Mortgages  

Kensington tailors mortgages for contract workers

Daniel Liberto

The mortgages, which are available to applicants of any profession that have been contracting for a minimum of 12 months, offer different rates on two-year fixed products that vary depending on the deposit money paid upfront.

Two-year fixed rate mortgages up to 75 per cent LTV are available from 3.44 per cent, 80 per cent LTV two-year fixed rate at 3.99 per cent and 85 per cent LTV two-year fixed rate products are charged from a rate of 4.74 per cent.

Following the lock-in period of two years, rates will revert to Libor-plus 4.3 percentage points for the 85 per cent LTV product, and to Libor plus 4.1 percentage points for the 75 per cent and 80 per cent LTV mortgages.

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Fees on all mortgages include a completion charge of £999 and an administration charge of £100, which covers the cost of free valuations. Free valuations and free legal assistance are available on remortgages.

When considering each applicant’s suitability, Kensington confirmed that income will be calculated at 46 times the borrower’s confirmed weekly rate.

According to data from the Office for National Statistics the number of temporary and contract workers has increased by around 230,000 since 2005, a rise which was mostly attributed to the financial recession and the volatility of the UK job market.

Kensington said the products were released in response to the growing numbers of contract workers in the UK, who are struggling to get a mortgage because their incomes cannot be applied to the standard models of assessment.

Provider view:

Alex Hammond, head of marketing communications for Kensington, said: “There are nearly a quarter of a million more contract workers in the UK today than there were in 2005. Yet many of these could struggle to secure a mortgage as their income does not fit a standard model. However, at Kensington we have the underwriting expertise to make sensible lending decisions for people who work on a contract basis and will be charging contractors the same rate of interest as permanent staff. This new range of products signifies our continued commitment to specialist lending and to offering our intermediary partners the very best lending experience.”

Adviser view:

Simon Collins, product technical manager for London-based independent mortgage broker John Charcol, said: “It is always refreshing to see a lender who, having recognised a need in the market, takes a positive stance, rather than shying away. The LTV and rates look very competitive, plus it is great to see that there are no restrictions on the profession. Add in the fact that it is a manual underwrite rather than credit score reliant, and that is the icing on the cake.”

Charges:

Fees include a £999 completion charge and a further £100 administration fee.

Verdict:

The number of contractors in the UK has increased since the financial recession threw the job market into turmoil, but with mortgage providers simultaneously tightening their lending criteria it has been difficult for contractors to purchase homes. Although this is not the first mortgage product tailored specifically for contractors, Kensington should be applauded for entering this niche market. Extra competition could result in rates dropping, which is what this specialist sector needs to compare fairly with the traditional mortgage market.