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More Mortgage Application Trouble for Contractors

More Mortgage Application Trouble for Contractors

This month a study revealed that the biggest dilemma for UK self-employed contractors was to get a mortgage. 

The poll by PCG, the leading professional association that represents freelancers and contractors, found that many self-employed Brits’ personal finances are affected but 38% of contractors surveyed confessed that the biggest struggle was the battle to get a mortgage.

According to the findings, a mortgage is the main barrier that contractors have to overcome because it causes trouble when proof of salary by an employer is required. 

However, this obstacle is only said to get worse due to the recently launched Mortgage Verification Scheme. Under this scheme, mortgage lenders who suspect that an applicant has provided fake income figures to boost their borrowing power can pass the detail onto HM Revenue & Customs for a cross-check.

Contractors who make income declarations to mortgage lenders that don’t correlate with figures on tax return forms to HMRC can face an investigation. 

MVS is intended to help lenders pick out fraudulent mortgage applications and therefore help them lend more responsibly. It also gives the taxman the opportunity to ensure data given by freelancers is accurate. 

It is reported that the data exchanged with lenders and HMRC should only be limited however, advice has been issued that it doesn’t necessarily mean going to a second lender if you have been rejected by another because “sophisticated systems” mean that most mortgage lenders share such info. 

If you are self-employed and need advice regarding tax paperwork, mortgage applying and legislation such as IR35 and AWR, get in touch with Nixon Williams today.