Contractor Mortgage Specialists

Whether you are on a fixed term contract, working inside or outside IR35, or even on a freelance basis, obtaining a mortgage often remains very straightforward. The most important thing is to present your income to a lender in the correct format that they will accept, whether this be through your payslips, your contract or your company accounts.

Get started below or call 01225 459515

Buy A Home Remortgage

Bespoke Advice Personal To You

Not all lenders are suitable for contractors, and if you wish to maximise your borrowing then using a lender which works on your day (or hourly) rate will certainly help.

Banks will often consider the remaining term of your current contract, your experience and continuous employment within your industry, as well as the level of deposit or equity you have available. There is no standard approach available to obtaining a mortgage as a contractor and this is where we can help.

Get Started

FAQ

Getting A Mortgage As A Contractor

Getting a mortgage as a contractor can be more straightforward than you might think. We’ll explain how lenders may assess contractor income, including contract and day-rate income, the evidence you may need and the mortgage options available to you.

Can I use my day rate for affordability?

Many high street banks have rigid criteria around what income they will accept, with very little room for manoeuvre outside of this. Many lenders, especially when you work outside IR35, will use your company accounts along with your salary and dividends to calculate how much they can lend. However, there are some high street banks that will use you day rate to verify your income.

These lenders will calculate your income as your day rate, multiplied by five (or the number of days you work per week), and then either by 46 or 48 weeks. They will then use this figure for affordability. For example, if your day rate is £500, some suitable contractor lenders will calculate your income as £500 x 5, and then x 46 = £115,000 per year. By using a lender that calculates your income this way, it will really help maximise the amount you can borrow to remortgage or purchase your new home.

I work through an umbrella company, does this complicate matters?

Absolutely not! When you work through an umbrella company lenders will simply look at your last three months (or 13 weekly) payslips to verify your income. If your income fluctuates each month (which is often the case), then banks will typically average your gross income over the last three months (minus any umbrella company deductions) and then annualise this to confirm your annual income.

Not all lenders will offer a mortgage where you work through an umbrella company, however there are many high street banks who are more than happy to consider this income structure.

My contract expires soon, how much of an issue is this?

If your contract is expiring within the next six weeks then this will start to limit your options, however it is still certainly possible to obtain a mortgage. Where your contract is due to expire soon, lenders will often look at your contract history and the length of time you have been contracting, your overall experience and time working within your industry and whether you existing contract is likely to be extended.

Put simply, if you currently have a valid contract and at lest two years experience within your industry then it is possible to obtain a mortgage.

What documents will I be asked to provide?

The answer to this will vary depending on whether you have a fixed term PAYE contract, or work on a day rate basis either inside or outside IR35. Generally, you would need to provide your latest three months (or 13 weekly) payslips if available, a copy of your contract(s) covering the last 12 months, plus your latest three months bank statements.

Many lenders in the market will assess your income differently from one bank to the next. We ensure that we understand your income correctly, demonstrate this to the lender in the way they want it to be declared, all whilst providing the necessary supporting documents to rapidly approve your application.

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

Case Studies

The Story

A professional contractor working inside IR35 approached Lansdown Financial looking to remortgage their existing home, secure a competitive interest rate and raise additional capital to fund a side extension to the property.

The client required a total mortgage of £900,000 on a capital repayment basis over a 16-year term, representing 70% loan-to-value (LTV).

Despite earning a substantial income through a consistent contracting history, the client was concerned that their employment structure could restrict their mortgage options. They needed a lender who understood how contractors working inside IR35 are remunerated and could assess their income appropriately.

The Challenge

Securing a mortgage as a contractor working inside IR35 can be challenging, particularly where lenders assess affordability using PAYE payslips rather than the contractor’s underlying day rate.

Although the client had a strong and consistent earnings history, the combination of a £900,000 mortgage, a relatively short 16-year repayment term and the requirement to raise additional capital placed greater demands on affordability.

Our challenge was to identify a lender willing to assess the client’s contracting income appropriately while accommodating the additional borrowing for home improvements and offering competitive remortgage terms.

The Solution

Lansdown Financial took a tailored approach, reviewing the client’s contracting history, current day rate, income documentation and overall financial circumstances to identify lenders whose affordability criteria were best suited to their requirements.

By liaising directly with mortgage underwriters, we identified a lender willing to assess the client’s income using their contract day rate rather than relying solely on their PAYE payslips, allowing their borrowing capacity to be more accurately reflected.

Through our understanding of contractor mortgages and specialist lending criteria, we secured the required £900,000 repayment mortgage at 70% LTV over a 16-year term on competitive terms, enabling the client to remortgage their home while raising the additional funds needed for their planned property extension.

Testimonials