Construction costs increased in 2021, and a shortage of materials could make new construction a costly business in 2022. This is especially true given the recent developments related to the Covid-19 pandemic. If the Omicron type causes too much confusion, supply chain bottlenecks may worsen. Making it more difficult for builders to procure the materials needed to build new properties. While it is impossible to say the average price of a newly built property in 2022, it is possible to predict its price increase reasonably. On the other hand, interest rates are likely to rise soon. That’s why getting a mortgage and buying a property in the fastest time is so important. Whether the contractors want to repay their mortgage, reduce their mortgage repayment, or are ready to buy their new property. It is best to do so as soon as possible.
However, by early 2022, Omicron has weakened borrowers’ confidence in the mortgage market. But on the other hand, more people get the third dose of their booster vaccine, and more assets are expected to enter the market.
Trends Affecting the Contractor Mortgage Market In 2022
While Omicron could slow operations for several months, supply shortages will keep prices in the New Year. Many contractors and self-employed will continue to live away from their workplace. But it is expected that some people will be drawn to the cities if they realize that living outside the cities is not suitable for them.
Mortgage rates are likely to increase next year. But given the Bank of England’s scepticism about raising interest rates in recent years. It is unlikely that the central bank will raise rates quickly. Forecasts indicate that cities with high investment and good infrastructure will face increased demand. This section refers to the most critical trends affecting the contractor mortgages market in 2022:
Spread the culture of working from home
The spread of the work-from-home culture created in 2021 will likely continue into the new year. This means that some people will seek to live in areas far from urban centres. However, if their companies do not allow them to work from home for at least part of the week, it is unlikely that things will return to normal.
Returners to cities
However, some people who moved out of the cities may return to the cities. While the effect of a work-at-home culture is likely to last forever, many seek to live in cities for social reasons. In cities, for example, concerts and sporting events are more easily accessible. Therefore, more flats will be bought or rented in large cities because young professionals are looking to enjoy things they will experience after a few years of pandemics.
Increase the base rate
The Bank of England finally raised the base rate in December from 0.1 per cent to 0.25 per cent. Inflation has now reached 5.1 per cent due to rising energy costs. Given that rising interest rates reduce inflation, so over time, mortgages for contractors may become a little more expensive. However, experts believe that the possibility of increasing the base rate depends on Omicron.
Reduce housing price growth
Due to the lack of housing supply in the market, prices will continue to rise in 2022. But many experts believe that price growth in 2022 will be reduced by about 1 per cent. However, house price growth may be as high as 4% in some areas, such as Scotland and Wales. However, new infrastructure in cities and the number of new houses built will be influential when analyzing the increase in housing prices in different areas.
It looks like cities like Liverpool, Manchester, Leeds and Birmingham could attract more residents next year as they have attracted much investment in recent years. Also, after the pandemic led to an unprecedented drop in demand, many changes took place in London and costs were significantly reduced.
Get A Mortgage As A Contractor In 2022
This is a question that many self-employed people think about because lenders do not clearly understand how much they are being paid. They often prefer to invest in low-risk individuals and find lending to contractors challenging. So it will be more challenging to get a contractor mortgage, but it is certainly not impossible.
Can you get a mortgage as a contractor in 2022?
Yes! While getting a mortgage can be a daunting task for contractors, it is certainly not impossible. Conversely, many contractors borrow and own their property. In this case, they will probably have to provide proof of income for the past few months or even years. This may be more difficult for contractors and freelancers in the beginning. However, there are several options for this category of people.
What factors can lead to a rejection of a contractor mortgage application?
Contractors’ income conditions are volatile, so it is not surprising that many lenders, especially those on the main streets, do not fully understand their income. There are several reasons, including poor credit history, job gaps, high debt, and excessive credit applications, that lenders may reject contractors’ mortgage applications. On the other hand, if it is clear that the contractors cannot repay the mortgage, their application will probably be rejected. It is essential to consult a financial advisor in advance to avoid this. This is also true for sole traders and limited companies; it is challenging to get a contractors’ mortgage, as some lenders may find it a new business.
Why is 2022 a good time to get a mortgage?
Now is a great time to get a contractors’ mortgage because you will not pay the extra stamp duty fee. This is also good news for homeowners, as 5% deposits and stamp duty help them expand their portfolio while saving. So 2022 will be an excellent time to get a mortgage for contractors and buy an investment property to start your portfolio.
Challenge finding contractor-friendly lenders
In recent years, the rapid growth of self-employed has been a prominent feature of the British labor market. However, there is a growing career class of contract professionals in the self-employed market. According to a report published by IT Contractors UK, it is estimated that 1.7 million people in the UK currently have full-time contracts. Contractors make up a significant portion of the workforce, operating in many sectors, but the most critical area is information technology, finance, construction and oil and gas industries.
Changes in the way contract workers are hired and the private sector aligned with the public sector will lead to more contract workers being hired, but workers will undoubtedly have more detailed advice on how to get a mortgage for contractors. There is a common myth that contractors have difficulty getting mortgages, and lenders have no appetite for help. On the other hand, a growing group of lenders lend to people who work on a contract basis.
But finding them is not easy, and different lenders have criteria for providing mortgages to these customers. But contractors can also access the same rates and options that working customers enjoy. However, the contractors’ revenue structure is more complicated.
Advantages of Using AWS Mortgages Consulting Services
It is quite possible for contractors to get a mortgage, although factors affect contractors’ eligibility to get a mortgage. Knowing them makes it easier to accept contractors’ requests. Whether you are a small business owner or a sole trader, you can be sure that AWS Mortgages specialist advisors will give you detailed advice on how to get a suitable mortgage. It does not matter what job you do because our advisors have years of experience in this field and have established relationships with many lenders. You can get fixed, offset, standard or variable mortgage by using the services of our mortgage advisors in London, depending on your priority. You can also get interest-only mortgages and mortgages and joint ownership.
AWS Mortgages advisors have been helping contractors manage their business finances for years and are always ready for any questions they may have. If getting a contractor mortgage, freelancer mortgage, or property mortgage is on your to-do list for 2022, AWS Mortgages advisors will be happy to help. Contact us today, and we will be happy to talk about your situation.