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Contractor’s can beat off the challenges presented by the property market

Monday 14th July 2014

Daily headlines are suggestive of an imminent interest rate rise to ease the accelerating housing market, and to also calm down the fear that the UK economy “could be more vulnerable to income and interest rate shocks” as more households increase their level of debt.

Speculation is that base rates could increase as much as 3% by 2018 but uncertainties remain as to exactly how much and when. Some speculators are proposing that an increase could be as soon as Q4 of this year.

The Mortgage challenge…

Challenges to borrowers come in various forms as the IMF has been urging the Bank of England to set a limit to the amount of high loan-to-income lending that banks can offer. More stringent checks have been placed on mortgage applications since the introduction of the Mortgage Market Review (MMR) placing extra pressure on those applicants with an interest only mortgage or a non-standard income. The good news is that Contractors who use the trusted specialists at ContractorFinancials are avoiding the lengthy delays with the new procedures that are being experienced by those applicants going direct to their high street bank or building society. In contrast to the 2-3 hour meetings that have become standard in branch, after an initial fifteen to twenty minute discussion with an Adviser at ContractorFinancials, your application will begin to be processed.

Contractors may face the extra challenges imposed on a mortgage application due to the nature of your non-standard income, typically when approaching a high street Lender direct as a fluctuating income will not be taken in to consideration and they will often demand to see 2-3 years of accounts. Fortunately, the IFA’s at ContractorFinancials are able to use a multiple of your annualised contract rate to assess your affordability, this will enable the doors to be kept wide open for you to take advantage of a range of mortgages.

A mortgage to suit your needs…

For some, a moderate increase in interest rates could spell an affordability disaster. Contractors could use an impending rate rise as an opportunity to re-evaluate their current mortgage with a fixed rate or to remortgage to safeguard against any sharp movement in rates.

Those who are on an interest only mortgage expiring before the end of 2020 are likely to of been contacted by their Lender to establish how they intend to repay their mortgage at the end of its term. Remortgaging now to a repayment mortgage could save you the hassle of finding a way to clear the lump sum on your interest only mortgage but it is important to plan ahead to ensure you can secure a competitive rate.

Remortgaging has become increasingly popular as rates are so low today compared to what they were ten years ago. In 2004, the specialists at ContractorFinancials were offering Contractors a 10 year fixed rate mortgage with the Halifax at 5.79%, this would have been fixed to 31st October 2014. Comparatively fixed rates are so low at the moment and unlikely to decrease any further, so today, Contractor friendly Halifax can offer a 2 year fixed mortgage with a rate as low as 1.99%. That is a massive 3.8% differential between the two rates from 2004 to 2014, which would represent a significant saving in your monthly repayments.

The Remortgage specialists at ContractorFinanicials can talk through the various remortgage options available to Contractors, please call the team on: 0208 090 0702 or email 123contracting@contractorfinancials.com .

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