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If you need specific advice on
how much you can borrow, give us a call or you can
make
use of the following rules of thumb:
Mortgage
tips for IT contractors
- Don’t assume
mortgage payments will be easier in future
years -- you are probably well aware of the
cyclical nature of the IT contracting
business. When inflation was high (8-10%), house
prices and contractor hourly rates rose and so mortgage
payments became a lower percentage of monthly
income.
However, we now have low inflation and so the
percentage of income that your payments make
up will only reduce significantly if your
contractor fees increases significantly because of
performance, promotion or contract workload – rather than
inflation.
- As a rule of
thumb you can typically borrow 4 times
your gross regular income. For joint
applications the rule is 3.5 times the
combined income, or three times the highest
income plus the other income. The higher of
these two calculations will count.
- If your contract
fees will be higher in the future, you may want the
initial monthly payments to be as low as
possible. Look for mortgages with discounted
rate offers, long discounted rate periods, and
a long loan period.
- If you want to
know the mortgage will be paid back fully at
the end of the mortgage term rather than
planning for an excess lump sum at the end of
the term, look for repayment, or full with
profits endowment mortgage. Full with profit
endowment loans are the only interest-only
mortgages that guarantee the loan is fully
repaid provided all repayments are made.
- If you want the
total amount of interest paid over the
mortgage term to be as low as possible, look
for mortgages with a shorter loan period.
Although monthly payments will be higher, a
shorter loan period reduces the total interest
you pay. Also look for lenders with low
standard variable rates. If you believe
interest rates will increase, look for
mortgages with a long fixed rate period as
well.
- If you want to
know exactly how much your monthly payments
will be for the next few years, look for
mortgages with fixed rates, a fixed rate
period right for you, and competitive standard
variable rates after the fixed rate period is
over.
- Deposits: For a
self-certification mortgage, where you
guarantee your own income, you may need to pay
a minimum deposit of between 15-25%.
- We are happy to
answer any other questions that you may have,
so that you can get back to billing those
hours!
Ready
to apply?
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