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How freelancers and contractors can save money on their mortgage

Tue 23rd Jun 2020

The Coronavirus pandemic has raised financial concerns for many people, especially those who are self-employed including freelancers, contractors and limited company directors.

Whilst some financial help is available from the Government – such as the Self-Employment Income Support Scheme (SEISS) and the Coronavirus Job Retention Scheme - not everyone is eligible for these schemes and so a lot of people will be looking to cut costs where possible.

If you’re a homeowner and you haven’t already looked at saving money on your mortgage, now is the time to start. Here are a few steps you can take:

Putting your buy-to-let mortgage through your limited company

If you’re a contractor or small business owner operating through a limited company, you can buy rental properties through the business. The lending options available for you to do this will vary though, and in some cases it’s better to manage the properties through a separate company.

Buying property this way means you’ll be paying corporation tax instead of income tax. We can help you to take the dividends and maximise tax efficiency, so you save more money.

If you are in a position to buy property, now could be a good time to do so as you may benefit from cheaper prices and lower interest rates.

Consider switching providers

Many lenders are currently offering highly competitive long-term fixed-rate mortgages. That’s why it’s important that you review your current terms and you might be able to switch to something cheaper elsewhere.

Consider a mortgage holiday

Mortgage holidays started in March, allowing people to defer payments without it affecting their credit rating. These were originally only supposed to last until June, but the option has now been extended for another three months.

Whilst providing some initial relief however, mortgage holidays are not beneficial as a long-term solution. You will still have to make up the shortfall after the three months and the repayments will be higher.

Ask for advice

During these difficult and uncertain times, it’s vital that you ask for advice before making any big financial decisions. We work alongside CMME – a specialist mortgage broker for contractors, freelancers and the self-employed. As well as mortgage offers, they also provide bespoke advice and support for independent professionals.

You can find out more about CMME and contact them here.

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