get a Mortgage with an Umbrella Company?
Working for an Umbrella Company shouldn’t make it any more difficult to get a mortgage deal, especially with a broker researching the options for you.
The most important factor is confirming your true income, as lenders will base the mortgage amount on your annual salary. If they do not recognise your full income they may offer you a smaller loan than you hoped for.
What are Limited Company or Umbrella Company Contractor Mortgage Options?
Many Contractors operate under their own Limited Company, or work for an Umbrella Company. In both cases, you may find mortgages challenging if you receive a low basic salary that gets topped up with bonuses or dividends. Some traditional Mortgage Lenders may not recognise these additional payments as part of your annual income.
The best solution is to find a broker or lender that understands contracting and small businesses and will be more flexible about how they assess your income.
A broker will identify the lenders that will cater for your specific situation and compare the lending criteria and interest rates to recommend a good value deal.
How do you prove income?
Proving your income is a crucial step in a mortgage application. What a lender will need to see can vary by lender, but you will usually need to supply payslips from your Umbrella Company, two or three years’ self-assessment records or certified business accounts.
Some Contractor-friendly lenders will take details of recent contracts to assess your income, and use your standard contract rates as the basis. Often this approach will allow you to borrow more.
Your income is an important part of how a mortgage provider decides how much to lend you. They want to be certain that you can comfortably afford the repayments on your mortgage.
Does IR35 affect Umbrella Companies?
Umbrella companies are a fairly new concept, and have grown popular in response to the IR35 tax rules brought in for private sector organisations in April 2021. HMRC brought in the rules to tackle ‘disguised employees’ – where Contractors perform roles that could be done in-house and pay less tax than an employee.
If you work through an Umbrella Company you can still be appointed for contract roles, but are inside the IR35 rules because you are paying tax and national insurance as an employee of the umbrella organisation.
How important are specialist Contractor Mortgage Advisers?
As a Contractor working for an Umbrella Company, you will find it much simpler and less stressful to let us secure a mortgage that suits you.
We have lots of experience in Umbrella Company mortgages. Our Mortgage Advisors know the lenders that welcome Contractors – some will even underwrite a mortgage specifically for your situation. We will compare all the criteria, rates and fees to recommend a deal, and help you in applying for a mortgage that works for you.
We help clients find good deals on all kinds of mortgage products, including remortgaging and Buy to Let mortgages. Hardisty Financial Ltd trading as Mortgage Co. is registered in England and Wales and authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE