We all know that Education is widely regarded as one of the most critical aspects of our entire civilisation. Also, the education sector is nothing without our qualified teachers. Supply teachers play a crucial role in assisting the state and some private institutions in providing a stable platform for students. Yet, despite occupying a critical and valued role in society, supply teachers can sometimes find it difficult or even impossible to obtain a mortgage. Mortgages for teachers come up with different challenges, which we will discuss in this mortgage guide ahead. Some mainstream lenders have mortgages for teachers schemes such as ‘first homes’ aimed at Key Workers or Professionals. In what follows, we will examine mortgages for supply teachers, the origin of the problem and, more importantly, potential solutions.
Working as a teacher comes with its challenges and rewards also. Affordable Teacher Mortgage could be one reward that you can get as a professional teacher. A mortgage for a teacher can sometimes be easier to obtain when compared to other professions. Most of the Niche Lenders often favor a qualified teacher over other professionals for the loan. For example, teachers building society understands teachers’ needs and requirements and could offer impossible deals for a specialist lender. Teachers Building Society in the UK has been helping teachers and similar educational professionals to climb onto the property ladder for over 50 years. The company has helped thousands of people achieve their dream homes through affordable loans. They understand how important your career choice is, and they want to help you make sure that you do not miss out on any opportunities because of financial constraints. If you are looking forward to buying a house, you should consider applying for an affordable mortgage deal. You may need to provide proof of employment along with details about your salary structure. It is also worth noting that to qualify for a teacher mortgage, a professional must be a teaching assistant with NVQ level 3. This means that you would require a minimum of three years of experience working within schools. However, if you plan to apply for a mortgage after only two years of work, you might face difficulties.
Mortgage for teachers: What does it mean?
The term ‘teachers mortgage’ refers to a type of mortgage offered by banks and building societies specifically designed for those wishing to buy a new-build property. These types of mortgages are usually available to individuals who are employed in education and are eligible to teach full time. There are many benefits associated with these kinds of mortgages, including lower interest rates than standard mortgages, flexible repayment options, and no application fees. A typical teachers’ mortgage offers competitive fixed-rate products ranging between 2% – 4%. As mentioned earlier, there are various reasons behind offering mortgages for teachers. One reason is that teachers are considered key workers, and therefore, they deserve special treatment. Another reason is that teachers are highly respected members of society and hence, lending companies feel obliged to give them preferential treatment. Moreover, teachers tend to spend long hours away from their families during school holidays to dedicate themselves fully to their profession. Therefore, it makes sense to lend money to someone who spends long periods away from their family.
What are the advantages of getting a teacher’s mortgage?
There are several advantages of getting a teacher’s mortgage. Some of which include:
- Lower Interest Rates – When you take out a teacher’s mortgage, you will enjoy low-interest rates. In fact, most lenders offer up to four percent or even less. On top of this, some lenders offer zero percent interest for five years.
- Flexible Repayment Options – With a teacher’s mortgage, you can choose to pay back your monthly installments either weekly, fortnightly, or quarterly depending upon your convenience. Also, you can opt for a lump sum payment option at any time without having to worry about penalties.
- No Application Fees – Unlike traditional mortgages where you have to submit documents such as credit reports, income tax returns, etc., a teacher’s mortgage doesn’t involve any paperwork. All you need to do is fill out a simple form online and wait for the approval.
- Tax Benefits – Since teachers are regarded as high earners, they receive certain tax breaks. For instance, if you earn more than £50,000 per annum, you won’t have to pay capital gains tax. Furthermore, if you are self-employed, you don’t have to pay corporation tax.
- Better Loan To Value Ratio – Teachers are viewed as higher-earning individuals, so they generally command better loan-to-value ratios. Hence, you’ll find yourself paying much lesser amounts when compared to borrowers whose salaries aren’t quite as good.
- More Choices – While you may struggle to find suitable properties while searching for a regular mortgage, finding a teacher’s mortgage shouldn’t pose too big of a problem. Most lenders provide loans on both residential and commercial properties. However, be careful not to over-extend yourself because you might end up losing control over your finances.
- Higher Equity Loans – If you’re looking to purchase an investment property, then you should consider taking out a teachers’ mortgage instead of a conventional one. This is because equity loans allow you to borrow against the value of your home rather than just its price tag. Thus, you get access to greater borrowing power.
- Less Risky Lending Practices – Most people think that only rich people qualify for a teacher’s mortgage, but this couldn’t be further from the truth. In reality, anyone who earns above £30,000 qualifies for a teacher’s mortgage. What’s more, most lenders also make sure that applicants meet all other criteria before approving them.
- Access to Specialised Products – Teachers often work hard throughout the year, and thus, they require financial assistance to help fund their lifestyles. As such, many banks now specialize in providing products specifically designed for teachers. These range from personal loans to business finance options.
- Easy Credit Score Requirements – Many people assume that applying for a teacher’s mortgage requires a perfect credit score. But this isn’t true since most lenders accept scores ranging between 620 and 680.
- Low Down Payment Requirement – You don’t necessarily have to put down 20% of the total cost of buying a house with a teacher’s mortgage.
I am a supply teacher; why is it difficult to get a mortgage?
The most significant single difficulty in obtaining supply teacher mortgages arises from the status of your occupation. As a newly qualified teacher seeking a mortgage, you may have experienced a refusal from a street lender because of the no employment history.
Typically, supply teachers are considered to be temporary workers. By definition, you won’t have a full-time employment contract, and both the duration of your teaching assignment and its potential options for an extension can be challenging to predict by any supply teacher mortgage specialist.
This might mean that for many seeking agency teacher mortgages, conventional mortgage lenders will face the considerable problem of not being sure about your income over the period ahead. In a sense, temporary employment status can be more of a problem in finding mortgages than self-employed.
A closely related inhibitor arises because agency workers typically do not receive income during holiday periods. Given the lengthy and extended nature of school holidays in the UK, that means that for much of your financial history over 12 months, you will appear to have no verifiable income from the viewpoint of a potential mortgage lender.
Most conventional mortgage providers need to see evidence of consistent and relatively secure income to quantify the risks involved in lending to the applicant. If you are unable to provide such evidence easily, you may find that mortgage lenders are reluctant to go further.
Fortunately, we at NeedingAdvice.co.uk Ltd may be able to assist you in finding a solution. It is always better to connect with a specialist mortgage broker who can help you to connect with a suitable lender with the most affordable mortgage rates. In addition, we can help you with a range of mortgage schemes and get you onto the property ladder.
What do I need to qualify for an agency teacher mortgage?
The good news is that not all mortgage lenders necessarily take a very fixed view of agency teaching and the associated requirements for supply teacher mortgages.
Some lenders understand the slightly unpredictable nature of your income and contract position. As a result, they may be much more flexible in accepting short-term contract commitments in certain situations:
- Even if your contract is temporary, if it has a significant period left to run going forward into the future, some specialist lenders may consider that as evidence of income;
- If you can provide evidence of income (even if there are gaps due to holidays) over the preceding 12 to 24 months, so much the better. That evidence would typically consist of remittance advice, taxation statements or bank account statements;
- Suppose you are relatively new to this domain of employment with not a great deal to show by way of history. In that case, some providers of agency teacher mortgages may assess your application objectively based on common sense rather than standard computer-controlled assessment algorithms.
How much deposit will I need for a supply teacher mortgage?
As is the case with virtually any mortgage applicant, irrespective of their employment position, the larger the deposit you offer, the more likely it is that you will get a fast and positive outcome to your application. The larger deposit, such as 10-15%, could give access to previously unavailable lenders. Also, if you can’t afford a sizeable deposit mortgage as a supply teacher, you could put forward a minimum of 5% deposit from your financial resources.
Is there anything else that will help my mortgage application?
It is essential to recognise that there are many factors used by potential mortgage providers when they are considering agency teacher mortgages. Evidence of your income over time and your contract going forward are only two of them.
Other factors that might be pertinent will typically include:
- the amount you are looking to borrow will need to be seen to be affordable – not just in terms of your salary but also in terms of your other current monthly outgoings. This is part of the duty of care all licensed mortgage providers must demonstrate through assessing affordability criteria. That is a statutory requirement designed to protect your interests;
- the property you are considering will need to be seen to be sensibly valued when reviewed against an object valuation of it against market norms;
- you will be expected to have an acceptable credit history score. Please note – this does not mean that you need to have an impeccable credit history record! Many people have minor glitches on their credit histories, and these are rarely considered showstoppers by potential lenders of supply teacher mortgages. If you have particularly serious problems with your history, it may increase the interest rate you will be expected to pay, and of course, any mortgage lender will reserve the right to decline an application if your history is particularly bad;
- it may be possible to consider your partner’s income in situations where they will be a joint applicant and joint owner of the property concerned;
- typically, your mortgage application must relate to a property in the UK, and you will need to meet other criteria relating to proof of identity through things such as passports, driving licences and most importantly, your presence on the electoral roll.
Can I get a supply teacher mortgage with bad credit?
Yes, you can get a supply teacher loan even if you have an adverse credit score. Whatever is your situation, at needingadvice.co.uk ltd, we deal with all kinds of bad credit mortgages by giving the most suitable financial advice. We are also the only specialist broker with the most affordable broker fees, which will fulfil all the requirements. You only need to provide us with your adverse credit details information with complete honesty, and our experienced mortgage broker could help you grab the appropriate mortgage deal.
Next Steps – Supply teacher mortgages
We offer our assurance that we fully understand the frustration many supply teachers feel when they experience difficulty in securing a mortgage. There is, though, no need to become demoralised, and we may well be able to assist you in finding a way forward. We invite you to contact us at your earliest opportunity for an entirely confidential and non-committal discussion of your needs.
FAQs- Umbrella company mortgage
What is the difference between a limited company and an umbrella?
An umbrella company is a company that has been set up specifically to act as an employer. They are often used to cover several businesses owned by the same person. A limited company is a legal entity that exists independently from its shareholders. It is usually formed under the Companies Act 2006 and provides protection against personal liability for directors and officers.
Who can get an umbrella company mortgage? Are they only available to contractors?
Yes, an umbrella company mortgage is only available to contractors. However, this does not mean that you cannot apply for a traditional mortgage through a bank or building society. You could still use one of our mortgage advisers to find out whether you qualify for a standard mortgage. If so, you would then be able to take advantage of the additional benefits offered by an umbrella company mortgage.
Can I get an umbrella company mortgage without being an employee of the umbrella company?
No, you must be employed by the umbrella company in order to obtain an umbrella company mortgage.
Do contractors pay national insurance?
Yes, you do need to pay national insurance contributions if you are self-employed. National Insurance is calculated on the basis of your net annual income. Your umbrella company should make sure that it pays NIC on your behalf.e received from an annuity contract
Can I get a mortgage as umbrella contractor?
Yes, you can. As long as you are employed by such company, you should be able to apply for an umbrella company mortgage. This means that you will be able to benefit from the additional services provided by mortgage provider.
What is the contract rate for umbrella organisations?
The contract rate for an umbrella mortgage varies from one company to another. The main thing to look for is whether the rate includes any fees. These include administration charges, stamp duty, valuation costs and other miscellaneous expenses. Some companies charge more than others.
How much money can I borrow with an umbrella organisation?
This depends on what type of loan you want to secure. Most umbrella companies offer loans of up to £750,000. There are some umbrella companies offering higher amounts.
How long do you need to be PAYE to get a contractor mortgage?
You need to be in employment status for at least 12 months before you can apply for a contractor mortgage. This is because the lender needs to know how much you earn each month. We at needingadvice.co.uk ltd, are the mortgage advisor for all types of contractor mortgage advice. Feel free to contact our team.
Are the mortgages to contractors considered competitive mortgages?
Yes, the mortgage for contractors is considered a competitive mortgage. In fact, many lenders have made it clear that they are willing to lend to contractors.
Are there any disadvantages of getting a contractor mortgage?
The main disadvantage of getting a contractor mortgage is that you may not be eligible for certain products. For example, you may not be able to access interest-only mortgages. Also, you may not be allowed to purchase a property worth over £1 million.