6 November 2019

Flexibility is key for contractors

Britain’s freelancer and contracting industry is booming like never before. A study, commissioned by the Professional Contractors Group in June, found that there are now 1.4 million freelancers alone in the UK – that’s a 14% growth over the past 10 years. 

Whilst being a contractor can offer flexibility and independence, it can however, also mean uncertainty, especially when buying a home. The nature of the work can mean that your contractor client’s income jumps around, making it an unattractive prospect for some mortgage lenders to lend to them. So finding a flexible mortgage lender is key.

At Principality, we understand the importance of being flexible. That’s why we assess each and every case on its own merits and provide you with direct access to our underwriters and an intermediary support team. So you can talk through your contractor mortgage cases with an expert for guidance, before they’re submitted. And once you’ve sent us your case, you can be assured that a dedicated underwriter will always be on hand when you need them. 

Who’s classed as a contractor?

The definition of a contractor can vary from one lender to another. And a contractor shouldn’t be confused with a Pay as You Earn (PAYE) worker or sole trader. Although a contractor is independent of the client they work for and their payroll, they tend to only work for one client and are usually hired on fixed term contracts. Often they’re specialists in their chosen field so can charge premium rates for their services, which commonly are IT, accountancy, banking and engineering, amongst others. 

Getting to know your contractors

• First time contractors 
We don’t exclude first time contractors as we won’t ask for a history of contracts. 

• Labour only sub-contractors
We consider applications where applicants have been contracted to no more than 2 employers in the last 12 months, though we do ask for 1 year’s accounts. 

• Day rate contractors 
We look for at least 2 years’ experience in the industry, and we only ask for a copy of the latest contract which needs to evidence wages over £50,000.It’s easy to calculate your client’s income too – just use the daily rate x 5 days x 48 weeks.

We accept day rate contracts, temporary and fixed term contracts, as well as labour only sub-contractors as suitable sources of income to determine affordability. 

It’s about more than the mortgage product

We realise that lending isn’t just about the mortgage product but also about which mortgage lender best supports your contractors and you through flexible lending criteria, excellent service and expert people who go that extra mile. And that’s reflected in Principality being a Which? Recommended Provider for Mortgages 2018 and 2019. 

To find out more about our products, please visit www.principality.co.uk/intermediaries
Or to contact our dedicated Intermediary team please call 0330 333 4021*, email intermediary@principality.co.uk or look us up on LinkedIn www.linkedin.com/showcase/principality-intermedaries

Loans subject to affordability and mortgage lending criteria.

* To help us maintain our service and security standards telephone calls may be monitored or recorded.

Published: 06/11/2019