High St. affordability calculations: antiquated and biased!

High St. affordability calculations: antiquated and biased!
Contractor Mortgages

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Last Updated on September 11th, 2018 07:55am.

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The High Street, as a rule, cannot grasp how contractors work. If you’re self-employed, you’re self-employed. Lenders place all independent professionals in the same hat and assess them on their tax return or accounts.

This is so not the best way of working out how much contractors can afford. That’s because most limited company contractors keep salary and dividend drawings low.

Showing off your best asset (clue: it’s hidden!)

Both tax returns and accounts are disproportionate compared to the income you’ve generated. What they won’t show is the retained profits within your business.

The vast majority of in-branch advisers will only assess you on the amount you’ve declared for tax purposes.

You may be earning more money than you’ve done in your life to that point. But because of the way bank staff pigeonhole self-employed people, you’ll get a rough deal on the High Street.

Underwriters, however, are aware of any contract-based underwriting policy the bank has. That’s if their employer has such a facility. Not all High Street banks are “contractor-friendly”.

It’s these underwriters, with whom we deal, that will make the difference. We know how to best demonstrate your affordability. They know how to assess you, based on that presentation.

It’s not about accounts or tax returns. It is about getting you the best mortgage the value of your contact can buy. That’s what contract-based underwriting does.

Author: John Yerou

John Yerou is the owner and founder of C&F Mortgages; a trading style & trade mark of the award winning Mortgage Quest Ltd. One of the most recognised names in providing mortgages for contractors and freelancers across the UK.

In 2004 John began his career in Financial Services as an independent mortgage adviser and broker. John has been instrumental in negotiating bespoke underwriting for contractors with high street lenders.

His presence in the industry as a go-to expert is growing by the day and he is regularly cited and writes in publications both locally and nationally.

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