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NEW Contractor offset mortgage

Monday 15th September 2014

We are delighted to announce that after 6 months of negotiation by ContractorFinancials a new Contractor friendly Lender is coming to the market with an exciting range of offset mortgage products tailored to the needs of Contractors and Freelancers. They have negotiated contract based underwriting with Leeds Building Society and have access to products that are available to only one other broker in the country.

Key features of the exclusive Leeds Offset Contractor Mortgages:

  • 5 year fixed from 3.89% on a 75% loan to value (LTV)
  • 3 year fixed rate from 3.49% on 80% LTV
  • 2 year fixed rate from 3.19% on an 85% LTV.
  • £199 booking fee payable to Leeds on application
  • £1300 or £800 completion fee which can be added to the loan amount
  • Available on loans of up to £500,000
  • And ContractorFinancials charge you no broker fee saving £695 compared with the other broker!

Read on to find out more about these exclusive Contractor Mortgages…

A new Contractor Friendly Lender

ContractorFinancials have already secured annualised contract rate underwriting with well-known high street Lenders including Halifax, Clydesdale and Nationwide and have continued to work with other Lenders to broaden their criteria to bring new banks and building societies in to the Contractor space.

They are exceptionally proud to announce that after lengthy negotiations Leeds Building Society are the latest Lender to open up their product range to include contract based underwriting. This marks a significant step in their ongoing work with the lending community to encourage key providers to see the benefits of supporting the Contractor community. Leeds is a forward thinking Lender with an excellent reputation and are very excited to bring these exclusive products to market.

To calculate the annualised contract rate that Leeds will use simply work out:

Your day rate x 5 days per week x 46 weeks per year = your annualised contract rate x up to 5 times depending on your circumstances

Flexibility is key for Contractors and as such, there is a growing demand for offset mortgages. Leeds have answered this call with their extensive range of Offset Contractor Mortgages which cater to homeowners with a wide range of loan requirements. The range of two, three and five year fixed rate products allow Contractors to ride out any interest rate increases over the next few years, as the Bank of England is predicted to revise the base rate from its current low of 0.5% next year.

What is an Offset Contractor Mortgage?

An offset mortgage is a fully flexible scheme where credit balances held in separate savings accounts are deemed to have been paid off of the mortgage, thereby reducing the total on which you pay interest (i.e. if you have a £100,000 mortgage and £10,000 in your savings account you’ll only pay interest on a £90,000 mortgage). You still have access to your savings whenever you want and there’s no cap on the amount you can withdraw or deposit in your savings account.

Most mortgage products have early redemption charges (ERC’s) if you try to reduce your mortgage by more than 10% per year. These are often too restrictive for our clients who may find themselves in the position of being able to pay down a substantial chunk of their mortgage when they are in a good contract or at the end of their business year when they can take a large dividend. With an offset mortgage, there are no penalties as you don’t actually pay off a large chunk of capital, you simply benefit from the reduced interest on your mortgage by holding your contract earnings in a linked account, a win/win solution for Contractors. Woolwich have a very good offset calculator if you want to see what the benefits would be to you

How does an Offset Contractor Mortgage work?

An offset mortgage can either be set up on a payment or term reduction basis. With term reduction you maintain the same monthly payments to the lender as would be due without the credit offsets. This would have the net result of making a greater capital repayment than would have otherwise been the case (because less of each months repayment is needed to pay the interest and therefore more can be allocated to the capital repayment). This overpayment can have a significant impact on reducing your mortgage term so we tend to advise our clients to take this route.

Alternatively you can accept that you make no additional capital repayment each month but instead enjoy a reduced monthly payment to the lender by virtue of the reduction in interest due each month. The danger of this route is that because you are not making capital repayments on the original loan amount, if your offset credit balance is then required and withdrawn at some stage during the mortgage term, you would still have a substantial debt to begin paying off (having made no capital repayments on this sum throughout the period that the moneys were offset).

Fees free and free valuation!

The maximum loan size is £500k and ContractorFinancials have negotiated a free standard valuation up to £560. The interest on your mortgage will be calculated daily so you will benefit from an immediate reduction when you increase the balance of your savings and current accounts.

The great news is that ContractorFinancials won’t charge you a broker fee for applying through them which will save you £695 compared with the other broker who has access to this exclusive rate.

Secure your offset mortgage today and secure your new home this weekend

To benefit from these exclusive Offset Contractor Mortgage rates contact Christopher Joynes at 123 Contracting by email and a mortgage adviser will be in touch. They can secure you an agreement in principle with Leeds within an hour of your initial contact so don’t delay, get your offset mortgage today and start saving.

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