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Contractor Mortgages - What you need to know

What is a Contractor mortgage? 

There are no specific mortgages out there for Contractors, as a Contractor you can access the same mortgages as any other borrower. No matter if you are self-employed or a PAYE borrower, you will be able to access the same mortgage market as everyone else.

The difference comes in the lenders, there are some specialist lenders out there who tailor their mortgage deals and products to entice certain professions in. They tend to know a lot about that particular profession and will be able to understand your specific circumstances more.

How much can a Contractor borrow for a mortgage? 

The amount that you will be able to borrow for your mortgage will greatly depend upon how much you earn annually. You will undergo an affordability assessment in which your income and credit history is checked to determine you can afford the mortgage and that you are a reliable borrower.

You need to try and have at least six months’ worth of accounts ready to provide to the lender to show your income and tax documentation if you can. The more proof of your earnings that you have, the happier the lender will be as it is more evidence of how you handle your finances. Most lenders do prefer for you to have at least two or three years of accounts ready to show them.

How is a Contractor’s income assessed for a mortgage?

Lenders will look at your income and if it fluctuates or you are on day rate then a lender will average out your income to estimate an annual income. The more evidence you have of income the better as they can they estimate how much you may expect to earn in the upcoming years.

No matter if you are a Limited Company or on a base rate you will need to provide proof of your income to secure a mortgage. Lenders will assess bank statements as well as your contract rate during the mortgage application process. 

If your earnings change drastically over time, then it would be worth seeking the help of a mortgage broker to find a mortgage lender who will accept you onto a mortgage loan. The interest rate could be higher as if your income changes you may be deemed a high risk borrower.

Getting a mortgage when you are paid a day rate 

Lenders will take your day rate and multiply it by the number of days you tend to work per week or month and then multiply it out to get an estimate for the whole year. Days that you take as holiday could be factored in as well as gaps in contracts meaning lenders can assume you work less than you do.

There are more calculations involved so sometimes it can be harder to find a lender willing to accept you if you are a Contractor on day rate. It is best to be on longer contracts or to have evidence of long periods of work when applying for a mortgage. 

How do you strengthen your mortgage application as a Contactor?

As a Contractor it can be slightly more difficult to find lenders willing to accept you onto a mortgage but there are things you can do to make yourself more attractive as a potential borrower

Offer a larger deposit

Most lenders will ask for 10% of the purchase price of the property in question as a deposit for the mortgage loan. If you approach a lender with a larger deposit, you will be more attractive to them and lower your risk as a potential borrower.

Provide all contacts and agreements

If there are any previous agreements with other lenders of employers to prove that you can borrow or that you are reliable then provide these to your chosen lender. It can improve your chances as it is more evidence towards what you are like as a borrower. 

Ensure your credit is in check

You need to make sure your finances are in order before approaching a lender. Bad credit can happen, but it can minimise your chances of getting accepted onto a mortgage or result in higher interest rates.

Lenders want to see that you can handle your money and pay what you owe so ensure that all of your debts are paid off before approaching a mortgage lender. There are options if you do have bad credit, but they may be limited as a Contractor too.

Make sure to close any unused accounts and to ensure that you are registered to the correct address and name on the Electoral Register. 

How can Pia Mortgage Experts help me?

Here at Pia, we have access to the whole mortgage market for first charge mortgages, meaning we can access lenders that are not available on the high street. As a Contractor it is likely that you are going to need a specialist lender; here at Pia we will listen to your circumstances before hand-picking lenders to suit you.

There are a range of mortgage offers out there as well as mortgage rates to go through. As a Contractor your time is precious so why not let the experts take the stress out of the search. 

A personal mortgage expert will pick mortgage products that are suited to your needs.


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