If you are employed by an Umbrella Company then you may have heard of something called an ‘umbrella mortgage’. There are home loans out there that are aimed towards professionals underneath an umbrella company. Only specialist lenders offer mortgages tailored toward umbrella employees, this is due to the complexity of the way the companies can be set up.
The good news is that some Umbrella Companies offer what they call ‘umbrella company mortgages’ so you should check if they can offer you a mortgage. You will need to make sure you have been working for at least 12 months to be able to prove you are able to make repayments on your mortgage.
Can I get a Mortgage with an Umbrella Company?
You can get a mortgage with your current umbrella company but it is not your only option. There are a lot of different mortgage products on the independent mortgage market which a Mortgage Broker can access and help guide you through.
It can be easier to go through the umbrella company as they will have a history of your regular income and can look into it much easier. Specialist lenders will look into the overall contract value instead of your income too. This will be subject to the contract being signed and consistent with the pay received and must be over an acceptable amount of time – all of this will vary among lenders so check their criteria.
What are Limited Company or Umbrella Company Contractor’s Mortgage Options?
You can access any traditional mortgage product as an employee of an umbrella company, but it may not be the right option out there in comparison to a specialist mortgage. Lenders will tend to shy away from umbrella companies due to the somewhat complexity of the way they are set up.
Lenders will need proof of income no matter what type of mortgage you are applying and to know for sure the right option based upon your situation it is better to get in touch with a Mortgage Broker. An adviser can talk you through the different options that you can access based upon your own financial position.
How do you Prove your Income as a Contractor?
Lenders will look into your income which can be a bit of a long process depending on how the umbrella company you are employed by is set up. Lenders will need to ensure everything is legitimate while carrying out their affordability checks.
You will need to make sure to have at least the last two ideally three years of accounts prepared and ready for your underwriter or lender to assess. Many limited companies and umbrella companies can run into issues at this stage for not having the appropriate documentation prepared.
If you are on a day rate then lenders will look at your weekly rate and multiply it out to work out an estimated annual income. If you have different contract rates it is worth seeking out help from Mortgage Advisers, you may need a specialist lender to secure a mortgage.
Are Umbrella Companies Affected by the IR35?
To keep it short and sweet, no Umbrella Companies are not affected by the IR35. As you are paid directly as an employee of the company you are taxed as such too, this means your IR35 will not be affected so long as you are an employee.
What is the Importance of a Specialist Contractor Mortgage Adviser?
It is important to get in touch with a professional who can help you to understand everything you are committing to when it comes to your mortgage. Buying a new property can be so exciting but you want to make sure you are doing it all properly and a Mortgage Adviser can help you do so.
Mortgage Advisers know what documentation is required when approaching a lender and can access the independent mortgage market. High street lenders, banks and building societies can offer competitive rates but there are also independent and specialist mortgage lenders who cater specifically towards contractors under an umbrella company.
Mortgages can be a pricey process and the more prepared you are when approaching underwriters and lenders then the more time and money you’ll save yourself. Mortgage advisers have the experience and knowledge to find the right mortgage product for you, no matter what your circumstance.