Closing down sale on Barclay’s contract based mortgages – 4 days to go!
In a major blow to the Contractor community, Barclays informed us last week that they will no longer be willing to lend based on a multiple of your Contract rate alone. In a bid to help as many of our clients as possible we have managed to secure a one-week extension which means that we have until Friday 20th to submit your application. We expect the phones to be ringing off the hook and so would urge clients that may be looking to buy to act quickly in their hunt for a house purchase/remortgage to secure the mortgage amount that you need before it’s too late.
A blow for Contractor Mortgages
Barclays have been one of the key lenders offering contract based underwriting since we started to negotiate these offers back in the 1990s Even post-credit crunch and with the FSA unhappy about anything that does not conform to traditional mortgage underwriting, the Barclays announcement still comes as a shock. Whilst we have managed to negotiate our specialist underwriting arrangements with other lenders, there is a concern that they may follow Barclays lead in the future and as such we are cautioning clients that contract based underwriting should be made use of now whilst you still can secure the loan size you need.
We continue to speak to other banks and building societies as we try and put in place other options for the UKs Freelancer community but with Barclays pulling out of the market this will prove more difficult. We are determined, however, to continue fighting on behalf of Contractors to try to ensure that you aren’t penalised for your working status when it comes to getting a mortgage.
What will be the alternative?
If we lose contract based underwriting entirely you will be forced to arrange a mortgage based on traditional lines using your accounts. This will have a huge impact on those new to contracting who won’t have accounts and will reduce the amount that you are able to borrow because inevitably your accountant will have done his/her job and minimised your taxable income. Basing affordability simply on a multiple of your annualised contract rate has allowed us to secure far larger loans than would otherwise have been possible meaning that you can , in almost all cases, borrow as much as (if not more than) when you were a permie.
With self cert mortgages all but dead and contract based under writing under threat, the future of homeownership for Contractors looks uncertain. Indeed policymakers are already talking about an entire generation of the wider population that will be frozen out of homeownership by more stringent deposit and income requirements and sadly Contractors may now be joining their ranks.
Buy now rather than wait?
Whilst we appreciate that you may have been considering buying at a later date there could very well be a case for bringing forward those plans to access the contract based underwriting. A client last week suggested that this all sounded like a sales ruse on our behalf and we explained in the strongest terms that we don’t make a habit of being alarmist. Having been active in this specialist field for over 12 years now and in contact with mortgage lenders at the very highest level over that time, this move by Barclays needs to be understood in the wider context of the authorities desire to turn back the clock to an age when credit was far less readily available. It is for this reason that we urge clients to consider applying now for a contract based mortgage in order to ensure you get your foot on the property ladder or move up that ladder whilst you still can.
How do I apply?
Barclays have given us an extension on until close of play on Friday 20th August 2010. This means there is now a race against time to submit applications before this deadline.
You will need a signed copy of your current contract, your last three months personal and business bank statements and a valid UK passport or driving licence. We will also need your CV, two recent utility bills and a signed declaration (which we will email you).
We can fill in your application over the phone to speed up the process and will be able to submit it and this will secure your mortgage with Barclays in time for deadline. Please make sure that you call or email as soon as possible to take advantage of Barclays contractor mortgage offering. We anticipate being extremely busy over the coming week and urge you to give yourself as much time as possible to get the loan application underway before the Friday 20th deadline. Our mortgage team will be on hand to help all week and will endeavour to get your application through on time.
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