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Orange Genie Accountancy - a helping hand with Mortgages.

Over recent years Freelancers and Contractors have grown in numbers and now represent a substantial element of the labour market. Many contractors choose to enter the labour market through their own Personal Service company and as such they are able to structure their rewards in a way that is most suited to their circumstances. Traditionally many contractors choose to withdraw funds through a combination of salary and dividends – this is often a concept not understood by high street lenders and is sometimes cited as a barrier to choosing the contracting route.

A lifestyle decision to enter a contracting career and legitimate tax planning should not detract from a contractors ability to obtain a competitive mortgage. Orange Genie Accountancy work closely with CMME who specialise in providing mortgage advice to contractors. CMME have negotiated specialist contract based underwriting with many of the well-known High Street Lenders that makes securing a competitive & affordable mortgage easy. Instead of looking at what the accounts of your limited company show, your mortgage will be based on a multiple of your annualised gross contract rate. This means that any tax saving methods you have in place will have no impact on your affordability calculation & you won’t need to present three years’ worth of accounts to prove your income. This often means you can borrow more than your permanent colleagues & at the same competitive rates.

Your first step on to the ladder
Before you start the exciting hunt for your perfect home, you need to have an idea of how much you can afford to borrow. You should work out what your expenses are per month, so that your repayments will be affordable for you. Worryingly 33% of first time buyers have put an offer on a property without knowing whether or not they could afford it but you needn’t fall in to this trap. 

When you are ready to start the process of organising your mortgage, an Adviser at CMMA can arrange an agreement in principle from whichever mortgage lender you have chosen. 

Once you have had an offer accepted on a property, CMME handle the whole mortgage process for you & they won’t charge you a fee for specialist advice, saving you over £500. 

Remortgaging to a better rate
If you already have a mortgage then you will already have an idea of what you want your monthly repayments to be but you might be surprised by how much you could save by remortgaging to a new fixed rate product. 

A remortgage expert can help you look at the whole of the market to find a more competitive rate which could save you hundreds of pounds a year in repayments. Your new mortgage will depend largely on the valuation of your property but the expense of this is often covered by the new Lender, as are any legal fees, so you needn’t be concerned about the costs of remortgaging. If your property has risen in value then you may be able to release some capital to put towards home improvements or whatever you had in mind, alternatively you may wish to leave this capital where it is so that you can secure an even lower LTV remortgage & therefore access better rates.

More than a million first time buyers have entered the market since the base rate was cut to a 300 year low at 0.5% in early 2009 according to Lender Nationwide. Many of these first time buyers have yet to experience a rise in interest rates & some may be shocked to see their repayments increase when that day comes. 

The guidelines announced as part of the Bank of England’s (BOE) Forward Guidance scheme last year, explained that when unemployment hits 7%, the BOE may look to increase the base rate. This was not expected to happen until 2016, however the economy has grown at a meteoric rate since then & unemployment is now standing at 7.1%. 

Getting a fixed rate mortgage
Contractors who are concerned about the potential increase in interest rates, should remortgage on to a fixed rate Contractor mortgage to avoid being affected when rates start to move. A fixed rate mortgage is great for Contractors who want to know exactly what their monthly repayments will be for a certain amount of time. When this period is up, you can always remortgage onto another fixed rate if you need to. 

Get in touch with Orange Genie Accountancy today!

accountancy@orangegenie.com  / 01296 468 483 

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