This is something that many of my colleagues question. Some have even postponed going ahead with a mortgage as the information that they received was either a) wrong or b) not explained in the correct way. This ultimately left them saving for even longer whilst at the same time struggling to pay their rent when they could have been paying their own mortgage off.
I am trying break down this information to help explain each of the options;
In social work there are a variety of different ways that you can practice;
1. Permanent staff on a fixed contract (local authority, private or voluntary sector)
or Self-Employed as an Agency Social Worker which can be through a;
2 Limited Company, 3 Sole Trader or 4 Umbrella Company
I for one have been one of those social workers who was provided with incorrect information which has caused me added stress. You need to ensure that the mortgage broker that you are speaking with has a sound knowledge and can understand you individual circumstances and information.
1. Permanent staff on a fixed contract within a local authority, private or voluntary sector
This is definitely the easiest one to start writing about. If you are a Social Worker on a fixed contract you should be able to find a lender. Sometimes it’s easier if you have been in the post for over 12 months but that is not always necessary. Social Workers on a permanent contract can be accepted by a lender before this time and there are even some lenders who specialise where contracts have only just started or just about to start.
If you would like any advice on this I know some good mortgage brokers that specialise in this area so please contact me.
Agency Social Worker mortgages
This can be split in to three areas; Sole Trader, Limited Company, Umbrella company.
Many social workers are starting to become agency social workers and these usually don’t offer a long term contract which can add to the stress of having a mortgage accepted in the first place.
As I was saying earlier this is the one that many people ask me about. It always seems confusing and some brokers may not specialise in this area and some people are told not to bother/ are declined. But don’t panic some do and it can happen, it did for me.
Lenders like to know that you are in a secure place and as we know agency roles don’t really provide us with this and there are the risks that we may then not be able to pay our mortgage that month.
Now to get over this hurdle there are a few things we need to improve our chances of getting this mortgage that we have been waiting for;
- If you’ve been in the same role with the agency for over 12 months things are going to be a lot simpler to sort
- If you have a fairly good credit history for a few years this will really help
- If you’ve managed to save at least 5% for the deposit if you have good credit and you will need around 20% if your credit score isn’t very good.
- You would have to be borrowing no more than 5 times your income if you have good credit or no more than 4 times if your credit score isn’t very good.
2. Limited Company Social Worker
I am registered through my own Limited Company and the reasons I have done this is because I want to remain as an Agency Social Worker for a number of years and it worked out as the better option for me at the time.
Now this can become complicated when trying to get a mortgage. I found that the majority of lenders wanted me to have 2-3 years accounts. Now, at the time I didn’t have this and I only had 1. This is me trying to reassure you that there are lenders out there that can do it. You just need to find the right broker to help you get this. If you have your limited company the lender will be looking at the salary and dividends that you have paid yourself.
3. Sole Trader Social Worker
Although setting up as a Sole Trader is a lot easier than setting up your limited company. The mortgage lenders still have similar requirements from you. The big difference here is as a Sole Trader the focus is on your net profit. Ideally they still want to see 2-3 years accounts but as I said there are still specialists out there who can help and guide you.
4. Umbrella Company Social Worker
If you are a Social Worker through an Umbrella Company normally the Agency you are with referred you to this Service. This again is not as straightforward as it could be if you have a permanent contract. Again, the worry is that you may not securely be in this role and that it could end. This is very similar to Limited Company and Sole Trader requirements when you are a Social Worker.
As I said earlier I know some mortgage brokers that specialise in this area and they were fantastic with helping me to get my mortgage. Just let me know if you want me to pass on your details or if you have any other questions please don’t hesitate to contact me.