Scottish Widows is a highly regarded lender known for accommodating applications from day rate and hourly rate contractors.
A notable feature of Scottish Widows is their offset mortgage products, an advantageous option for contractors and freelancers. This involves opening a linked savings account, which can be used to reduce either the monthly payment or the mortgage balance, according to your preference.
Scottish Widows is open to considering applications from contractors operating either through their own limited company or a payroll umbrella.
Scottish Widows’ Approach to Day Rate Contractors:
- IT Contractors: Scottish Widows has no minimum daily rate for IT contractors. Even if you have a day rate as low as £100, Scottish Widows will consider your application. They are particularly keen on IT contractors and freelancers.
- Non-IT Contractors: For non-IT contractors, a minimum day rate of £312.50 is required for Scottish Widows to consider the application under their contractor policy.
- First-Time Contractors: Scottish Widows will consider day rate contractors who are on their first contract, provided they have been working in a similar role for the previous two years.
- Remaining Contract Duration: The lender requires a minimum of four weeks remaining on your contract. They understand the short-term nature of contracts and do not insist on a lengthy remaining period. For contracts with less than four weeks left, they may ask for an extension or a new contract.
- Employment Gaps: Continuous work over the preceding 12 months is preferred, with allowances for holidays or brief breaks. However, extensive gaps may necessitate considering other contractor-friendly lenders.
Calculation of Gross Contract Value by Scottish Widows:
- Scottish Widows calculates the gross contract value by multiplying the daily rate by five (for a standard working week) and then by 48 weeks.
- They do not use the average of the previous year to determine the daily rate.
Example Calculations:
- Day Rate: £350 per day x 5 days x 48 weeks = £84,000 gross contract value.
- Hourly Rate: £42 per hour x (stipulated or 37.5 hours default) x 48 weeks = £75,600 gross contract value.
Application Requirements:
- Proof of ID (such as a Passport or DVLA Licence).
- Proof of Address (such as a Utility Bill and Council Tax Bill).
- Current Contract with Terms and Conditions, signed and dated.
- Three months of personal and business bank statements.
- Lender’s Direct Debit Mandate, Offset Declaration, and Telephone Banking Form.
- For property purchases, proof of deposit or a gifted deposit letter, with a template provided by us if necessary.
Having all required documents at the outset aids in efficiently presenting your application to Scottish Widows’ contractor mortgages department, ensuring a swift and favourable outcome.
At Mortgage Knight, we specialise in guiding contractors through the mortgage application process. Trust our expertise to provide the professional advice and support your application needs.
Scottish Widows Offset Mortgage
Scottish Widows is a well-established and highly regarded mortgage lender, particularly noted for its flexible approach towards contractors, including those on day rates or hourly rates. Whether you’re an IT professional or working in a non-IT field, Scottish Widows offers mortgage products tailored to meet the unique needs of contractors and freelancers
Offset Mortgages: Ideal for Contractors
One of the standout features of Scottish Widows is its offset mortgage products, which are especially beneficial for contractors and freelancers.
This mortgage type allows you to open a linked savings account, which can be used to reduce either your monthly mortgage payment or the outstanding mortgage balance.
You have the flexibility to choose based on your financial circumstances, making it a highly advantageous option for those with fluctuating incomes.
Contractor-Friendly Policies
Scottish Widows demonstrates a progressive approach to assessing contractor mortgage applications. They welcome applications from those operating through their own limited company or a payroll umbrella. Their contractor-specific policies are designed to make the mortgage process smoother for this group of workers.
Scottish Widows’ Approach to Day Rate Contractors
Non-IT Contractors
For contractors in non-IT fields, the lender sets a minimum day rate of £312.50 to qualify under their contractor mortgage criteria.
Gross Contract Value Calculation
Scottish Widows calculates the gross contract value using the following method:
Day Rate Contractors
The daily rate is multiplied by five days per week, then by 48 weeks to account for a typical working year.
Hourly Rate Contractors
The hourly rate is multiplied by the stipulated or default 37.5 hours per week, and then by 48 weeks.
Example Calculations:
Required Documentation for Mortgage Applications
To ensure a smooth and efficient application process with Scottish Widows, having the following documentation prepared is essential:
Proof of Address (e.g., Utility Bill, Council Tax Bill).
Direct Debit Mandate, Offset Declaration, and Telephone Banking Form (as required by the lender).
Having these documents ready from the outset will help expedite the mortgage process and improve the chances of a swift, favourable outcome.
Why Choose Mortgage Knight?
At Mortgage Knight, we specialise in navigating the complexities of contractor mortgages. With our in-depth knowledge of Scottish Widows’ contractor-friendly policies, we provide personalised advice and guidance throughout the application process. Trust our expertise to ensure your mortgage application is presented professionally and efficiently, maximising your chances of approval.
Let us help you secure the right mortgage for your needs, so you can focus on what you do best.