
We have guidance for daily rate contractors who are self-employed or working through their own limited company set up and are looking at purchasing a home.
What is a Contractor mortgage?
What is a Contractor mortgage?
Getting a mortgage when you're paid a 'day rate.'
Some lenders may be willing to calculate your annual income on the basis of your day rate, though many require you to have a 12-month contract for this to be an option.
In London and the UK, if you are a daily rate contractor, mortgage lenders will typically calculate your annual income by multiplying your daily rate by the number of days you work in a week and then projecting that figure over a full year. It's important to note that lenders will also consider any breaks in your employment, including holidays and time between contracts. As a result, they will usually assume that you work between 46 and 48 weeks in a year.
Day rate example:
If your day rate is £400 and you generally work four days per week, your estimated annual income would be around £76,800.
£400 x 4 days = £1,600 per week
£1,600 x 48 weeks = £76,800
This approach can be especially helpful if you recently left full-time employment and have not established a proper track record.
If you are a contractor, mortgage lenders will require proof of your ability to succeed in this line of work. This may include documentation of your past experience, relevant qualifications, signed contracts, and a professional network for reference purposes.
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