Saffron Building Society offers bespoke mortgage products for self-employed individuals and contractors, providing loan options that cater to the specific needs of those looking to finance residential homes. With a focus on affordability, Saffron Building Society ensures that its mortgage products are tailored to meet the unique requirements of borrowers in the residential market. Their intermediaries assess applicants and accounts differently, according to how each gets paid for overtime.

This blog post discusses contract-based underwriting, the method used for contractor mortgages. If you are a contractor looking for a loan with flexible repayment options and competitive interest rates, this article is for you. For loan repayment details using the self-employed method, loan applicants can visit our sister website, selfemployedmortgages.com.

Saffron Contractor Mortgages

 Saffron Building Society made significant improvements to contractor mortgage products. To stay updated on all the latest changes, make sure to sign up for our email newsletter.

When the Saffron first opened its doors to applicants, its lending criteria for contractors was strict. Applicants can learn more about the maximum repayment options. It demanded:

• extensive cover from the length of time a contractor had left to run on their contract;
• that the contractor has at least two years’ contracting under their belt.

That’s no longer the case!

Saffron’s lending criteria have softened, showing real intent. They’ve expanded their catch net, and some:

• the building society now accommodates contractors with less than six months on their contract;
• you don’t have to be working in the IT sector;
• you no longer need to have been contracting for two years;
• if you’re working on a contract-to-contract basis, profession is irrelevant.

In short, Saffron BS contractor mortgages are available to ALL applicants, regardless of their income or repayment subject.

Saffron mortgages: documents and evidence

We’re not saying that the building society doesn’t follow responsible lending guidelines when considering applicants with varying years of experience in a specific subject and income levels. As with every mortgage company, it does offer products to applicants with income. The mortgage products are available to applicants of all income levels. Saffron has been providing mortgage products for many years and has many options for applicants.

The Saffron BS contractor mortgage lending criteria, are now more flexible for applicants. The maximum income is subject to the new changes. Let’s take a closer look at their new subject, income, maximum, and years in greater detail.

Apply for a mortgage from Day 1 of your first contract.

The most significant change at Saffron is that they now accept applicants with a minimum income from day one of their contract, and this policy remains unchanged for maximum years.

As long as the applicants have a minimum income and have worked in the same profession for two years, they’re good to go. Don’t forget to enable cookies on your browser for the best user experience.

That two-year history of employment and contracting is important for applicants who want to meet the minimum income requirements. But it could also be all as an employee.

So, in essence, Saffron BS accepts contractors with a minimum of one year of experience and a minimum income from their first contract. To qualify, contractors must be able to:

• evidence of both their employment history and their new contract;
• provide a CV and a copy of the new contract detailing that evidence;
• provide 3-months’ invoices;
• submit 3-month bank statements to corroborate those documents from a financial perspective.

If you need a contract extension after several years, clients or agencies are often happy to help if you explain why it is necessary for your income. This is especially true if the extension is needed to meet the minimum requirements for your financial stability. Our advisors can also offer specific insight on income, having dealt with similar scenarios involving minimum income in recent years.

That’s the first income change; you have to say, it’s an income game-changer for the building society.

Mortgages Saffron offers to contractors.

Saffron offers contractor mortgages up to 90 per cent LTV. This means that individuals with a lower income only need a 10% deposit to get on the property ladder through this lender.

They assess a potential borrower’s annual income based on their daily rate over 48 weeks. The calculation assumes that the applicant invoices for five days of work a week to generate income.

As a rule, they forego the traditional yes/no credit score system and consider an individual’s income.

Instead, they have a team of experienced mortgage underwriters. This enables the building society to assess each mortgage application on its merits.

This practice adds a level of flexibility uncommon on the High Street. It also ensures that they base their mortgage offer to you on your genuine affordability.

Interest only — a change for the better

Another change the building society has made is with interest-only mortgages. They’re now offering them, in specific circumstances*, alongside repayment mortgages.

Introducing interest-only mortgages mirrors changes in the mortgage market nationwide.

 Leeds BS began offering interest-only in its pilot contractor mortgage scheme. Other mortgage lenders are bringing back the once-popular repayment vehicle, too.

Established homeowners will remember interest-only mortgages with great fondness. That’s because they’re a great way for independent professionals to buy their homes.

Due to fluctuations in income, contractors can pay off sizeable amounts of the balance at a time.

This is a practice Saffron not only allows but actually encourages:

“With our variable rate products, you can even pay off capital and enjoy a lower rate. This can help you pay off your mortgage faster.”

*If you’re selling and/or downsizing, this could well be the way forward for you. The most contractors can borrow for interest only is 70% of the home’s value. You must also have £250k equity in the home you’re selling.

Age is no longer a barrier as Saffron moves with the times.

Let’s have a quick chat about the credit crunch. We know that mortgage lenders had to tighten their belts in the fallout from the recession.

This, in some way, led to lenders like Saffron introducing stricter lending criteria.

 It also led to a rise in self-employed numbers in the UK labour market.

At first, commentators assumed that the swell in the ranks came from disgruntled employees. What had they got to lose starting their own business?

Job security was almost non-existent. Wages were frozen. The outlook was bleak. The initial interpretation put the rise in start-up businesses at the feet of ex-employees.

It took a breakdown by age of the UK’s self-employed workforce to see the reality. The over-65s, or ‘olderpreneurs’, accounted for an unexpected percentage of newly self-employed.

As of June 2016, the number of over-65s working is 1.2 million. Based on post-recession history, ⅓ of those are self-employed.

In response, Saffron has removed the barrier of age from accessing self-employed mortgages. You’ll no longer get an automatic “No!” if your mortgage ends after you’re 75.

Each applicant who’s in this situation will receive a ‘refer’ decision. That reference means you’ll leave a ‘soft footprint’ at the decision in the principle stage.

Like all contractor mortgages, your case will receive an individual appraisal. Now, we like to get to know all our customers. In this case, chatting with you to understand your circumstances is imperative.

We need to know how you’ll fund your monthly repayments in retirement. If you’re going the interest-only route, we need to grasp your exit strategy.

Once we’ve collated all that, we’ll pass your application to Saffron’s underwriters.

Again, this is a massive plus for Saffron. Around 400,000 olderpreneurs are in business for themselves in the UK. They may have thought a new mortgage unrealistic. Not any longer!

Saffron – welcoming Contractors from all niches and pay grades

So, do your contract earnings fall short of typical High Street expectations? Or do you offer services in a sector that falls outside the traditional contractor safety net?

If so, Saffron could be the lender for you. Here’s an overview of the building society’s lending criteria:

• You must have worked in the same type of industry for two years prior to application;
• Saffron calculates your annualised income for lending purposes as ((Daily £ Rate × 5) × 48);
• Saffron does not accept applicants with adverse credit scores;
• you must be at least 21 to apply for a contractor mortgage;
• proof of income documentation required is your:
  • current and previous contracts;
  • last three months’ invoices;
  • last three months’ bank statements, showing invoice credits;
  • your up-to-date CV outlining previous employment history.

Saffron can be a great option for contractors who work in industries that other lenders avoid. The rates they offer may be slightly higher than those from other lenders. Especially compared to rates offered by other contractor-friendly banks and building societies. A standard variable rate mortgage with, say, Halifax would attract a lower rate. And the monthly payments would be a lot cheaper.

But the type of mortgage funding we offer through Saffron isn’t for a run-of-the-mill contractor. Mortgages for, say, IT professionals have become more accessible. But we strive to cater for those career paths less trod, too.

Saffron contractor mortgages are a great addition to our product range. So, do you work in a non-preferred sector and earn less than £312.50/day or £75k per annum? Then, yes, they could provide the missing key to your search for home finance.