Maximise your mortgage borrowing based on a contracted daily rate
Mortgage lenders are increasingly coming to terms with the fact that work roles are changing and more experienced individuals are choosing dynamic work arrangements. We are seeing an increasing number of UK banks and building societies who are becoming more contractor friendly.
Traditionally, mortgage lenders work out your maximum mortgage borrowing based on gross annual income from employment, your net profit or an average of your self-assessment tax returns (SA302’s).
However, Contractor Friendly mortgage lenders are different. They will calculate how much you can borrow based on your contracted daily rate. There has to be evidence of regularity and continuous contractual work in order to do this.
How much can I borrow?
Use our brand new contractor mortgage calculator to work out how much you could borrow:
£340 daily rate = a potential mortgage loan of £397,800
Please note: Lenders will vary with regards to the number of weeks in the year in which they will multiply the final calculation. This is down to individual lender risk assessment.
Can I get a contractor mortgage with a limited company?
Yes, there are lenders who will consider a mortgage based on a daily rate even if you facilitate your contract via a Ltd Company.
What is the maximum I can borrow?
We have lenders that can go to 95% loan to value for contractor mortgages.
What are the lender requirements?
Mortgage lenders like to see a history of previous contractor experience and continuous work or regularity of income. Some lenders will ask for your previous 12 months contracts and they generally don’t like to see more than a 6-week gap between each contract start and end date. Holidays are permitted.
Basic mortgage lender requirements:
- A copy of your CV
- 3 months business bank statements (if Ltd Company)
- 3 months personal bank statements
- A copy of your current contract and previous contracts over the last 12 months
Which Lenders offer Contractor Mortgages?
The best contractor mortgage lenders are:
- Accord (but not for daily rate contractors)
- Metro Bank
- Natwest (minimum £75,000 income per annum)
- The Mortgage Lender
Before you approach these lenders, please consider our award winning mortgage brokers who won’t charge you any fees to process your mortgage for you.
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Author: Ben, Glow Mortgage Advisor (CeMAP, BSc Hons)
Date Published: 27th March 2018
Last Updated: 1st May 2019
Regularly monitored and updated.