Applying for a mortgage as a Daily rate contractor ?

Bigmac1euro · 17-01-2019 12:03pm #1

I work in IT as a daily rate contractor for the past 5 years.
I have an accountancy firm which manages my taxes.
I am under a PAYE structure and not as a sole trader or Private Ltd Company.

Does anyone know if the banks are giving mortgages to this type of contractor ?
Or has anyone any experience getting a mortgage as a Daily rate contractor ?

Woden · 17-01-2019 12:29pm

In the uk there exists brokers with a specialist flavour for handling contractors, mortgages and all that comes with it. See if there is an equivalent in Ireland?

https://www.mortgages.ie/go/specialist_mortgages
https://www.peppermoney.ie/self-employed-mortgage/

Car99 · 17-01-2019 12:34pm

Talk to a mortgage broker thats what I did and I got a mortgage, had to have three years accounts though.

Bigmac1euro · 17-01-2019 12:57pm

Car99 wrote: »

Talk to a mortgage broker thats what I did and I got a mortgage, had to have three years accounts though.

This makes me feel better, are you a daily rate contractor?

Phileas Frog · 17-01-2019 1:21pm

Ulster Bank require 12 months of contracting behind you, and a signed contract in front

(I'm a day rate contractor going through the same process)

srsly78 · 17-01-2019 1:50pm

I just did it as well. It's very annoying because the banks are clueless about the law - they don't know difference between sole-trader and limited company, and they don't realise most small companies are audit-exempt. Also they keep asking for paper accounts when the official ones are on cro.ie.

Car99 · 17-01-2019 3:35pm

srsly78 wrote: »

I just did it as well. It's very annoying because the banks are clueless about the law - they don't know difference between sole-trader and limited company, and they don't realise most small companies are audit-exempt. Also they keep asking for paper accounts when the official ones are on cro.ie.

Audit exempt? IT contractors are in revenue spotlight.

https://www.irishexaminer.com/business/revenue-takes-17m-haul-from-contractors-346864.html

Bigmac1euro · 17-01-2019 4:05pm

Phileas Frog wrote: »

Ulster Bank require 12 months of contracting behind you, and a signed contract in front

(I'm a day rate contractor going through the same process)

Well I'm on the same contract for 5 years so it shouldn't be an issue.
This is good to hear. Any advice for when I do approach the bank ?

As posted above I'd probably be best going for a broker who specializes in the area.

I just found it hard to find any info on daily rate contractors going for a mortgage.

srsly78 · 17-01-2019 4:06pm

Car99 wrote: »

Audit exempt? IT contractors are in revenue spotlight.

https://www.irishexaminer.com/business/revenue-takes-17m-haul-from-contractors-346864.html

Yes and? Banks require a tax clearance cert from all self-employed people.

Audit exempt means you do not have to get audited every year, but anyone can still be subject to a random audit. You can lose this status if you don't pay your tax.

Roberto_gas · 17-01-2019 11:11pm

steo_magra wrote:

Well I'm on the same contract for 5 years so it shouldn't be an issue. This is good to hear. Any advice for when I do approach the bank ?

Ptsb gives mortgage if u have been over 2 years in contracting..

wally1990 · 18-01-2019 12:19am

There are a number of misconceptions among Independent Professional Contractors when it comes to the perceived difficulty of getting a mortgage.

There are literally thousands of self-employed people who are eligible for (and have successfully gotten) mortgages.

For the most part the process is very similar to being an employee, but there are a few extra documents you’ll need – but your accountant will prepare these for you.

These tend to be;

1 to 2 years financial accounts (some banks will settle for one year’s accounts)

6 months business bank statements (including business credit cards)

2 years Revenue Notices of Assessment (Tax Returns) or P.60’s

Tax Clearance confirmation Once your documentation is up to date and you have sufficient income,

you are no worse off than an employee in your application to get a mortgage.

In fact, you’re probably better off as it’s likely you will be earning more as an Independent Professional Contractor than you would be doing the same job as an employee.

This means you can afford to borrow more.

Phileas Frog · 18-01-2019 7:39am

If you're going to lift content directly from the Contracting Plus website, could you please credit your source, rather than trying to pass it off as your own?

CIARAN_BOYLE · 18-01-2019 8:29am

srsly78 wrote: »

I just did it as well. It's very annoying because the banks are clueless about the law - they don't know difference between sole-trader and limited company, and they don't realise most small companies are audit-exempt. Also they keep asking for paper accounts when the official ones are on cro.ie.

The filed accounts are probably abridged short form accounts. Full accounts need to be prepared as well and the banks can ask for them.

Also the banks often want limited companies to undergo an audit before lending to them or to directors based on income of the company.

So the company may be audit exempt but it can still opt to undergo a voluntary audit.

Often banks require this. Sometimes they don't.

Bigmac1euro · 18-01-2019 6:30pm

Should I get income protection insurance ?
Has anyone been asked by the banks what happens if you fall ill ? Obviously as a DRC we don’t get paid holidays.

Income protection is something I’ve been planing on taking it for a while now.
I’ll probably take it out before I go for a mortgage to be on the safe side so if they do ask me about being sick I can say well I have this set up with Aviva or whoever I choose.

LincolnHawk · 18-01-2019 8:29pm

The bank will fall over themselves to set you up with income protection anyway but it won't affect mortgage eligibility.

I got a mortgage as a contractor no problem. The info yer man copied from Contracting Plus is exactly what I had to provide.

spectre · 20-01-2019 10:52pm

I was in your positition 5 years ago. Was no trouble to get mortgage approval. I had full approval from KBC, AIB and EBS. Rate was in the low 400s at the time and I had a 20% deposit and was borrowing 250k, although I think I had approval for more (maybe 300k).

I didn't have my own company, I was operating through an unmberalla company (as a director) and paying PAYE every month.

Banks do not understand this type of employment. I didn't need to supply audited accounts. Do not tell them that you are self-employed - you presumably pay yourself all income as PAYE salary each month, therefore in the bank's eyes, you are treated as a PAYE worker.

I had to supply three years of P60s which needed to be stamped and signed by the accountant that runs the umberella company. I also needed to supply my CV as part of the application - this is to show a good track record of not being out of work.

Regarding Income Protection, the banks will not insist, nor even suggest you have it. I've never had it, thankfully have never needed it. Would be interested to know what kind of quotes you get for it. It is a tax deductible expense as far as I'm aware so depending on the quote, it may make a lot of sense in taking out this kind of policy.

Dante · 20-01-2019 11:39pm

I'm in a similar position, currently contracting in London through my limited company but planning on buying a house back in Dublin in next couple of years.

I'm curious as to how banks would calculate the amount they are willing to lend assuming the typical low salary-high dividend pay model. I assume the usual 3.5x salary doesn't apply.

spectre · 20-01-2019 11:57pm

DaaaaaaaaaaN wrote: »

I'm in a similar position, currently contracting in London through my limited company but planning on buying a house back in Dublin in next couple of years.

I'm curious as to how banks would calculate the amount they are willing to lend assuming the typical low salary-high dividend pay model. I assume the usual 3.5x salary doesn't apply.

Probably not as you're not paid an annual salary. The earnings as per the previous year's P60 should be counted as the "salary" I expect.

If the bank is being prudent, it should not be lending 3.5x this amount, given that the work is not permanent. 3X should be doable though, assuming you can take out a 25+ year mortgage.

quietsailor · 21-01-2019 12:34am

steo_magra wrote: »

I work in IT as a daily rate contractor for the past 5 years.
I have an accountancy firm which manages my taxes.
I am under a PAYE structure and not as a sole trader or Private Ltd Company.

Does anyone know if the banks are giving mortgages to this type of contractor ?
Or has anyone any experience getting a mortgage as a Daily rate contractor ?

Future readers/OP,
Loads of people are giving advice about needing audited accounts -- That's incorrect advice. The OP is in a PAYE relationship with a company, it's daily rate/contract PAYE (whatever way you describe it yourselves) but it's PAYE!!!

OP, the people you need to talk to are the payroll/accounts dept of the people you operate with/through. They'll be the ones stamping your salary cert, and if you have a good relationship with them, the words "Self Employed" need never appear on the cert, your PAYE so for gods sake don't complicate things with the banks.

I was in the same situation as a PAYE contractor two years ago and my company were willing to stamp the salary cert for me and there was no mention of self employed - I had P-60s to back up my wage claims and and enetered that data on the saalry cert which my employer duly stamped.

One thing I'd advise about salary certs;

Get a list of all the banks & brokers you intend to apply through/with
Get a copy of all their salary certs.
Fill them in with the same data on every one, don't get cute!
Email them to your payroll manager in one go.

Don't send them into payroll in several emails, it will piss them off having to repeatedly check your info and stamp certs for you.

Similary if you are making multiple applications different banks have differnt requirements for statements - some require 6 months and some required 3. GO back through your last 6 months statement on EVERY financial account you own and check them.
Print them off and photocopy them, your salary cert, address proof, id proof etc in one go X however many applications you're going to make (plus one for a spare!)
That way you know all your data is there when you supply it to the bank/brokers. If you photocopy at different stages for different banks/brokers there is a chance you will miss something and have to re-apply. We'd applied to 10 different places so you can see if you make a few mistakes how quickly it gets messy. We just sent in the max requirement for each type of doc for each bank. It saves trying to figure out "6 months statements account X for AIB, but 3 months for of the same account for BOI"

If you get the chance ask to hand in the docs to the bank and ask them to scan+email them. We got several of our docs back in badly sealed envelopes, open envelopes etc. AIB envelopes were so **** the gum was non-existent and docs had gotten lost; my ID proof, address proof and a statement of the account where we had our deposit stashed. That was a nervous weekend until we could contact the bank to transfer the money out in case someone used those missing docs to take the money out.

Bigmac1euro · 21-01-2019 12:48am

quietsailor wrote: »

Future readers/OP,
Loads of people are giving advice about needing audited accounts -- That's incorrect advice. The OP is in a PAYE relationship with a company, it's daily rate/contract PAYE (whatever way you describe it yourselves) but it's PAYE!!!

OP, the people you need to talk to are the payroll/accounts dept of the people you operate with/through. They'll be the ones stamping your salary cert, and if you have a good relationship with them, the words "Self Employed" need never appear on the cert, your PAYE so for gods sake don't complicate things with the banks.

I was in the same situation as a PAYE contractor two years ago and my company were willing to stamp the salary cert for me and there was no mention of self employed - I had P-60s to back up my wage claims and and enetered that data on the saalry cert which my employer duly stamped.

One thing I'd advise about salary certs;
Get a list of all the banks & brokers you intend to apply through/with

Get a copy of all their salary certs.

Fill them in with the same data on every one, don't get cute!

Email them to your payroll manager in one go.

Don't send them into payroll in several emails, it will piss them off having to repeatedly check your info and stamp certs for you.

Similary if you are making multiple applications different banks have differnt requirements for statements - some require 6 months and some required 3. GO back through your last 6 months statement on EVERY financial account you own and check them.
Print them off and photocopy them, your salary cert, address proof, id proof etc in one go X however many applications you're going to make (plus one for a spare!)
That way you know all your data is there when you supply it to the bank/brokers. If you photocopy at different stages for different banks/brokers there is a chance you will miss something and have to re-apply. We'd applied to 10 different places so you can see if you make a few mistakes how quickly it gets messy. We just sent in the max requirement for each type of doc for each bank. It saves trying to figure out "6 months statements account X for AIB, but 3 months for of the same account for BOI"

If you get the chance ask to hand in the docs to the bank and ask them to scan+email them. We got several of our docs back in badly sealed envelopes, open envelopes etc. AIB envelopes were so **** the gum was non-existent and docs had gotten lost; my ID proof, address proof and a statement of the account where we had our deposit stashed. That was a nervous weekend until we could contact the bank to transfer the money out in case someone used those missing docs to take the money out.

Thanks for the reply. This will be very helpful when the time comes. I’ll follow your advice. It gets me confused when people keep saying self employed (which I kind of am) vs a Paye worker. But as you say I’m not Self Employed to the bank.

quietsailor · 21-01-2019 9:15pm

steo_magra wrote: »

Thanks for the reply. This will be very helpful when the time comes. I’ll follow your advice. It gets me confused when people keep saying self employed (which I kind of am) vs a Paye worker. But as you say I’m not Self Employed to the bank.

You ARE a paye worker, you happen to be on a contract that has a finite length rather than a permanent position that keeps going until you retire but you are PAYE.

I cannot emphasize this enough, do not ever mention self employed. Do not mention the word contract if you can LEGALLY avoid doing so. It just opens up cans of worms that makes your mortgage process far more stressful!

Bigmac1euro · 04-03-2020 6:34pm

As expected the process of my application has come to halt as the bank seems to think I’m self employed and my umbrella company cannot provide the information to say I’m not. Nothing is making sense and the situation has become a bit of a nightmare.
The bank requested 3 years accounts and a few other bits and bobs which aren’t obtainable as I’m PAYE from a tax perspective.

If anyone is setup the exact same way as me I would be curious to see how they provided the information to the bank. In fact I would be more than greatful if anyone has any information on this matter because nobody seems to know.

I am an employee of an umbrella company
I am PAYE
I am a daily rate contractor
I am not self employed.
I am not a director like some posters above are.

ahnowbrowncow · 04-03-2020 6:48pm

Bigmac1euro wrote: »

As expected the process of my application has come to halt as the bank seems to think I’m self employed and my umbrella company cannot provide the information to say I’m not. Nothing is making sense and the situation has become a bit of a nightmare.
The bank requested 3 years accounts and a few other bits and bobs which aren’t obtainable as I’m PAYE from a tax perspective.

If anyone is setup the exact same way as me I would be curious to see how they provided the information to the bank. In fact I would be more than greatful if anyone has any information on this matter because nobody seems to know.

I am an employee of an umbrella company
I am PAYE
I am a daily rate contractor
I am not self employed.
I am not a director like some posters above are.

I think the poster above hit the nail on the head.

There's no reason to mention contracting to the banks at all as they'll assume you're self employed, which it appears they have.

Once you're taxed under PAYE and your payment frequency and amounts are consistent I don't see why they'd treat you any differently than other fixed duration employments.

un5byh7sqpd2x0 · 04-03-2020 6:54pm

Have you spoken to EBS directly? I was in exactly the same situation as you are last year - other than I was a director of an umbrella company - and they were the only ones that listened to me, approved for 3.5 x the past 3 P60s and no requirement for company accounts or anything like that. I had only been contracting for 12 months prior to speaking with EBS

Applying for a mortgage as a Daily rate contractor ?

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