Contractor Mortgages

The amount of mortgage you can get as a contractor will depend on: 

• How much deposit or equity you have available. 
• The value of the property you are buying and how much you are looking to borrow. 
• Your day rate/income structure. 
• The length of time left on your contract. 
• Whether your contract been renewed in the past. 
• Whether it’s a joint or sole application.  
• Your work experience as a contractor. 
• Credit score.  
• How many existing credit commitments you have.  
• The number of financial dependents that you have.   

A traditional mortgage calculator will not apply to your situation and could give you wrong information.

Speaking with a mortgage advisor with experience with dealing with contractors like yourself will ensure you have an accurate borrowing capacity figure, potentially saving you both time and money.  

The first step to getting a contractor mortgage is to ensure that you have a good amount of time left on your contract.

Mortgage lenders do not like it when you apply for a mortgage and your contract is about to end, evidence of a new contract or a renewal will be required to progress your application.  

The second step of getting a contractor mortgage is to endure that you are presenting yourself in the best light to the lender, you can do this with a good credit score, a well conducted current account, and keeping your existing credit commitments low.  

Also, the more deposit or equity that you have the better as this reduces the risk to the lender.  

Getting a contractor mortgage can prove much more difficult than with an employed applicant. 

Over the years lenders have analysed their statistics and contractors/self-employed mortgage applicants have a higher default rate than with employed applicants.

As a result of this, contractor mortgages are classified as specialist lending products making them take more time in underwriting due to the additional checks involved.  

The good news is that there is a good selection of both high street and specialist banks that offer contractor mortgages.  

Banks recognise that customers income can be from various sources and can very month to month, therefore, there are some brilliant mortgages available on the market specifically designed to help contractors.  

There are also banks that offer more quirky solutions to contractors such as bad credit options and age 50+ mortgage solutions to help those approaching retirement.  

There are also joint contractor mortgages available to help those looking to buy or remortgage with another applicant.  If the other applicant is employed this could help your chances of being accepted for a mortgage and could help increase your borrowing capacity.  

The number of independent contractors is on the rise in the UK. It’s popular for those that provide independent services such as doctors, dentists, vets, lawyers etc to be classified as independent contractors or freelancers.  

As an independent contractor you’ll be responsible for completing your own tax return therefore a good place to start with getting a mortgage is to download your tax overviews and tax returns from the HMRC portal.  

Your mortgage broker will then be able to let you know how much you can borrow and how much this will cost you on repayment mortgage per month.  

You’ll be able to increase your chances of getting an independent contractor mortgage by ensuring that your credit history is good, you have a big deposit, and that your income is regular and steady.   

Also, the longer that you have been an independent contractor will help as you’re showing your mortgage lender that you’re experienced and that you have the skills and responsibility to manage your money throughout the peaks and troughs with your income.  

Yes, contractor mortgages are a good idea. Without the flexibility of both the high street and specialist banks it’d be impossible for contractors to get mortgages.  

Banks will lend responsibility, as part of the affordability checks they’ll ensure that you can afford your mortgage both now and if interest rates increased in the future.   

Contractor mortgages can be a bad idea if you’re new to contracting and you’re nervous about the regularity of your income, maybe taking another year to save more deposit and rent might be a good option for you until you feel ready to buy a property and have the commitment of a mortgage.  

Our experienced mortgage advice team are on hand 7 days a week to answer all your questions about whether contractor mortgages are a good idea and can hopefully help you make up your mind as what to do.  

Yes, a semi-retired contractor can get a mortgage, there is a brilliant range of products available to you nowadays.  

You’ll be able to get a mortgage for a new purchase, remortgage, equity release, or buy to let.  

If you’re over the age of 50 you might also have pension income running alongside your contractor income which can support your mortgage application.  

The more experience you have at being a contractor and the longer that you’ve been doing it for will help your application and allow you to borrow more money. 

There is also a range of retirement interest only (RIO) mortgage products or equity release mortgages available to you which might be more suitable for you than a traditional mortgage.  

Our specialist over 50’s mortgage broker team will listen to your requirements and your objectives in order to recommend the best way forward for you.  

Yes, first time buyer contractors are available and are popular. You can get a first-time buyer contractor mortgage with as little as 5% deposit and schemes such as shared ownership and right to buy can be utilised just like with a regular mortgage.  

We find that our first time buyers like the help of a mortgage broker to navigate them through the maze of contractor mortgage criteria, surveys, valuations, conveyancing, and any other hurdles that we face along the way.  

If you’re looking for a first time buyer contractor mortgage it’s always best to speak with a mortgage broker before you start looking at properties to you have an accurate borrowing capacity figure and are comfortable with the monthly repayments.  

No, not usually, contractor mortgages do not cost more than regular mortgages. Although, depending on your individual situation, your mortgage might be at a slightly higher interest rate based on your risk profile to the bank.  

The longer you have been a contractor and the more experience you have will bring your risk profile with the lender down over time.  

Statistically, contractor and self-employed mortgages have higher default rates than with employed mortgages therefore they are priced accordingly with the bank. These statistics are based on years of historic data from the banks customer database.   

Yes, contractors can remortgage a property to get a new deal or to capital raise etc just like any employed applicant.  

We can help with the following contractor remortgage services: 

• Contractor remortgage for a new deal.  
• Contractor product transfers. 
• Contractor further advances.  
• Age 50+ remortgage options.  
• Bad credit contractor remortgages.  
• Capital raising mortgages for contractors. 
• Secured loans for contractors.   

Having a higher loan to value ratio, i.e. a lot of equity in your property will aid your chances of getting a contractor remortgage due to the lender taking on less risk with your application.  

There may be a lot of options with your existing lender also that we’ll compare such as a with a product transfer mortgage or a further advance. Staying with your existing lender could avoid you having to pay any early redemption charges if you’re in the middle of a fixed rate deal with penalties to leave.  

Our team of expert mortgage advisors will help you compare your remortgage options and recommend the best way forward for you based on your personal situation.  

Yes, contractors can capital raise on their mortgage, just like employed applicants.  Whether you are looking to remortgage to capital raise for home improvements, debt consolidation, or something else our expert mortgage brokers are on hand to help guide you through the process. 

Contractors can capital raise on their mortgage for: 

• Home improvements.  
• Debt consolidation. 
• Gift money to family members.   
• Anything else? 

When capital raising it’s always best to seek professional advice, there is a lot to consider, and mistakes can be costly.  

When thinking about consolidating debts, you’ll be taking previously unsecured debts and then securing them against your home, in the event of missed mortgage payments your home could be repossessed by the lender putting yourself in a worse position.  

Our team of experts are available 7 days a week to answer your questions and to ensure you fully understand your options.  

To prove your income as a self-employed mortgage applicant, you need to give the lender either full accounts and/or your HMRC tax calculations/overviews or PAYE payslips.

A certificate will be requested from your accountant may also be requested by your lender to support any income documents that you produce. Your accountant will need to be qualified and an Associate or Fellow with one of the leading professional bodies for the certificate to be valid.

If you have retained profit within your business or are currently or historically been making large employer pension contributions, there are some self-employed mortgage lenders that are good at looking at these cases individually to reassess your profit and income.

A reassessment in this way can have a huge impact on your affordability score and allow you to borrow more money if required. Leaving money in your business to de-risk or being sensible and saving into a pension should not present a challenge to self-employed mortgage customers.

If you are a contractor, you may be required to provide evidence of your day rate along with any signed contracts to prove that you have these in place.

Business bank statements might also be requested by your new mortgage lender to prove that you’re running a legitimate business and to back up your income claims.

We understand that being self-employed can present every individual in a different light when applying for a mortgage. Entering your income into an application form box will be difficult for self-employed customers, therefore, it’s always good to work alongside a professional mortgage broker for guidance and support.

Getting a bad credit mortgage for a contractor can be trickier, however, it is possible. Having an experienced broker that specialises in both bad credit and contractor applicants on your side will increase your chance of being approved.

• Bad credit contractor purchases.
• Bad credit contractor remortgages.
• Age 50+ mortgage options.
• Get a contractor mortgage with the following bad credit:
• County court judgements (CCJs).
• Defaults.
• Missed or late payments.
• Individual voluntary arrangements (IVAs).
• Low credit score.
• Debt management plans (DMPs).
• High debt to income ratio.

As with all bad credit mortgages, it’s always best to start off with a copy of your credit file, here we’ll be able to see when the bad credit occurred, whether it’s now settled, how much it was for, and what type of bad credit was registered.

The good news is that we work with both high street and specialist lenders, our expert mortgage brokers will find you a deal that is both good with your bad credit and your contractor income structure and recommend a way forward.

With bad credit mortgages, you’ll more than likely end up paying a slightly higher interest rate to compensate for the higher risk to the lender. Buying a property should be considered a long-term investment therefore, taking a more long-term view is recommended with the costs.

In the future, when your credit score improves, it may be possible to remortgage you on to a better product depending on the current criteria and interest rates available.

Our mortgage brokers are available 7 days a week to answer your questions relating to all aspects of contractor mortgages for both new purchases and remortgages.