One of the UK’s largest and most recognised mortgage Lenders has expanded the specialist underwriting that we secured for IT Contractors back in 2001 to now enable ANY professional Contractor to purchase their own home. This means that, regardless of the sector that you have chosen to specialise in, you can now borrow with as little as a 5% deposit by also making use of the Governments ‘Help to Buy’ initiative.

This major development in our contract based income criteria follows an exclusive 3 month pilot that Contractor Financials has been involved with that won the Lender over to the idea of broadening their contract based lending out from the narrow IT definition of a Professional Freelancer. Alongside this exciting expansion, Contractor Financials also has access to semi-exclusive interest rates with this Lender, undercutting rates offered via the High Street to permis by 0.3% in many cases….

Fighting your corner with the mortgage Lenders

As the original Contractor specialist Independent Financial Advisers, we were solely responsible for negotiating the contract based underwriting that allows Freelancers to borrow based on a multiple of contract rate alone. For over a decade this underwriting has been available to IT Contractors as this field has been viewed by the Lender as a relatively stable industry.

Contractors operating in fields that the Lender consider to be more risky, such as Oil and Gas, Engineering, Banking and the Media as well as Freelance Professionals including Business Consultants, Doctors and Accountants have often struggled to secure the mortgages they needed and have had to provide additional evidence to verify income in order for their application to succeed.

Not content to rest on our laurels and accept this limited lending criteria, we have continued to raise this issue with key decision makers over the years to ensure that more Contractors can access a wide range of mortgages without having to compromise on the loan to value you can secure or the rates that you are offered.

It is this on-going work with what still remains the UKs largest Lender that has led to us being chosen as the only IFA in the country to pilot a new scheme which will see the contract based underwriting for IT Contractors that we originally negotiated over a decade ago, being extended to cater for any professional Contractor. This is a huge step forward for the UK’s freelance community as it opens up the contract based mortgage market to a new wave of homeowners.

Contractor Financials lands the knock-out punch!

The new underwriting that we have negotiated will enable any professional Contractor with a contract rate over £300 per day or £75k per annum to access mortgage lending based purely on a multiple of contract rate. Unlike other Lenders, this provider will lend to Freelancers regardless of how long they have been contracting so even if you are on the first day of your first contract, you can still apply.

This underwriting is available on any product across the Lender’s entire mortgage range with mortgages up to 90% Loan to Value (LTV) available to day one and veteran contractors alike. With such a wide range of options to choose from, our experienced mortgage advisers will be able to talk you through the mortgage products that will best suit your needs and will process the entire application on your behalf. You can even access a Help to Buy mortgage that the Lender is currently offering in association with the Government, offering contractors the opportunity to buy a home with as little as 5% deposit.

 An exclusive prize for our clients

Following the success of our pilot of the new lending criteria, we have used our reputation as the UK’s most trusted Contractor mortgage broker to negotiate new and exclusive mortgage rates for our contracting clients. This Lender will now offer ContractorFinancials clients semi-exclusive access to a range of two year fixed rate Contractor mortgages including a 60% LTV mortgage at 2.29%, a 75% LTV mortgage at 2.74% and for Contractors with a smaller deposit; an 85% LTV mortgage at just 3.74%.

All of these mortgages carry a £999 arrangement fee which can be added to the loan amount so you won’t need to pay anything upfront. You can overpay by up to 10% for the first two years and suffer no early repayment charges after this fixed rate period has ended so it will appeal to Contractors that wish to make lump sum payments to clear the mortgage early.

Unlike other Lenders who tend to cap the income multiple that they will offer on a contract based mortgage to around four times your annualised rate, this Lender will be far more flexible with their income multiples and offer up to five times your annualised contract, providing that you have a good credit score. This allows ContractorFinancials clients to borrow far more to secure your chosen property and is even available at 90% LTV so you won’t be penalised for having a small deposit.

Due to our profile as the largest and most respected Contractor specialist mortgage broker, we have secured a dedicated underwriter and case handler within the Lender which allows our advisers to secure you an agreement in principle within hours of your initial enquiry and the full mortgage offer within ten days of you securing your dream home. In some cases we have even turned around the entire mortgage offer as quickly as three days from your initial enquiry so you could be in your new home within a week.

We continue to speak to other Lenders to build on successes like this so as credit conditions continue to improve and the housing market recovers the future looks very bright.

To speak to an adviser here at Contractor Financials about this exciting new development in Contractor Mortgages call 0845 062 8888 or fill in a contact form and an adviser will be in touch.

The story so far

George Osborne announced his enhanced help to buy scheme in last month’s budget. Building on his previous efforts to kick start house building, help to buy has now been made available to existing homeowners who can utilise a Government backed loan to help buy a new build property.

Unfortunately the initial excitement felt by Contractors who saw this as an attractive way to trade up into a larger property without putting down a higher deposit was dampened as details of how the scheme was to be extended to existing homeowners were slow to be released. Fears grew from our high level discussions with mortgage lenders that none of our Contractor friendly banks or Building Societies would support the scheme.

However, despite some key details still to be agreed as to how the scheme will work in practice, as of last night the first Contractor friendly lender announced their help to buy Contractor mortgages rates so Contractors may already be able to benefit from the Governments help with their purchase.

Help to buy at a glance

• Available on new build properties only (will be available for “second hand” properties from 2014)

• Max purchase price is £600,000 and only available on properties in England

• You must have a minimum 5% deposit

• The property must be your only residence (i.e. you cannot own any other property or intend to Let To Buy)

• The Government will provide a maximum loan of 20% of the property value

• Only available on capital repayment mortgages

• Provided by the Homes Community Agency (HCA) on behalf of the government

• HCA appoint local HomeBuy Agents who approve prospective buyers and advise on local HomeBuy qualifying developments (not available on any new build property)

• Equity Loan repayable after 25 years or on sale of property (whichever is sooner)

• Interest free for 5 years, then charges at 1.75% rising in line with RPI plus 1% (if RPI is negative the increase will be 1%). Fee will be collected by the Post Sales HomeBuy agent.

• On sale, 20% of the proceeds of sale will go to HCA, regardless of the value of the initial equity loan (i.e. the loan is a 20% stake in the property rather than a cash figure so if the property falls in value the amount repaid will be less than the amount originally borrowed)

• An independent valuation will be required when the property is sold to ensure the sale is at open market value

Help to buy for Contractors

The rates on the new help to buy mortgage from our Contractor friendly lender are currently 3.89% fixed for two years until September 2015 and there is no arrangement fee to pay. This is available for properties up to the value of £600,000 at a loan to value (LTV) of 75% on the help to buy scheme. Contractors will need to put down at least 5% of your own money as a deposit and the Government will then top this up by up to 20% to reach a 25% deposit. The mortgage will be on a repayment basis in line with the regulation on the help to buy scheme but it is important to bear in mind that if you wish to substantially overpay and clear your mortgage quickly then there are early redemption penalties in the first two years.

Whilst there are other help to buy mortgages available in the wider market, this particular mortgage is available using the contract based underwriting that we have negotiated with the lender and this enables us to arrange your mortgage based on a multiple of your annualised contract rate alone. This helps you avoid the hassle of using your last three years accounts or umbrella payslips and should help you to borrow more, as affordability will be calculated without taking in to account any tax saving measures that you may be taking advantage of.

Using the contract alone could make all the difference to your application and ensure you are able to qualify for your chosen new build mortgage without any of the problems normally associated with using your accounts or payslips. Your Contractor mortgage application should be processed far quicker as you simply need your current contract, two forms of ID and recent bank statements to apply.

The devil is in the detail

Unfortunately, as with many Government schemes, the devil is most likely in the detail on the help to buy scheme. Whilst this Contractor friendly lender is open to helping Contractors on to the property ladder, there is no guarantee yet that the HCA will be so open minded.

The way that the help to buy scheme is structured, means that homeowners must first apply for a mortgage with a lender and then apply separately to the HCA to secure the Government funded loan for your deposit. This forces Contractors to go through two separate affordability checking processes and unfortunately, we don’t yet know whether we can influence the HCA to base their decision on gross contract or whether they will simply look at the traditional salary and dividend measures of income.

In order to qualify for the HCA loan you must be able to pass affordability tests which ensure your mortgage is a maximum of 4.5x income and no more than 45% of your net disposable income which should be fine for the majority of Contractors if this is calculated using contract rate. However, very few Contractors will be taking enough salary out of a ltd company or umbrella to borrow enough based on the above criteria so if the HCA refuses to use contract rate, you may struggle to secure lending.

The other dilemma that could be facing Freelancers is that if you are deemed to be able to afford a £400,000 property for example, you won’t be able to take a lower mortgage of say £100,000 using help to buy because the Government is aiming to only help homeowners that are in need of their support. The rationale behind this is that if you can afford a higher mortgage then you would be able to secure a mortgage for the lower value property independently from a lender without the help to buy scheme.

The HCA will also assess whether or not you are in need of Government help with your deposit, so if they judge that you could reasonably afford to save a 10-20% deposit yourself then you won’t be eligible for the scheme. This may affect higher earning Contractors hoping to purchase using help to buy, as the HCA may decide that you can afford to save your own deposit. It remains to be seen whether or not these caveats will hold back Contractors but we will keep you informed in future editions of Planet Contractor.

If you have found your dream new build home and want to register your interest in the help to buy scheme then call us on 0845 062 8888 or fill in a contact form.

Please note that we are waiting to hear from the HCA to confirm details on how they will calculate affordability. Please ensure you check with our advisers before proceeding with a new build purchase because Developers will require a deposit from you which will probably not be refunded if your application to the HCA is unsuccessful.

Against a backdrop of unprecedented levels of new enquiries from Contractors keen to discuss their mortgage options with us, this week we devote Planet Contractor to looking at a way that existing homeowners can cash in on any upturn in house prices in the year to come.

Let to buy

With the market already seeing feverish activity this month, existing homeowners face a dilemma. The process of selling your existing home, to trade up before prices rise too much, can be painfully slow. A combined sale and purchase also carries the prospect of an extended house buying ‘chain’ developing. Chains bring with them all the inherent danger that a link can break and halt the house moving ambitions of any number of seemingly far removed sellers, always frustrating and sometimes very costly indeed as you potentially have to start house hunting again from scratch.

However, there is a way that Contractors with an existing property can bypass the conventional process altogether and purchase your new home without delay and at today’s prices.  ‘Let to buy’ is the process of changing the status of your existing home into a rental property and then buying the new house on a standard residential mortgage from one of our Contractor friendly lenders. At the same time as this change of status there is the option to perhaps release some equity from the current property to help fund the deposit on your new home if needed. 

Long term investment or means to an end?

Very many clients retain their existing home as a rental investment and even future retirement income but for others ‘let to buy’ is simply a means to an end and they will sell at their leisure at a future date.

With time such a scarce commodity for many Freelancers, anything that takes variables out of the process of moving home is a significant benefit. For this reason we are arranging ‘let to buy’ literally on a daily basis. Recent cases have involved –

-an IT specialist wanting to buy in Manchester as a result of starting a new contract but wanting to retain a foothold in the London property market.

-a busy Interim Manager whose growing family demanded more space but who dreaded the prospect of countless disruptive viewings whilst the kids studied for exams.

-an oil and gas Contractor trading up in Aberdeen but who wanted to retain his existing home as a long term investment and income source.

Let to buy offers you the opportunity to move towards getting your new home today so you don’t miss out on any growth in prices over the months to come. The contract based underwriting that we have negotiated with mortgage lenders saves you the added time and hassle of sorting out your last three years accounts or Umbrella company payslips as we can arrange your mortgage based on a multiple of your annualised contract rate alone. This helps get your mortgage application underway even quicker and avoids any concern that your Contractor status will derail any house purchase plans you have. We often have an agreement in principle for you within hours of your initial enquiry. 

To find out more or if you have found your dream home and want to get the ball rolling now then call 0845 062 8888 or fill in a contact form and an adviser will be in touch shortly.

“A budget for our Aspiration Nation”

The Chancellor focussed his efforts on encouraging industry and entrepreneurship but also had room for some additional good news on personal taxation.

He announced that the long heralded increase in the personal income tax allowance to £10,000 has been bought forward to April 2014. This significant achievement is almost a £4000 increase on the income tax threshold that Osborne inherited from the previous Government and will make a difference to almost every Contractors pocket when it arrives.

On top of this earnings boost, Osborne announced that he will implement a £2000 give away based on employers National Insurance for SME’s. This will help encourage employment and the growth of small businesses but Contractors with a one man ltd company are unlikely to benefit as you will undoubtedly be structuring your earnings so that you are not liable for employees/employers NI in the first place unless caught by IR35.

A further clamp down on aggressive tax avoidance was announced that will continue to place a question mark over some of the more exotic offshore payment routes that some Freelancers use.

Working parents

Parents will be able to benefit from new tax free vouchers that will offer £1200 childcare to parents earning less than £150k pa and aims to encourage more parents to return to work after maternity or paternity leave. This will likely replace the existing childcare voucher scheme which is run by some employers but this time will be open to everyone as it is not reliant on access to a work backed scheme. This will open up childcare help to many Contractors for the first time and will come in to force in 2015. Ironically it could reinstate some of the help that many Freelancers lost when they fell foul of restrictions to child tax credit for those earning over £50k.

Good news at the pumps

Contractors will be pleased to hear that the planned 3% increase in fuel duty that was due in September has been scrapped and so has the escalating beer tax which will now be replaced by a cut of 1p per pint.

A boost to mortgages should help Contractors up the ladder

The Chancellor expressed his interest in igniting the housing market and building on the success of the funding for lending scheme in order to boost the construction industry and help Britons to move on to and up the property ladder. In an exciting twist to an otherwise fairly standard Budget, he is introducing a ‘Help to Buy’ scheme for new build properties and a ‘Mortgage Guarantee’ for all potential homeowners.

The Help to Buy scheme is being funded to the tune of £3.5bn and will allow homeowners purchasing a new build property to put down a 5% deposit while the Government pays the extra 20%. This should allow you to secure the more competitive mortgage rates only available to those borrowers with a higher deposit.

This is not an entirely new idea but has previously been limited to first time buyers earning under £60k pa. In a radical move, Osborne is extending the scheme to enable anyone to purchase a new build home (up to the value of £600k) under the same terms, regardless of income and whether or not you are a first time buyer, so Contractors moving up the ladder could also benefit. Using this scheme you only repay the Governments loan when you come to sell the property.

The new Mortgage Guarantee scheme will be available to all purchasers on any property, regardless of the style, age or location of the property and whatever your earnings or current ownership status. Encouraging up to £130bn of funding, the Mortgage Guarantee will be available from 2014 for three years and aims to offer mortgages to buyers struggling to come up with a large enough deposit to enable their house purchase. This will be hugely beneficial to Contractors who are eager to buy their first home or to move on up the housing ladder. Working in a similar way to the ‘indemnity’ policies of old, the Governments Mortgage Guarantee will help reassure Lenders that your purchase represents a sound risk (subject to the usual credit checks on you) in that if the worst should happen and they need to repossess and sell at a loss, in addition to your deposit covering part of the loss, the insurance will help absorb all or a substantial part of any remaining capital loss.

A narrow escape for Pension tax relief

Pensions seem to have suffered in recent budgets, with the annual allowance falling from £255k to £40k over the last three years budget statements and the lifetime allowance reducing from £1.8m to £1.25m. Thankfully this time the Chancellor steered clear of any further changes.

This will come as a huge relief to Contractors that are using their full annual allowance as there was speculation that this may have been cut to £30k pa but more worrying still were the rumours that the tax free lump sum which Contractors can release from age 55 was under threat. We are pleased to announce that no such measures have been taken so pension investment continues to offer one of the most tax efficient methods of transferring contract income in to personal hands.

Investment news

AIM

In a move to encourage investment in smaller companies, Osborne has axed stamp duty on shares traded in growth markets such as AIM from next April. This will allow Contractors interested in self investment the opportunity to access a far greater range of options. You could access these shares through a Self-Invested Personal Pension (SIPP) and benefit from tax relief on your contributions. The Chancellor is also in consultation over whether to allow investment in AIM and other growth markets through the ISA system.

UK Domiciled Funds

In a move to help UK domiciled investment funds complete on a level playing field with their Dublin and Luxembourg based competition, ‘schedule 19’ stamp duty reserve tax is being axed from April 2014. The tax amounts to potentially hundreds of millions over the life of a parliament and this will now be saved by investors.

Also in the budget

Funding Osborne is also in discussion with the Bank of England over extending the Funding for Lending scheme which has been so successful in recent months at getting the mortgage market moving. We have seen rates dropping across the range of Contractor mortgages that we have access to which is saving Contractors hundreds of pounds per year on repayments. Any extension to Funding for Lending would be welcomed by the Contractor Community.

The Chancellor is planning to consult on whether to allow Child Trust Funds (CTFs) to be transferred to Junior ISAs, a move that would help millions of children who already own a CTF to have greater flexibility from their investment. Currently, children born between 2002 and 2011 are stuck on the old CTF system whereas children born since November 2011 have been able to access Junior ISAs. Parents and Grandparents can invest in a Junior ISA in addition to their own ISA allowance so this move would be welcomed by Contractors

As always, the devil is in the detail when it comes to the Chancellors annual Budget as things emerge days later that are hidden in the small print. We will keep you updated via our blog  if there are any further items affecting the UK’s Contractor Community.

To speak to an adviser about any of the issues raised in today’s budget call 0845 062 8888 or fill in a contact form.

In the past borrowers had enjoyed the thrill of the chase as we moved every few years from one attractive rate to the next hot deal. The lack of mortgage funding since 2008 has effectively put the remortgage market on ice and many speculated that we were returning to the ‘mortgage for life’ mentality of old.

Faced with fear that Contract workers in particular did not now represent an attractive enough picture to a prospective new lender, many Freelancers have been happy to become wallflowers and sit out the last few years on their lenders Standard Variable Rate (SVR). The charms of new fixed rate deals elsewhere were not exactly getting the heart racing for all that perceived hassle of changing mortgage partner.

Thankfully, Lenders have finally leapt in to action and are spicing things up in time for Valentine’s Day with a range of seductive new Contractor friendly remortgage rates.

Michelin starred mortgage rates

Forget sticking with the same old options from your current lender this Valentine’s Day and explore the menu of opportunities elsewhere.

Using our specially negotiated contract-based affordability agreements with lenders, a fixed rate of just 2.49% is perfect for those Contractors with a larger amount of equity in their homes or savings to put down as it’s available on a 60% loan to value (LTV).

If you have a smaller deposit then hot off the press from Contractor friendly lender Furness is a 2.95% two year tracker mortgage on an 80% LTV. This attractive rate was launched on Wednesday and is the lowest rate at 80% LTV available to Contractors.

An alternative option which is causing quite a stir in ContractorLand is a discounted variable rate mortgage from Newbury Building Society at 2.99% on a 75% LTV mortgage. This mortgage allows unlimited overpayment so is ideally suited to Contractors that know they will be able to pay off large chunks of the mortgage over the next three years.

Has cupid’s arrow struck your perfect rate?

If the idea of a more exciting mortgage rate has set your pulse racing then you can take things to the next step by calling one of our award winning mortgage advisers on 0845 062 8888 to discuss your requirements.

Your dedicated adviser will talk you through the rates available based on your loan size compared to home value and once you have decided on the rate you are happy with, the adviser will secure you an agreement in principle and then the chase is on. To go all the way we will simply need a copy of your current contract, your last three months bank statements, two utility bills and two forms of ID.

The whole Contractor remortgage courtship is normally completed within 4-6 weeks of you first setting eyes on your new rate.

So whether you are simply remortgaging to a better rate to save on repayments or if you would like to release capital from your home to fund a business idea, home improvements or whatever you have in mind, you can rest assured that you should be shacked up with your new mortgage rate by Easter.

If, after our discussions we decide that you playing the mortgage field isn’t as attractive a proposition as enjoying the home comforts of your existing lender, then we can help you move to one of their new rates and in this instance, you won’t need to prove your income, address or your ID. It’s simply a matter of us smoothing the whole process for you.

Our Love is free of charge

Unlike some, we won’t charge for our love.

We charge you no brokers fees whatsoever for our matchmaking which can save you over £500! This means that unless your mortgage courtship is successful we don’t get our commission from the lender whereas others that charge you a fee get paid regardless of a successful outcome.

Our advisers can normally also arrange for any fees charged by the lender to be added on to your mortgage so you don’t need to pay them upfront and we can often negotiate to have all solicitors and legal fees paid by the lender. This means you can soon be enjoying that better rate and not pay a penny upfront, which is great news to help with funding that Valentine day treat!

Lenders are from Mars, Contractors are from Venus

Unfortunately, when it comes to securing a mortgage, speed dating with the Lenders directly can be disastrous.

We have had literally thousands of Contractors contact us over the years after being stood up by their local high street bank or let down by a broker because of their freelance status. Our advisers always endeavour to pick up the pieces on the rebound but as damaged goods, a failed application can have a serious impact on your ability to secure a specialist contractor mortgage in the future.

To avoid this heartache, Contractors should avoid wasting time with hot shots on the high street and instead apply through the good guys first time around.

A Mortgage Broker for Keeps

Over the last fourteen years, our mortgage advisers have used their charm to build unrivalled relationships with the key underwriters at the UK’s biggest lenders and have negotiated specialist lending based on a multiple of your contract rate alone. We use these key relationships to ensure that your application lands on the right desk and is processed by people that understand the way that you work.

Over time, we have been able to prove to these underwriters that Contractors offer a very safe prospect. We argue that you are hard working, motivated and highly desirable to your clients.

The lack of long term breaks without contract makes you very unlikely to fall behind on repayments. In fact, we believe that despite what may be assumed about the transient nature of your working patterns, Contractors make excellent mortgage candidates. However, the success of your application rests largely on your credit history so now really isn’t the time to date around. Instead, focus on your requirements and approach a specialist broker who can package your application appropriately to ensure love at first site with the Lender.

To hear those champagne corks popping to celebrate a great looking new mortgage rate speak to one of our Contractor mortgage specialists today on 0845 062 8888 or fill in a contact form and an adviser will be in touch very shortly.

Thankfully the big freeze on mortgage lending seems to have thawed as quickly as last week’s snow and the lenders with who we’ve negotiated our contract based underwriting are slashing their interest rates and offering far more choice to Freelancers, even those with as little as a 10% deposit.

2.49% mortgage rates that make your dream home a reality

The Governments ‘funding for lending scheme’ has injected some much needed life into the mortgage market and rates on Contractor Mortgages are at their lowest since the credit crunch began.

Way back in 2002 we negotiated Contractor friendly terms with the Halifax and they have been a stalwart ever since. The lender has cut the rates on their two year fixed rate mortgage to just 4.99% for first time buyers with a 10% deposit meaning that Freelancers can buy today instead of pouring money down the drain in rent whilst you save for a larger deposit.

If you have a larger deposit then you could benefit from even better rates with Nationwide and Clydesdale currently offering rates as low as 2.49% at a loan to value (LTV) of 60% however it’s important to note that trying to apply to lenders direct on a contract basis will be unlikely to be successful. We make sure your application will be processed by key underwriters who are well versed in the profile of our niche clients.

‘Interest Only’ loans not dead after all!

By using one of the special contract-based underwriting criteria that our MD Tony Harris negotiated with a lender back in 2006 we also have access to a Contractor friendly mortgage which offers you the opportunity to borrow on an interest only rate for the first three years and then move on to a repayment mortgage once the fixed term is up. This will appeal to Contractors that want to keep their monthly repayments low while they settle in to being a homeowner, perhaps if you need to do some work on the property and want to keep outgoings to a minimum. Other interest only Contractor mortgages demand that you have a repayment vehicle in place such as a pension or endowment policy which will be used to clear the deficit at the end of your mortgage term. However, with this new ‘low start’ interest mortgage, you don’t need to have a separate repayment vehicle and you can also rest assured that you won’t be left with a large lump sum to repay at the end of your mortgage term.

What are you waiting for?

If you are currently renting then now is a great time to get on the ladder and snap up a property as house prices are still relatively low in many areas. Taking into account the competitive mortgages that are available at the moment, you could be paying less on buying a property than it costs to rent it.

Securing a sufficient mortgage shouldn’t be a problem with us because you can borrow up to four times your annualised contract rate so a Contractor earning £50 per hour could borrow up to £360,000.

To get started you simply need a copy of your current contract, two forms of ID and recent bank statements and an adviser can secure you an agreement in principle within a few hours of your initial enquiry.  We understand how busy you are so the whole process can be completed using email, phone and post so you avoid the time consuming face to face meetings associated with a traditional IFA and you could be in your new house in a matter of weeks.

Why pay fees !

To find out what you could borrow to buy your first or next property and to discover how much you could save on any existing mortgage payments our fully qualified team of experts are on hand to help.

Unlike other brokers we still won’t charge you a fee for our advice or for the day to day processing of your application. This can save you £500+ so to speak to an adviser today call 0845 062 8888 or fill in this form and we will be in touch.

Lisa was awarded the coveted ‘Young Adviser of the Year’ title in recognition of her commitment to helping Contractors to get on to and move up the property ladder. Since joining the company in 2010, Lisa has worked tirelessly alongside our MD Tony Harris to negotiate contract based underwriting with some of the UK’s biggest lenders and has already helped many hundreds of Contractors to buy their own home.

The panel of judges were impressed by Lisa’s specialist knowledge of contractor mortgages and her impressive record of securing lending for the UK’s freelance community.

This award comes off the back of Lisa having already been crowned top adviser in the country for Clydesdale Bank applications last year. This is no mean feat and means she has secured mortgages for more Contractors than any other adviser in the UK has secured for even regular ‘permi’ clients.

We believe this speaks volumes of Lisa’s commitment to our Contractors and this further award gives her the recognition that she deserves.

How can our award winning adviser help you?

Lisa and her colleagues in the mortgage department at Contractor Financials specialise in finding mortgage solutions tailored to your Contractor status. Instead of relying on the more traditional route of relying on accounts to assess your affordability for a mortgage, Lisa and our other advisers will use a multiple of your annualised contract rate alone. This not only saves you the hassle of compiling your accounts but it also allows you to borrow more because your application won’t be affected by any tax saving measures that your accountant has taken.

Using contract based underwriting enables you to borrow up to five times your annualised contract rate and we even have access to lenders that are willing to consider Contractors on the first day of their first contract so there is no need to wait three years before you apply. Lisa and her colleagues simply need a copy of your current signed contract, two forms of ID and your last three months bank statements to complete your application; so it really is pain free!

The great news is that you can benefit from Lisa’s award winning advice completely for free as Contractor Financials charge none of the broker fees that other firms will charge for this service. This saves our clients £500+ which leaves more in your pocket for decorating your new home.

To speak to Lisa or one of her equally talented colleagues call 0845 062 8888 or fill in a contact form and one of our contractor mortgage advisers will be in touch.

With the Christmas break fast approaching, why not use some of your time off to plan ahead and make the most of your finances in 2013. This is our five step path to financial security in the year ahead…

Step 1: Save tax on your life insurance

Rather than pay for your life insurance from taxed income, our advisers have helped introduce a Keyman policy to the UK that allows you to enjoy corporation tax relief on premiums with no benefit in kind implications. This Keyman scheme aims to tax efficiently replace the death in service benefits that you may have enjoyed whilst working as a permanent employee and is paid for out of your company bank account instead of from post tax earnings. A carefully worded trust document ensures that, in the event that the worst should happen, any payout is free from inheritance tax too.

In most circumstances the policy is portable so should you close your limited company in the future and need to restart paying a policy personally, you needn’t worry about fresh medical underwriting.

You can also protect any employees such as your spouse (who may be company secretary for instance).

With this Keyman insurance, the tax man is effectively helping to fund the protection for your loved ones. So our award winning protection team should be able to help you find the cover you and your family needs without breaking the bank.

Step 2: Protect against state benefit cuts

Your income is totally reliant on you being fit and healthy enough to get into work tomorrow. With George Osborne’s announcement earlier this month that the level of state benefits would not keep pace with inflation and are becoming increasingly hard to qualify for, it’s essential to protect yourself against illness or injury.

As the Freelancer specialist, Contractor Financials was exclusively chosen to pilot a new scheme in 2012 based solely on contract rate alone rather than traditional salary and dividend income measures that may have left you underinsured. We are very pleased to announce that this has been a huge success, with many of our Contractor clients taking the opportunity to protect more of their income with a contract based policy than traditional plans would allow. Such has been its success, this product will be available permanently going forward but still only on such advantageous terms from our firm alone.

Income Protection will pay a tax free monthly income to protect your current lifestyle and can be funded from your own personal bank account. Alternatively you can get your limited company to pay a different policy with benefits taxable instead. Our award winning protection team even have the option of a policy that will pay out on the very first day of incapacity.

Even if you have income protection already in place, in light of our new contract based cover, we would urge you to review the existing cover in 2013 to ensure that it is still fit for purpose.

Step 3: Keep your monthly borrowing costs down and save £699

The Governments ‘Funding for Lending’ scheme which aims to inject some much needed capital in to the mortgage market, has already started to have a positive impact on lending. The tail end of this year has seen many of the large high street banks and building societies introduce far more competitive rates and the great news is that many of the Freelancer friendly lenders have followed suit.

For the first time since the credit crunch struck, we are able to secure Contractor Mortgages at rates as low as 2.49% at a 60% LTV and 4.49% at 90% LTV and these look set to improve further in the year to come as more funding is released in to the market.

Your mortgage is almost certainly your largest monthly outgoing and it’s therefore vitally important that Contractors make sure you are paying as little as possible in interest on this debt.

For the last three months our Contractor Mortgage desk has been inundated s with clients wanting to remortgage to a fixed deal or lower discounted rate.

The good news is that, unlike other brokers, we still make no charge for our advice which can save you £699 on a typical remortgage. Instead we will rely solely on the introducers commissions we receive from your chosen lender whereas other firms charge a fee AND receive this commission. Our fees free service gives you the support you need in terms of advice, processing the application and chasing the lender on a daily basis to ensure a successful outcome.

If your accounts are insufficient or you work via an umbrella company we will use our uniquely close relationships with the mortgage lenders to base affordability on a multiple of your gross contract income alone so we can avoid the difficulties that Freelancers often face if they approach a lender direct.

We will compare your current scheme with rates available elsewhere and wherever possible will get the new lender to pay towards any legal or valuation fees to remortgage you to a lower rate.

If at the same time you wish to release money from your home, our remortgage experts Kevin Vella and Miranda Francis will show you how. This money could fund debt consolidation, a deposit on a buy to let investment or home improvements etc.

Step 4: Start 2013 with two months free home insurance

With household expenses set to rise again in the coming months it’s never been more important to shop around and one area that we can really add value is in a review of your buildings and home contents insurance.

Our home insurance specialist Edward Davey has scoured the market to find a number of special offers on some of the most comprehensive buildings and contents insurance policies on the market so you can benefit from the peace of mind that your possessions are protected without being out of pocket.

Contractors can choose to either receive two months free home insurance to ease you in to the New Year or alternatively, another provider is offering free buildings insurance between exchange and completion. It is a legal requirement to cover your property on exchange of contracts but Contractors buying a new build property may not be able to complete and move in for several months while you wait for the construction to be completed. The policy that offers free cover until completion could therefore save you hundreds of pounds.

Edward Davey is on hand to help guide you through the maze of options and crucially we will also stand by to help you in the event of a claim.

Step 5: Avoid Coalition tax hikes with a Contractor pension

Pensions provide Contractors with one of the few legitimate tax breaks still left in a Freelancers arsenal.

Limited company Contractors can invest substantial sums over the course of each trading year whereas Umbrella company ‘employees can use salary exchange to save the equivalent of up to a 69% tax bill.

A £50k pa limit to contributions has posed difficulties to some but is open to a work around for many Contractors thanks to the expertise of our diploma qualified pensions advisers. This is set to fall to £40k in 2014 so if you have a large lump sum to invest then you need to ensure you make the most of the higher limit this year.

The trick is to make sure that any pension’s investment effort in 2013 isn’t wasted so don’t put new money or hold historic funds in old style, inflexible and poor performing schemes from the past. Our experienced pension’s advisers will find a tax saving retirement planning route that truly reflects your Contractor status and need for complete flexibility and ensure that you aren’t overpaying fees for an outdated fund.

If you have used your annual pension allowance then a cash or equity Individual Savings Account can grow tax efficiently over time but in the event of an unforeseen need can be accessed, normally without penalty. You can invest monthly or as a lump sum up to £11,280pa but may be better off drip-feeding your investment to help avoid the risks associated with current volatility in the markets.

To speak to a specialist adviser call 0845 062 8888 or fill in a contact form and a member of our team will be in touch shortly.

Many of our Contractor pensions clients have been caught in the crossfire as George Osborne made sure he was seen to be hitting the wealthy as well as rein in an out of control welfare budget…

Pensions in the firing line

The announcement that the cap for higher rate tax relief on pension contributions will fall from £50k to £40k from April 2014 will affect thousands of Freelancers who currently use their annual pension allowance as a very effective means to reduce tax on their contract income. Those Contractors need to ‘buy now while stocks last’ and make the most of the full £50k allowance in their pensions ‘input period’ during the 2012/13 and 2013/14 tax years before the change comes in to force.

In certain circumstances Freelancers will still be able to transfer up to £160k in a single year after the new limits come into force using carry forward rules that allow you to exploit the past 3 years unused allowances. This is particularly useful for Contractors because flexible working patterns mean that you may have more money to invest at certain times than at others and may wish to unload a lump sum payment when you finish a contract for example. The carry forward rules can also be used on an ongoing basis to transfer company profits into personal hands very tax efficiently.

The new annual limit of £40k will provide an estimated £600m for the treasury according to Standard Life, and must have seemed a relatively victimless crime against savers. However, we are not sure that the Chancellor has considered the fact that this new level not only affects the highest earners but also thousands of middle-earners who may be trying to make up for lost time to save diligently for their retirement in line with the Governments campaign for self provision in later life.

Fundamentally, these changes to the higher rate tax relief on pensions have been on the cards for a while now as we initially feared that the cap would fall to somewhere between £30-45k back in April 2011 when it dropped from £255k to £50k. In hindsight, this was a clever ploy by the Chancellor to give himself room to manoeuvre and it was probably always going to be lowered to the new level at some point in order to help further claw back the budget deficit.

The lifetime allowance for pensions has also been dropped from £1.5 million to £1.25 million from 2014/15 but Osborne insists that this will only affect a small percentage of the UK’s pension savers and that this will help to increase the overall savings made on pension tax relief to £1bn. Again this seems to ignore the reality of current demographic trends as we could all be funding ourselves through what could be a very long retirement. Any further restriction on the overall size of our pension pot should have been discouraged.

But don’t rely on the state pension…

The Governments eagerly awaited white paper is due soon which is expected to lay out plans for a flat rate state pension of around £140 per week. Whilst this is higher than the £107.45 per week that current retirees are entitled to, it is still shockingly low compared to the average Contractors earnings. In fact, to put it in to perspective, most would expect to earn that in a day.

In contrast, a 40 year old Contractor saving up to the new annual allowance of £40k until they reach age 65, could potentially receive a pension income of around £62,400 per year based on a conservative growth of just 4% each year and you won’t have paid any tax on your contributions up to that level.

On the bright side…

Nil rate tax band

The Chancellor stated his statement was tax neutral and amounted to a redistribution of tax and allowances so cuts in higher rate tax relief on pension contributions have allowed the Chancellor to increase the personal allowance to £9,440 from April 2013. This means that Contractors can earn up to this amount without being taxed so it will make a difference to the amount of your contract income you take home. In a welcome change to previous years, even those taking higher salary and/or dividends will benefit from this increase.

Higher rate tax threshold increases

The fact that higher rate income tax bands will increase by 1% each year from its current level is to be welcomed as it has been frozen in recent years, capturing more of us in the 40% bracket. However as inflation and wages are likely to continue to rise by more than 1% over the next few years there could still be far more higher rate tax payers than the 1% increase would tend to imply and many Contractors that are not currently paying higher rate tax may find themselves falling in to the threshold in that time.

……..and Tax planning opportunities

To minimise the effect that this will have on your earnings, Contractors can invest in a pension to lower your take home pay or dividends below the threshold. Alternatively, if you are working through a one man ltd company, you could also fund your life insurance directly from your business using our Keyman insurance. This allows you to pay from your pre tax profits rather than your take home pay so is a very cost effective method of paying for this essential insurance. To find out more about the Keyman insurance talk to our award winning protection team.

ISAs

The Chancellor has also increased the Individual Savings Account (ISA) limit to £11,520 from April 2013 and will consult on opening up the tax free investment options to include SME equity markets as offered by the AIM market to encourage investment in UK businesses. Contractors missing out on pension tax relief going forward should make the most of the increased ISA allowance to supplement their savings as any growth is tax free.

Income drawdown

Capped drawdown has been under fire recently and in recognition of the hardship caused by the cut to 100% of GAD (Government Actuaries Department) rates, Osborne has increased the maximum that you can receive as an income to 120% which will allow retirees greater flexibility without being forced to buy an annuity.

Benefits take a hammering…

Rather than the usual Robin Hood approach we have come to expect from the Autumn Statement, Osborne has chosen to steal from the rich… and steal from the poor as well. An increase of just 1% per year on benefits will help the Government to meet their target of further welfare cuts by 2016/17 which already stands at £18 billion. Contractors should consider self insuring in order to supplement the meagre incapacity and housing benefit now offered by the state, as relying on just £74.80 per week would have huge implications on your budget and lifestyle, especially as you won’t be entitled to the sick pay that an employee can fall back on.

An income protection policy will pay out a monthly income if you are unable to work due to accident or illness and the award winning protection team at ContractorFinancials have now secured an agreement with an insurer to base cover on your gross contract rate rather than drawings or salary giving you far greater confidence in the event of a claim.

Other surprises in the Autumn Statement…

In an uncharacteristic act of charity, the Chancellor has decided to scrap the planned 3p increase in fuel prices tax which was due to come in to force in January which will be a huge relief to Contractors relying on your car to get to you to and from site. He will also put a cap on rail ticket prices for two years and will be investing heavily in road and rail improvements.

The much debated mansion tax which has been championed by the liberal democrats was noticeably absent from the Autumn Statement but it remains to be seen how long the Chancellor can hold firm on this under increasing pressure from almost every angle.

In conclusion, today’s Autumn Statement was a mixed bag but at Contractor Financials, the feeling is that it could have been a lot worse. There was talk of the pension’s annual allowance being reduced to £30k which would have affected far more Contractors than the proposed £40k allowance.

We feel optimistic for the year ahead following today’s realistic and forward thinking Autumn Statement. To speak to an adviser about any of the issues raised in today’s statement, call 0845 062 8888 or fill in this form and an adviser will be in touch.

From a shortlist of ten independent financial adviser firms, Contractor Financials was chosen above all others for the outstanding level of service and advice that we offer our clients. The judges looked into our processes, reviewed case studies, looked at our specialist knowledge of our niche market and studied our company ethos and found that our team go that extra mile to deliver financial solutions tailored to the unique needs of our clients.

It was a star studded event, with Head of Operations Jacqui Hatcher collecting the award from Olympic rowing gold medallist, Garry Herbert.

Other prize winners on the night included some of the biggest providers in the industry such as Aviva and Legal and General but in a ‘David and Goliath’ struggle against the big guns we were able to bring home one of the most coveted awards of the evening.

Latest in a long list of accolades

IFA Catherine Young had liaised with the judges for this latest achievement whilst in recent years her colleague Samantha Foster has been recognised as ‘Best Newcomer’ and pension and investment specialist Richard Braid has gained praise as best intermediary by the FT in a mystery shopping exercise of advisers.

The sense of achievement in this months award has been particularly pronounced however because it applies to the whole practice rather than an individual. Having prided ourselves for many years on the work we do behind the scenes with financial product providers and mortgage lenders on behalf of the Contractor community, this industry recognition has felt especially satisfying.

Such a high profile pat on the back has also been very well received by clients and our affiliate Accountants and Umbrella companies alike.

A specialist IFA for a community of specialists

With an eye on the needs of Freelancers we recently helped an insurer design and introduce the new Relevant Life policy to the UK which has been creating a huge amount of interest amongst clients.

Since our taking the lead in rolling out this product in 2010, many insurers now thankfully offer this cover as it allows our one man ltd company Contractors the ability to tax efficiently pay for life insurance through their business. For the first time Freelancers enjoy the same terms as a large corporation death-in-service policy as premiums are offset against corporation tax, with no benefit in kind payable by the Contractor and any payout free of inheritance tax for your family.

Personally funded insurance, from post-tax income, is therefore rapidly becoming a thing of the past thanks to our efforts, saving Freelancers huge amounts of tax in the process.

In the same way we continue to work tirelessly with mortgage lenders to maintain underwriting based on a multiple of your contract rate alone and doing away with the traditional accounts and payslip based approach which so often restricts what you can borrow. Indeed we are on the threshold of offering another unique initiative on the contractor mortgages front. Watch out for next month’s Planet Contractor for details.

So, how can the Intermediary of the Year help you?

The award winning team are on hand to ensure that you have the knowledge you need to make the most of all the opportunities, whilst guarding against the pitfalls that your freelancing life may throw at you. We understand that finding the time to look through all the different contractor mortgage, protection and investment options is unrealistic when you are trying to satisfy the needs of your client and this is where our fully qualified advisers can really help.

A solution tailored to you…

As specialists, the team at Contractor Financials can help you find a solution to suit all your needs.

-       Replace existing life insurance so that it is paid tax efficiently by your company

-       With seasonal illness and dangerous roads a constant hazard at this time of year we have negotiated income protection based on gross contract rate rather than drawings to ensure you have peace of mind in the event of a claim

-       Save tax today whilst planning for tomorrow with a specialist contractor pension

-       Buy your first or next home without the lottery of approaching a lender direct by using our contract based affordability criteria and pay none of the usual broker fees for our advice

To find out more about how our award winning advisers can help visit www.contractorfinancials.com or call us on 0845 062 8888