Aldermore has changed its criteria to allow sole trader or limited company self-employed contractors to apply for its mortgages, with the affordability calculation on an employed gross income basis.
Prospective buyers need either 12 months’ history as a contractor or 24 months in the same sector, providing there are two months remaining or a renewal agreed.
Income for contractors will be determined based on the day or hourly rate of their current contract, multiplied across 46 weeks. The hourly, daily or weekly rate on the latest contract will be used to calculate annual income for underwriting purposes.
Aldermore’s lending criteria will be extended to allow fixed term contractors to be assessed as employed, in addition to those employed via an umbrella company.
The new proposition will focus on flexibility of underwriter decision-making, allowing Aldermore to consider different employment types in history, longer gaps in contracts, up to two contracts being worked at the same time, and “day one” contractors, said the lender.
Aldermore’s 90-95% LTV contractor mortgages
All contractors already have access to Aldermore’s standard mortgage products, up to 90% loan to value (LTV) for self-employed contractors and up to 95% LTV for those working via an umbrella company or a fixed-term contract (FTC).
The lender also offers an adverse criteria range for contractors who may need further flexibility.
This follows the recent expansion of Aldermore’s owner-occupier range, including first-time buyers, the self-employed and people with less-than-perfect credit histories.
Jon Cooper, director of mortgages, said: “We know homebuyers have more varied and complex circumstances than ever before, especially those who are self-employed contractors. Aldermore’s flexible approach for people who are sometimes overlooked enables us to back more customers on their individual merits and enable them to get the mortgage that’s right for them. If the loan makes good sense, we will always strive to make it work and find a solution.”
At the end of April, Aldermore reintroduced a range of mortgages targeting borrowers who have experienced credit difficulties.
Level one (lowest adverse tier) and two rates start from 5.44% and 5.84% respectively and are available up to 95% LTV, while level three, which comes with a 6.34% rate, is offered up to 80% LTV.
All tiers carry a £1,999 arrangement fee.
Victoria Hartley is contributing editor at Mortgage Solutions, Specialist Lending Solutions, Your Money and Your Mortgage at London-based publishing company AE3 Media.
She has an MA in Radio from Goldsmiths after gaining a 2:1 in a Comparative American Studies BA at Warwick University. She also holds a TEFL qualification and taught overseas in Mexico and Japan from 1994 to 1997.
Her role includes editorial oversight of the news, analysis and features, event content management and strategic and editorial consultancy for the AE3 Media group. She is an experienced video, broadcast and live-event host and regularly chairs web and podcast debates and interviews.
Multiple award nominations have resulted in two wins: Santander Media Awards, trade journalist of the year and Headlinemoney Awards, mortgage journalist of the year (B2B). Here is one of the award-winning pieces: https://www.mortgagesolutions.co.uk/news/2011/07/21/exclusive-tale-bailey-fraud-witness/
Previous roles include editorships of Mortgage Solutions, consumer title What Mortgage and trade title Credit Today as well as a stint freelancing for a variety of outlets including The Guardian and Which? Money.
