Contractor Mortgages

We provide mortgages for contractors based in & outside the UK.

• Contractor mortgages from £250,000
• Use your day-rate contractor income for your mortgage calculations (not just the salary you take from your limited company)
• Market leading rates
• Access to high street, private & specialist bank mortgage deals
• Up to 95% loan to value (residential mortgages)
• Up to 80% loan to value (buy to let mortgages)
• Interest only, interest roll up and offset mortgage options
• Revolving mortgage options - unlock the equity in your main home & access funds whenever you need to
• We can help if you have complex income e.g. from multiple directorships, income from multiple currencies, offshore trust or family trust arrangements, bonus & dividend income
• Solutions for UK expats, non-dom & foreign nationals buying or remortgaging UK property
• Fast professional service. We understand that sometimes finance needs to be arranged quickly!
• If you have assets that you would like to be leveraged as part of the transaction such as your investment portfolio, other property or pensions; our team can look at leveraging these assets to negotiate more flexible lending criteria and more favourable interest rates, to help you get the best deal

Contractor Mortgage Rates Snapshot

*Overall Cost For Comparison

As a contractor or freelancer, getting a mortgage in the UK can be more difficult than as a permanent employee. However, there are specialist lenders and brokers equipped to understand your income situation and help you secure financing. Through our market knowledge we can deliver enhanced, bespoke or exclusive terms.  

Call us on 0203 900 4322 to discuss your requirements. 

How Contractor Mortgages Work

Contractor mortgages function similarly to conventional mortgage products. The key difference is in how affordability is calculated. Rather than basing it on a set salary, lenders assess your contract rates and typical annual earnings.

There are two main hurdles contractors face when it comes to securing a mortgage as a contractor: 

• Many mortgage lenders require you to have been earning contractor income for at least 2 years for a mortgage
• And your actual earnings are often tied up in your limited company, which you are withdrawing sparingly from for tax purposes, meaning your borrowing potential is reduced.

But you can get a mortgage with just 1 years' history, and you can get a mortgage calculated on your day rate, not your annual income. But you need to speak to the right lenders and package your application in the right way - in short, it helps to speak to a specialised mortgage broker, such as us at Clifton Private Finance.

You also generally need:

• Proof of current contract terms and future work pipeline

The more consistent your income, the better your chances of approval at competitive rates.

Calculating Income for Contractor Mortgages

One key challenge for contractors getting a mortgage is that they often pay themselves a low salary and dividends from their limited company for tax efficiency. This can limit borrowing capacity when lenders only consider their salary income, despite their earning potential being a lot higher via their actual day rate.

However, some lenders have a better understanding of how contractors are paid and how the industry operates, and can base your affordability on your full earning capability.

This is typically a significantly great borrowing amount compared to making the calculation based on your limited company withdrawals.

How the calculations work:

We work with lenders who will multiply your day rate by typical days worked per week, less holidays and contract gaps. Usually around 46-48 billable weeks per year.

For example, if your day rate is £350 and you work 5 days weekly:

• £350 x 5 days = £1,750 weekly
• £1,750 x 46 weeks = £80,500 estimated yearly income

Consistency is vital. And as your dedicated mortgage adviser, we'll help determine the optimal way to demonstrate your earning capability to lenders.

• In terms of the absolute minimums to benefit from this type of calculation, you'll need to be earning a minimum of £75kpa based on your day rate. 
• You'll also generally need a minimum of 1 year working in your profession, even if with separate employers. 
• And you'll need at least 6 months left on your current contract - but if you don't have this, a proof of contract extension is also acceptable.

Explore our Latest Contractor Mortgage Case Study: Discover how we helped our client secure a substantial £458k mortgage based on their daily contractor rate - not their annual income:

Deposit and Affordability

Expect to put down at least a 15% deposit as a contractor. The higher your deposit, the better the interest rate options. You can typically borrow 3-4.5 times your provable income. Some lenders may also factor in company retained profits.

Having a partner included could boost affordability. Equity or rental income from an investment property can also help your application.

Book Consultation » 

Mortgage Application Tips for New Contractors

Becoming a contractor opens up mortgage complexities because of your unique income that's arguably less reliable than a contracted income from a lender's perspective. But approvals are still feasible, especially if you have a proven track record in your profession. Here are some examples that’ll improve your mortgage chances:

• Demonstrate steady earnings over 1-2+ years
• Maintain a clean credit history
• Use an accountant to prepare your accounts properly
• Avoid changing income structure prior to applying if you can
• Put down the largest deposit possible (the ower your loan to value, the less risky for your lender and the more lenient they can be with your application criteria)
• Provide proof of future contracts or extensions, or a pipeline of future work

Even if you're newly self-employed, your experience and assets can demonstrate income stability potential. With the right broker guidance, securing a good mortgage as a contractor is absolutely possible.

Why Use a Broker for Contractor Mortgages?

With changing lender criteria, limited company intricacies, and new products constantly emerging, expert advice makes a difference. A broker can source suitable deals, match your profile to appropriate lenders, and optimise your application for smooth approvals.

any generalist lenders simply don't understand your earning structures and income flows - they're geared for processing standard mortgage applications on bulk and tend to flat-out reject any nuanced or complex cases.

At Clifton Private Finance, our experts are fluent in limited company mortgage applications and contactor criteria - and we have access to the right specialist lenders.

Securing finance can be enough of a headache without going it alone - find out how a specialist broker can help.

Explore our Case Study: Uncover the strategic utilisation of limited company profits as a catalyst for securing a substantial £650k mortgage by our clients. 

Book Consultation » 

Types of Contractor Mortgages

• Sole Trader: You work for yourself and keep all the profits from your business after taxes. You will need to provide SA302 tax statements as proof of income for mortgage applications.
• Freelancer: Similar to a sole trader but may take on longer contracts with companies. Having ongoing contracts or future deals lined up can help demonstrate income stability for a mortgage application.
• Partnership: You share ownership of the business with one or more partners. You will need to show proof of your share of the partnership profits that you receive as income.
• Limited Company: You are paid through some combination of salary and dividends from the company. Retained profits in the company may also be considered for mortgages in some cases.
• Umbrella Company: You are an employee of the umbrella company so your income is PAYE (pay as you earn). This regular PAYE income can help satisfy mortgage affordability criteria.

The different contractor types have varied implications for what income proof you will need and how stable your income is treated for mortgage eligibility and affordability assessments.

  Book Consultation » 

Remortgaging as a Contractor

If contracting when you originally got your mortgage, remortgaging should be more straightforward if your situation is unchanged. However, lenders may reassess income due to the variable contractor nature.

But remortgaging gets trickier if:

• Your latest year's earnings were lower
• You made a loss recently
• You switched from permanent employment

You might find that your existing lender isn't flexible enough for your contractor income. It's always good to shop around anyway when you're remortgaging for the best deal on the market - especially when you've had a change in income structure - so we recommend getting in touch to compare the contractor mortgage market.

Documents Required for Contractor Mortgages

Getting your paperwork in order is a crucial piece of securing a contractor mortgage.

Lenders will want to see proof of your income and ability to meet repayments.

While requirements can vary, at a minimum you should have the following documents prepared for your mortgage application:

• Recent contract(s) showing your role, day rate, and duration. These provide the clearest picture of your earning potential.
• 1-2+ years of accounts. The more account history the better, as this demonstrates sustained income.
• SA302 tax calculations. Important for verifying your self-employed income over recent tax years.
• Tax year overviews. Help support and align with your SA302 tax income figures.
• Bank statements evidencing contractor payments. Statements help validate the actual receipt of income.
• ID and address verification. Standard for confirming your identity and residence.
• Future work pipeline proof. Contracts, Letters of Intent, etc demonstrating you have ongoing projects ahead.

Having your financial data organised and paperwork in order shows lenders you operate in a business-like manner and eases their ability to assess affordability. A broker can advise exactly which documents your particular lender will require. With the right proof and preparation, you improve your mortgage chances.

What if your contract is running out?

Most lenders want 6-12 months remaining on your contract when applying. If less, provide details like:

• Your track record as a contractor
• Experience in your field
• History of regular renewals
• New contracts already secured
• References from regular clients

We may be able to help if we understand your broader financial situation and can put it favourably to a lender.

 Book Consultation » 

Ready to Apply for a Contracto Mortgage? We Can Help.

A specialist broker knows contractor criteria across lenders. They assess your situation, identify options you may miss, and handle applications for quick approvals. With evolving lender rules and new products launching regularly, an expert broker matches you to appropriate deals.

At Clifton Private Finance, our advisers search the whole market to identify your optimal contractor mortgage.

• Understand your situation - We'll learn about your unique circumstances
• Recommend suitable lenders - And products to match your needs
• Optimise affordability - And maximise how much you can borrow
• Provide expert support - And handle applications from start to finish

Securing a mortgage doesn't have to be difficult, even with the complexities of contractor mortgages.

Get in touch today and we'll match you with an advisor who can make it a smooth, stress-free process.

Call us on 0117 959 5094 to discuss your requirements, or book a free consultation below. 

FAQs

Is it hard to get a mortgage as a contractor?

It can be trickier than as a permanent employee. But specialist lenders and brokers make it achievable with the right preparation and application. Proving steady earnings is essential.

Can I get a mortgage if I'm on short-term contracts?

Yes, there are lenders that understand contractors and freelancers. They'll assess affordability based on your contract rates and typical income.

How long must I be a contractor to get a mortgage?

Most lenders want at least 1 year of accounts and this is generally the minimum. Some may accept less if you have strong proof of future earnings.

Can you get a mortgage with just a current contract?

If you've only just started a contract but not working yet, some lenders can approve a mortgage based on your future pay. Ensure you provide the contract, offer letter and income proof.

How much can a contractor borrow?

You can typically borrow 3-4.5 times your provable income. Factors like your rate, deposit, company profits and partner's income impact affordability.

Do I need a permanent job to get a mortgage?

No, specialist lenders offer contractor mortgages for self-employed applicants. But if you have permanent income on a joint application it can improve your borrowing capacity.

How long as a sole trader before I can get a mortgage?

Most lenders will require 1-2 years of accounts and tax returns. Some may accept less if your income is very high.

Can I get a mortgage if I'm paid via an umbrella company?

Yes, umbrella company contractors can be easier as you have PAYE income. Mortgages are generally assessed like a regular employee depending on the lender and your contract.