IT contractors seeking mortgages

As an IT contractor you can either set up your own limited company or else become part of an umbrella company.

In terms of getting finance from banks, the difference is (I think) that if you set up your own company you are said to be self employed - but with an umbrella company you are deemed to be an employee of that company.

Is this a clever way around getting mortgages ? Or do the banks ignore this technicality and just treat you as self employed anyway?

HAs anyone any experience in doing this?

What about this key thread?

Company to hold investment property

Thanks clubman but i think you misunderstood my post.

I do not want to buy any property through a company.

Basically I am an IT contractor and am looking for mortgages to buy property in a personal capacity.

When looking for mortgages, as an IT contractor having set up a limited company for IT services,I am deemed by the bank to be self employed if I look to raise finance to buy property in a personal capacity.

If however I join an umbrella company,technically I am said to be an employee of this umbrella company i.e. not self employed.

DO the banks go along with this when giving out mortgages for IT contractors? ((i.e. treat me as an employee of a company)

Or do they still treat you as self employed regardless ?(And therefore look for a couple of years trading accounts)

OK - I did misunderstand your point. Sorry.

edit..

I'd secind ITF's reply. You're accountant should be able to provide payslips and this will effectively mean you are treated as a normal employee.

I have gone through this process over the past couple of months.

Hi,
I talked to my own bank with whom I have an account for the last 10 years. I assumed having set up my own company that I would be in mortgage purdah for a year or two. But no... I was offered five times contractor salary after 5 months contracting. I was very surprised.
Gearoid

I have had the opposite experience. Any time I have bought a property as an IT contractor, I have always supplied company accounts and signed company statements from my accountant.

Probably because I pay myself very irregurlary, when I need the cash!

Never had a problem getting a mortgage though, I think the banks know the score and dont discriminate.

hAVE ANY OF YOU HAD THE SAME EXPERIENCE WITH BANKS ABROAD?
sPECIFICALLY IN cee?

Where's cee?

camel said:

Where's cee?

Click to expand...

Central/Eastern Europe

qwertyuiop said:

As an IT contractor you can either set up your own limited company or else become part of an umbrella company.

In terms of getting finance from banks, the difference is (I think) that if you set up your own company you are said to be self employed - but with an umbrella company you are deemed to be an employee of that company.

Is this a clever way around getting mortgages ? Or do the banks ignore this technicality and just treat you as self employed anyway?

HAs anyone any experience in doing this?

Click to expand...

My personal experience is that the banks all ignored the financial construction completely and looked at my pay slips and the cash flow into my personal account over a relatively short period of time (3-6 months). They weren't interested in the company at all. Maybe times have changed recently but they offered me a mortgage without any unusual penalties or clauses. So just phone up and ask the banks (anonymously if necessary) what their policy is. This is precisely the sort of work a mortgage broker would be expected to do for you to justify his (outrageous) kick back.