Taking out a mortgage is a serious matter that should never be considered lightly. Many adults spend years preparing for the financial responsibility to ensure that they have no risk of defaulting or getting behind on payments.
Those who work independently, such as IT contractors, have more to consider, such as how stable their business is, and how much they can afford to put down initially, and how much they can pay per month without going over their budget.
The Business Is Profitable And Stable
One of the most important things to determine before applying for IT contractor mortgages is the state of the business or contracts. This is crucial as it will have a big impact on how much money can be borrowed.
Business should be steady and include regular income, either on a weekly or monthly basis. This can be harder to guarantee as an IT contractor, which is why most rely on either estimates of monthly income, or a yearly average.
Those who are just getting started as a contractor may not have a lengthy history to draw from, which can sometimes complicate things. There are still ways around this, as it is possible to use projected annual earnings in some cases.
It Fits Long Term Career And Financial Goals
Another big question for those looking at mortgages for IT contractors is whether it will fit into their long term career and financial goals. It is a serious commitment, which is why it should be thoroughly thought through.
Like any financial transaction, it is important to go over all of the details carefully to avoid overstepping the budget or over stretching any credit limits. This will help to prevent possible default or missed payments if the work load is reduced from time to time.
One way to avoid stretching the budget is to carefully go over it and see how much money is available after paying all of the other expenses for the business and other necessities.
A good budget is one that includes all of the expenses plus an additional amount in case there is an emergency. If the budget is not quite where it needs to be, then it may be a good idea to either cut unnecessary expenses, or to consider saving for a larger down-payment.
Another consideration is whether the contracting will be a long term career path. Those who may not plan to stay with it for a long period of time may be better off waiting until they establish a new career before taking on such a big responsibility.
You’re Ready To Take The Next Step
After looking at the budget and the outlook for the business, many will find that they are ready to take the next step and secure an IT contractor mortgage in order to purchase their new home.
To make the next step easy, many will often look to a professional for help with the process. A professional is the best choice because they are familiar with the process, and can make it easier for almost anyone to get approved, even if they have only been contracting for a few months.
During the process, a professional will look at any income and estimated income in order to determine the size of any IT contractor mortgages that will be taken out.
John Yerou is MD of Freelancer Financials which specialises in Contractor Mortgages.