Day-Rate Contractor on a New Contract Buying their First Home

The pandemic has made life difficult for many borrowers and our client, a day-rate contractor looking to buy his first home, is no exception. Although he needed a mortgage to purchase the £950,000 property he wanted to buy, he was only two months into his current contract following an enforced four-month break from work because of difficulties securing a contract during Covid.

The client was lucky in that he had help from family with the deposit, with a 25 per cent down payment to put towards the purchase. He therefore needed a 75 per cent loan-to-value (LTV) mortgage and wanted to add the lender arrangement fee to the mortgage.

Numerous lenders were sourced but this was a complex case owing to the short period of time he had been on his current contract, the four-month break from work before that and the family-funded deposit, as not all lenders are keen on this.

Key requirements: –

• A lender happy to lend to a day-rate contractor two months into their current contract and with a four-month gap in earnings before that. • A lender prepared to accept a gifted deposit. • A lender who would add the arrangement fee to the mortgage.

After sourcing the mortgage market, we identified a lender who would agree to lend to a day-rate contractor and would agree to our client borrowing the required amount of £712,500.

The application process: To support the mortgage application, the client provided evidence of his contract and identity. We were delighted to inform our client that the lender had issued a formal mortgage offer for the full amount requested.

• Property value: £950,000 • Loan amount: £712,500 • LTV: 75% • Rate: 2.87% fixed for two years • Lender product fee: £999 added to the loan • Monthly payment: £3,335
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