Securing a mortgage as a contractor is a challenging task.
Factors such as the cost-of-living crisis and a slow jobs market make it unsurprising to hear contractors say they’re concerned about getting a mortgage. Throw in an uncertain economy and fluctuating interest rates, as we have in 2024, and the challenge becomes all too obvious.
Have 2024 mortgage rates passed their peak?
According to Lloyds Banking Group’s insight into the housing market for 2024, “Despite indications that mortgage rates are past their peak and that rates are reducing, they're still up from the low levels that people had become used to.” Lloyds added, "Two years ago, we saw rates sit around 2-3%, with some even dipping under 1%, but for those remortgaging in the coming year, that will more likely be around 4% and 4.5%. As a result of this, we can expect to see people trying to manage their repayments through longer-term mortgages, so we assume we’ll see that trend continuing through 2024.”
As of April 2024, the Bank of England's base interest rate in the UK stood at 5.25%, following 14 consecutive increases from December 2021 to August 2023. These successive rate hikes have profoundly impacted mortgage rates across the board and left contractors, who already face challenges in securing loans, facing the prospect of higher borrowing costs and stricter lending criteria.
How can contractors enhance their prospects of mortgage approval?
Despite these challenges, contractors can still take steps to enhance their prospects of mortgage approval. These include maintaining detailed financial records, demonstrating continuous employment with the same umbrella company or agency, and working with lenders experienced in catering to the needs of contractors.
At TJW Contract Solutions, we partner with a premier contractor mortgage specialist committed to assisting contractors, freelancers, and self-employed professionals throughout their mortgage journey and beyond. Renowned for their expertise in navigating complex income structures, they have a rating of 5/5 on FEEFO and offer access to an extensive range of tailored products, often unavailable through traditional channels.
If you want help or advice on getting the best mortgage deals available to contractors, visit our website at https://www.tjwcontracts.co.uk/blog/mortgages-and-insurance.
