Perhaps the biggest concern for contracting clients when they decide on buying a house is the deposit required by the mortgage lenders. Most high street banks and building societies prefer a higher deposit as it lowers their lending risk.
Contrary to popular belief, contractors do not need a bigger deposit. Mortgage lenders, including banks and building societies, treat contractors based on the standard rules. Hence, contractors will not be discriminated against in terms of the deposit, subjected to an affordability assessment, and acceptable credit history. However, most high street banks and building societies perceive contractor applications as a relatively higher risk due to employment nature. Therefore, such applications should be submitted to the mortgage lenders cautiously to avoid the risk of decline.
In terms of the deposit, all mortgage lenders provide competitive rates starting from deposits of 10%. However, several specialist lenders offer mortgages with a deposit as low as 5% of the property value. Lower deposits will demand stricter underwriting and it is prudent to have a larger deposit as one would benefit from a better rate.
Mortgage deposits can be accumulated from any legitimate source. It’s the solicitor’s and advisor’s role in making sure that the deposit is in adherence to anti-money laundering regulations as lenders require proof of deposit when processing the mortgage application.
The following are common sources of how deposits can be accumulated:
We at WIS consider each mortgage application uniquely, discuss the complications with the underwriters of the banks directly if required, and provide you with the best possible rate as we operate the whole market.
Please note that most lenders have temporarily ceased to grant high LTV loans, given the current pandemic situation; however, it is best to discuss your options with a mortgage broker.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.