Since breaking reports on the pandemic, contractors have been faced with countless challenges with many changing the way they work since IR35 (off-payroll rules) came into force. These changes also pose the question of what working through an umbrella company means for contractors’ mortgage plans.

First Time Buyers
The property market is primed for house hunters right now and first-time buyers can take advantage of the mortgage guarantee scheme designed to help buyers with lower deposits pursue their mortgage plans. Those eligible can access 95% mortgages with just 5% deposits up to a property value of £600,000. The scheme is currently available and running until the December 2022 to both first-time buyers and existing homeowners.

Remortgaging
Take out a new mortgage on a property you already own

Following an unprecedented year and work uncertainty for the independent sector, saving on monthly repayments will likely be very welcome news. Did you know you could potentially save £1000s by remortgaging your property? UK homeowners are currently wasting £4,500 a year on unfavourable Standard Variable Rates, as reported by the Evening Standard.

Today, the Bank of England Base Rate is at a historic low (0.10%) meaning now could be an ideal time to think about remortgaging to a better rate .

It is good practice to keep a regular eye out for more competitive mortgage rates, however, there are prime times you might want to consider reviewing your mortgage rate:

• Your current deal is due for renewal: your lender will automatically move you on to a Standard Variable Rate (SVR) at the end of your current deal which is likely going to be higher than the deal you were previously on. It is worth researching the market for a better rate 3 months before your rate gets swapped over.
• Your House Value has Increased: lockdown inspired many home renovation projects - mortgage comparison site money.co.uk, revealed that UK homeowners have spent £55billion perfecting their home during 2020. With house prices rising at a rapid rate, your house might be worth a lot more than it was when you set your current mortgage deal. This means you may now find yourself in a lower Loan to Value (LTV) band, so you could be eligible for much lower rates. Whilst exit fees are something you should consider before switching deals, the associated savings with your new mortgage rate could be worth accounting for the early exit fees. 
• You Want to Raise Additional Funds: Remortgage can give you access to additional funds for big purchases including:
  - refurbishing your home
  - car or other motor purchase
  - opportunity to consolidate debts and make them easier to manage
  - pay the deposit on a second home or buy-to-let property

Buy-to-Let
Buy-to-let (BTL) mortgages are designed for landlords who plan to let their property out to tenants. Although usually more expensive than regular mortgages, investing in a buy-to-let property can be the ideal way for a contractor to boost their income. According to the ONS, private rental prices rose by 1.2% in England, by 1.6% in Wales and by 1.1% in Scotland between April 2020–April 2021.So, if you’ve been thinking about becoming a contractor landlord, you are certainly not alone.

Extra Costs to Being a Contractor Landlord include:

• Letting agent fees
• Mortgage repayments
• Furnishing the property (if you so choose)
• Income tax
• Landlord insurance
• Smoke and carbon monoxide alarms
• Energy Performance Certificates
• Gas Safety Certificates

The reality is that most lenders have little understanding about the contracting market and fewer will have a grasp on contracting working through an umbrella company or switching between an umbrella employee and back to contracting. This means that their standardised procedures do not accommodate contractors. 

Our partner CMME specialises in providing mortgage advice for independent professionals, with access to some of the most competitive rates on the market. So however you choose to work, CMME will fight your corner and ensure the right mortgage deal is available to you.

Your property may be repossessed if you do not keep up repayments on your mortgage.