A new Contractor Keyman insurance that we have helped trial last year allows you to fund life insurance direct from your business account, with no income tax or benefit in kind to pay. The premiums should also be ok to offset against your companies corporation tax as a legitimate business expense.

Thanks to a tax efficient trust arrangement you protect your loved ones in the same way as the death in service benefits that you benefited from when you were a permi, whilst saving significant amounts of tax compared to paying for cover from your personal bank account.

In addition to these obvious tax savings, benefits shouldn’t be liable for inheritance tax in the event of your death either.

As well as insuring yourself, any employees (perhaps your Spouse is Company Secretary?) receiving a salary can be protected too. Often it’s all too easy to think about only insuring the main bread winner but with the costs of child care etc rising fast, the loss of a home-maker can be disastrous too.

This cover is flexible enough to accommodate future changes to your employment status because it can be altered to a personally funded plan in the future if required. This feature is vitally important in case you suffer health problems that could make you uninsurable in the future. Protection can be provided until your 75th birthday and can be adapted as your needs change.

Our award winning experts are on hand

As Independent Financial Advisers with well over a decade of experience in advising Contractors we compare the providers that are able to offer this type of policy to ensure that the policy is cost effective for you. We will also painstakingly complete the all important trust documentation on your behalf to ensure that you gain the maximum tax benefits, will help transferring the policy to new trustees if needed in the future and of course will do our best to aid your family in coping if the worst should happen and they need to claim.

We understand that, as a Freelancer, your time is precious so we have streamlined our advice process as much as possible to ensure that you can arrange your policyr with a minimum of time and effort needed on your part. Our award winning protection advisers will discuss your needs via email and phone and will ensure the application is successfully completed and you gain the cover as soon as possible. On receipt of your policy documents you will also know that, compared to personally funded policies, the taxman is now helping you fund that all important protection for your family.

Please contact Catherine Young who is one of our qualified advisers at ContractorMoney today on 0845 066 8888 for more details or fill in a contact form on this site.

Saving levels on the up

In the rosier financial climate of a few years ago it was commonplace for excess income to be spent without much thought, on evenings out, foreign holidays or new cars. Since 2008/9 and the beginning of the recession however, spending on ‘luxury’ items such as these has dramatically dropped. People now think much more carefully about where and how they spend their money and savings accounts and economy plans have become popular, with First Directs research showing 42% of mortgagees are putting money away regularly. Our own experience as advisers shows that clients are increasing their ISA contributions to build up that all important rainy day fund.

Knowledge is power

For most Contractors your mortgage will represent the principle area of concern when times get financially tough and it therefore makes sense to consider overpaying on your loan from excess income or savings whenever possible.

First Direct’s research also shows that an alarming 31% of clients don’t know their exact mortgage interest rate, with 25% not knowing whether they can overpay on their debt, or how.  It is more important than ever that Contractors consider their financial security so examining the terms and conditions attached to your individual mortgage, reassessing whether it is the right mortgage deal for you, and investigating early payment options are all essential steps to take when looking to future-proof your finances.

With the best of intentions….

However, in the survey, 48% of First Direct’s customers said that whilst they would use spare income to overpay their mortgage debt, tellingly only 21% actually do.

Similarly, Freelancers will have every intention of using their savings or excess income to pay off their mortgage but, inevitably, other more pressing matters come up before savings are transferred. For example a new car or repairs to an existing one may be needed or work on the home may need completing and the building up of savings must start all over again.

The press has been full of stories about the future of the Landlord sector and on current trends we predict that home rentals could account for a massive 15-20% of the entire housing market by 2020. Current conditions represent a great opportunity for those savvy Contractors who can purchase now as a long term investment.

Many Contractors choose to build a property portfolio in order to supplement their current and future income, perhaps providing a cushion in the event of suffering a lower contract rate or time between contracts. Others clients have gone on to  build very substantial portfolios  numbering 30+ properties and have given up contracting altogether whilst another type of investor has simply looked on their buy to let as a home for  long term savings to help fund future retirement alongside a more traditional pension plan.

Buy to Let mortgages for Contractors

Funding an investment property purchase is different to our home owner contractor mortgages because affordability is calculated on the rent that a likely tenant will pay rather than just you, the borrowers, income. Typically, the rent needs to account for 125% of the monthly mortgage repayment on the property so choosing a property wisely is the best way to ensure your application is successful. A good location, reasonable purchase price and high local demand should all equal a healthy rental ‘yield’ over and above the mortgage payment. The fact that the income proof required for a buy to let mortgage is calculated in this way will mean that your contract income will have less of an impact on your application but your day job will still need to be represented in as good a light as possible and this is where we bring our expertise to bear.

High street lenders have long been accused of being out of touch with the contracting sector and often continue to offer traditional “thanks but no thanks” responses to contractor mortgage applications when you apply direct. However, ContractorFinancials have worked tirelessly to gain access to a range of products from these same lenders, which are individually tailored to the particular requirements of those working in the contracting sector.

Our Service

Our qualified mortgage advisers here at ContractorMoney, specialise in offering High Street mortgages to contracting professionals. We also charge you none of the usual fees for our advice which will typically save you between £500 and 1% of the purchase price.

“There has been a recent increase in demand for buy to let mortgages, from Freelancers” says adviser Lisa Merriman. “With a 25% deposit, contractors can secure very competitive rates of around 3.5% on a 2 year tracker mortgage and some lenders even offer up to £500 cash back to clients on completion”.

“Even if you have a larger deposit, using a mortgage can be a great way of reducing the tax liability on rental income received as opposed to buying outright or putting down more cash. It also means that you won’t be committing all of your savings.” She adds.  “Various costs can be offset against profits and income and we will be on hand to help along the way.. We appreciate that contractors are incredibly busy people and may not have time to meet in person. We can offer support through phone and email which saves our client’s valuable time and means that you can get cracking with your offer on the property without a delay that could allow another buyer into the frame.”

To talk to Lisa or one of our other qualified mortgage advisers about how a buy to let mortgage may benefit you, call 0845 066 8888 or fill out a contact form on this website.

As IFAs we are uniquely focused entirely on our Contractor clients and pension investment represents one the very few non-contentious tax breaks still available to you so many  were very disappointed when these new rules came out last year. Thankfully an old pensions phrase was reintroduced to our lexicon as ‘carry forward’ allowed the member to utilise unused allowance from the three previous tax years based on the new £50k cap. An example of this would be:

08/09 – £30k investment – Carry forward is £20k
09/10 – £20k investment – Carry forward is £30k
10/11 – £80k investment – Carry forward is minus £30k

Available carry forward of unused allowances is £20k, with the maximum contribution being £70k for the current year if we add your normal £50k allowance.

As the investor has invested £30,000 over the allowable in the 10/11 input period this will have subsequently reduced the available additional investment possible.

However, the rules were revisited by the HMRC late last year and have now been amended which could work out very lucrative to pension savers, especially contractors who are looking to reduce their tax burden and regardless of whether they are caught by IR35 or not. The new rules will nownot incorporate any overpayment in past years, so based on the above example the investor would actually have an additional £50,000 as the 10/11 tax year would simply qualify as a zero figure. If we then add your £50,000 allowance you have a maximum of £100,000 investment open to you.

Contractor Pensions

As you can see, with specialist advice the new allowance need not stop you achieving the tax breaks you seek whilst also boosting your income at retirement. The tax savings shop window is still very much open for business and with tax year end round the corner / company year end on the horizon,  this could be the perfect time to take advantage of the new rules and put in place some effective financial planning from your Contractor Specialist IFA.

If you would like further information on this and our range of flexible Contractor Pensions then please contact Andrew Gains who is one of our qualified advisers at ContractorMoney on 0845 066 8888 or fill in a contact form on this site and we will be more than happy to help.

Currently it really is a buyers market, with most sellers settling for well below the asking price of the property, and many properties remaining on the market for well over a year. Houses are often reduced over a period of time, as they devalue further, and seller’s positions worsen.

There are though various issues that buyers must overcome when applying for a mortgage. More stringent criteria has come into practice, with more and more borrowers finding themselves in the ‘high risk’ group, and mainstream mortgage brokers can end up seriously penalising Contractors, Freelancers, the self employed and those with a commission based wage..

Contractor Money are an ideal ally for those wishing to take advantage of the current drop in housing prices. Our expertise in the field of contractor mortgages is second to none, and our years of experience have contributed to great deals with lenders. You need an advisor who understands the way your contracts workand can to speak to lenders on your behalf.

The specialists at Contractor Money can help anyone looking for a contractor mortgage and will take the stress out of the entire application process,. Simply contact us to discuss your requirements further.

 The Lloyd’s TSB report examines not only the financial circumstances involved in the struggling ‘second stepper’ market, but also notes the perceptions of the borrowers themselves.

 Various factors were found to have impacted the viability of moving upwards for many buyers. Statistics showed that over 60% of first homeowners have hoped to move during the last year in order to take advantage of current low prices, but have been unable to do so. Within these ranks will be many Freelancers

 The affordability criteria used by lenders has altered over recent years, and borrowers who were approved previously may now find that they cannot borrow the amount they need for their next property. This can be particularly problematic for couples who have had a child or changed their employment status since their original home purchase (common as young families often need to move to a more spacious home). Freelancers also face difficulty being approved on affordability from many lenders, however Contractor Money use a contractor friendly affordability criteria which can give clients an advantage.

 Another important factor for many is the typically high deposit now required in order to borrow. Many will have little or no equity in their current property, and would have to save up a large sum of money in order to move. 71% of those asked said they are worried about raising a deposit. 36% quote this as their main reason for not moving. For those in negative equity, raising a deposit may seem impossible.

 Selling their existing property is of course an essential part of taking the next step on the property ladder, and unfortunately sellers who cannot find a buyer are simply unable to take advantage of any mortgage deal they have been offered.  This is where ‘let to buy’ can help. Our advisers can show you how to rent out your current property, releasing capital towards the next purchase.

 With so many unable to move because of the need for larger deposits it has become imperative that Contractors pay as competitive a rate as possible on their current mortgage as savings can build up by way of overpayments on the debt leaving more equity in the existing property. The remortgage desk at ContractorMoney has been inundated lately with Freelancers looking to exploit a fresh raft of competitive deals as lenders battle for market share

The same study also showed: (1) there are 31% who don’t exactly know their mortgage interest; (2) there are 43% who don’t have any idea of their mortgage total cost; (3) and a quarter of the total respondents don’t know if they are overpaying their mortgage. For a contractor or a freelancer, not knowing the details of one’s standing contractor mortgage is very risky. Granting the fact of not having a predictable flow of income, a freelancer or a contractor may end up having overdue monthly contractor mortgages—which is considered a bad credit history.

The study further showed that there are 25% who don’t know if they are allowed to have their mortgage overpaid within a certain period of time, while the other 15% are unaware of their mortgage’s outstanding amount. Having these specific knowledge deficiencies in one’s standing contractor mortgage can hinder flexibility in paying his or her mortgage. Owing to the nature of earning one contractor or freelancer has, overpayment of mortgage has its benefits such as diminish recurring mortgage interest.

Although the result of the study concluded that the number of borrowers overpaying their mortgage is only half the number of borrowers regularly saving in their account, the hypothetical question of how they would use any remaining money has revealed a different one. There are 48% who would overpay their mortgage, 42% who would increase their regular saving deposit, and 33% who would use their spare money to pay off their bank credit cards. Finding among these three the best option to pay less and save more may vary from one situation to another. For contractors and freelancers, flexibility of payment is the keyword for the type of mortgage they need.

The research has drawn further enlightenment in the relationship between savings and mortgage cost. Balancing saving against mortgage, borrower can dramatically lower the cost of his or her mortgage payment at approximately £28.25 per month while still having access to his or her savings should the need arises. This is exactly the type of mortgage loan a contractor or a freelancer really needs. Paying less interest while not worrying too much for any emergency scenario to occur should be the type of mortgage payment contractors and freelancers should be having. This ultra-flexibility of payment is only achievable through offset mortgage.

Senior Mortgage Manager Richard Tolchard of First Direct stated the benefits a borrower can have with an offset mortgage loan. Based on the result of the study, freelancers would choose to put their spare money to savings while half would overpay their mortgage, offset mortgage can provide a benefit in both sides. An offset mortgage allows contractors to lower down their monthly mortgage interest while keeping the flexibility of accessing their savings account anytime.

Also, the study found out that gender and age are two important factors affecting knowledge and view of their mortgages. Except with the specific limit of overpayment, the study noted that men are more conscious of almost all aspects of their standing mortgage. 63% of men are aware of the total cost of their mortgage, much higher than the 52% of women. This finding, however, may not be that relevant to produce a top-notch option for freelancers and contractors on how to make most of mortgage loans available to them. But, of course, this part of the study can be used to remind female contractors to be more conscious regarding the details of their mortgage.

Furthermore, 86% of the age bracket 25-34 has been shown to put their money more on their savings account, while 62% of ages 55 years and above consider or do the same. This suggests that the younger 25-34 age group is more aware when it comes to money matter. Next to the 24% of 45-54 age group, 22% of the 25-34’s have higher probability of overpaying their mortgage. In the study, they have the highest probability of considering overpaying their mortgage at around 51%; this is significantly higher than the 35% of the 35-44’s, 33% of 45-54’s, and 24% of 55 and above age group who also consider overpaying their mortgage.

The study clearly shows that different type of people—having different gender and belonging to different age group—have their own preferences when it comes to money. And for contractors and freelancers, flexibility in their mortgage payment is very helpful. Contractor mortgages offer a variety of ways to contractors in terms of loan payment. Doing one’s homework and research does help one find what he or she really needs. Securing contractor mortgages and paying of one’s mortgage loan is not really a problem once you have the right people.

 The Chancellor has given his backing to plans that could see the Bank of England and it’s Financial Policy Committee (FPC) empowered to place loan to value caps on all mortgage borrowing. As contractor mortgages are typically seen as high risk, and already subject to more stringent control by individual lenders, they are likely to suffer further restrictions as a result of any legislation passed.

 The global fiscal crisis has hit theUKmortgage industry hard, with first time buyers making up less than 25% of the market. This is a direct result of current loan to value rates, which are preventing many from being in a position to buy. Before the recession struck, many borrowers were able to borrow money to the value of their home, or more, with low deposits. The result of this excessive borrowing in previous recessions was a large number of people finding themselves in negative equity, financial difficulty and even facing bankruptcy although figures suggest the impact has not been so great this time around.

 Contractors and freelancers are victims of the current economic situation, as contractor mortgage applications and loan to value rates are scrutinised to a much higher degree than those from other applicants. Typically the loan to value rate for a contractor is likely to be higher than that set for other buyers. Bank and Building Society branch staff and more mainstream mortgage brokers often don’t understand or appreciate the contracting or freelance industries, and prefer to deal with ongoing permanent employment contracts, even where wages are lower or less well defined.

 IT Contractors, Engineers, Oil and Gas professionals, , writers, architects and any other freelance business people may find that they are penalised unfairly due to the fact that they have many short term contracts, no definite income pattern, and have produced their own set of accounts. The proposed Bank of England powers would limit lending in all high risk sectors, and would no doubt increase the difficulties already faced by these applicants

The retail price indices (RPI) were noted to be a little higher at 4.8% the moment the rate of consumer price indices (CPI) lowered down to 4.2 % in December. In November 2011, the retail price indices were noted to spiral downward to 4.8 % from a fluctuating 5.2%.

The last time there was a major drop in the yearly inflation was recorded somewhere in the middle of November and December 2008; that was the time when VAT was cut.

According to the Office of National Statistics, Clothing, Gas and Petrol were the biggest pressures pushing consumer price indices downward, while the mobile phone and landline charges were the only significant factors pushing CPI upward.

With lightening news in the economy, now could be the right time to make that all important house purchase. If you are contractor and looking for a great deal on a mortgage – speak to one of our friendly team today!

Traditionally, protection policies are priced based on a number of health questions, with the emphasis on determining the risk of death from health related factors such as diabetes, heart attack and cancer. However, with the most common cause of death in 20-30 year olds now a road accident, the emphasis is shifting.

Insurance provider Axa is predicting that in future, lifestyle questions such as how many points you have on your drivers licence may play a bigger role in determining how much you pay for your insurance premiums and which companies will cover you. The application process is also likely to become more specific to age groups and younger generations in particular will be judged on lifestyle choices rather than the overall health profile of the entire population.

Other factors such as your postcode, your occupation and your income may also become more important in the future. For Contractors, this may cause significant problems if providers see your occupation as a risk and as such seeking advice on which providers will be open to your application will become even more important.

Already our protection advisers can access a policy that discounts your premiums based on gym membership and how active you are and increasingly insurers are understanding that if they can influence and reward behaviours then the next result can be the archetypal win/win.

At Contractor Financials we specialise in providing Independent Financial Advice to Contractors and our protection team are experts at finding the right cover to suit your needs.