In Bristol, there’s an expanding sector known as the “gig economy” which constitutes over a million individuals worldwide. These individuals work under short-term contracts and are deprived of certain benefits available to full-time workers. For instance, they aren’t compensated for sick days or holidays. A significant number of these contract workers provide professional services, while others carry out manual jobs. The surge in e-commerce has also led to an increase in courier roles.
Securing a mortgage can be a daunting task for gig economy workers, as they might be categorised as self employed in Bristol by lenders. To enhance your chances of acquiring a mortgage in such a situation, it’s crucial to develop a solid work history. Generally, having at least one year of employment history stands you in good stead for mortgage qualification, unless your contract extends considerably beyond that timeframe. If lenders regard you as a sole trader, you’d need to show your net profits –your earnings after deducting expenses – and may require the help of a chartered accountant. If you’re operating your own limited company, lenders would usually consider the salary you’ve drawn, plus any declared dividends.
Given the swelling number of contract workers in the economy, lenders are beginning to take a more flexible approach in evaluating their incomes. If you have a history of contract work, and a currently valid contract, some lenders may consider your “day-rate” as a basis for assessment. They would arrive at a yearly income figure by multiplying your day-rate by five, and then by 46 weeks (instead of 52), acknowledging the probability of contractors not being able to work round the year.
Ideal for IT contractors who pick contracts selectively, waiting for more lucrative opportunities.
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Just as it’s wise for self employed in Bristol individuals contemplating a mortgage to get their affairs in order ahead of time, the same principle applies to gig economy workers. Although it’s desirable to minimise tax liabilities, sustainable, substantial earnings are essential when applying for a mortgage, as lenders seek such assurances. Establish a relationship with a mortgage advisor in Bristol as early as possible to improve your prospects. For those on zero-hours contracts, securing a mortgage is possible. However, lenders usually require a year’s worth of earnings and might consider your average annual earnings.
Date Last Edited: February 9, 2024