Contractor Mortgages | CMMEA guest blog by CMME

As we enter the final month of 2017, we take a look at what the new year could bring for contractors and the self-employed. With a number of important changes scheduled to take place, we examine five things you really should start thinking about in preparation for 2018.

1. No more issues with online SA302s

Over the past year, self-employed individuals looking to take out a mortgage have experienced a great deal of trouble getting lenders to accept print outs from HMRC online accounts. As the government tried to phase out paper copies of the SA302 document – which detailed an individual’s tax calculations and yearly tax overview and was required to complete the mortgage application process – and replace them with self-served online printouts, there were reports that many lenders were refusing to accept such printouts, leaving the self-employed and contractors unable to borrow.

However, with news that HMRC has come to an agreement with UK Finance and published a list of lenders who will accept the new digital copy, things are looking up for those self-employed workers looking to buy a new property. That being said, if you’re self-employed and feel like you need advice or assistance with your mortgage, it’s still a good idea to utilise a specialist brokers’ expertise.

2. Changes to PRA

From the 30th September, changes to the regulations surrounding buy to let mortgages kicked in and began impacting the way portfolio landlords applied for a mortgage. The new PRA rules stipulate that any landlord with four or more mortgaged buy to let properties will be considered a portfolio landlord and will have to go through a series of new checks when they apply for a mortgage. This new checking process requires a great deal more paperwork and documentation and is more complex than the existing lending arrangements. If you’re a portfolio landlord and are thinking about taking out a new mortgage you may want to be prepared.

3. Think about mortgage protection

If you’re looking at taking out income protection insurance in 2018 may be a good idea to take the idea seriously. This kind of insurance often protects you in the case of illness and redundancy and can ensure your family aren’t encumbered with your mortgage payments should anything terrible happen. With the economic uncertainty of Brexit looming, this might be the time to look at your protection options.

4. Cut to dividend allowance

When the Chancellor of the Exchequer reaffirmed his commitment to cutting the Dividend Allowance from £5000 to £2000 in April 2018, many felt contractors were being unfairly targeted. However, this move will affect individuals in different ways depending on their personal financial circumstances. As we move into the new year, it’s vital that those affected by a cut in dividend allowance understand what it means for them and what they could expect to pay.

5. Bank of England base rate rise

With news that the Bank of England have increased interest rates for the first time in a considerable amount of time, it’s important to think about the impact such a move (and any future moves) could have on the cost of borrowing.