Your Step by Step Mortgage Planner

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.
• We are happy to answer any other questions that you may have so that you can get back to billing those hours!