Contractor mortgages

trust pilot rating 4.7
Mortgage house

contractor mortgages
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?

Being a self employed contractor can offer you flexibility and independence, but also with it comes uncertainty – especially when buying a property.

In recent times we’ve seen an increase in the number of freelancers and independent contractors in the UK. This may seem like heavy competition when you’re looking for a mortgage that suits you.

There's no need to worry as several mortgage lenders may consider granting you a loan, despite your fluctuating income. This guide provides you with detailed information on how mortgage lenders evaluate your application and suggests ways to increase your likelihood of approval.

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.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Get no obligation and fast advice today

When it comes to your finances there is no such thing as a stupid question.

The internet is not a secure medium and the privacy of your data cannot be guaranteed.