Contractor Mortgages
Getting a foot on the housing ladder can be a complicated business, especially if you are a contract or freelance worker, with a fluctuating income.
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While working for yourself has lots of benefits, when it comes to securing a mortgage, lenders can make it more of a challenge.
That's where we come in.
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At Your Mortgage Room, our team's experience and mortgage advice has helped hundreds of contractors choose the right lender for their specific circumstances.
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We could do the same for you.
What is a contract worker?
Lenders usually define contract workers as someone who is self-employed, on a fixed term contract with a company and earning a fixed rate of pay.
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The rise in remote working and freelancing has boosted this sector, and in September 2024, there were around 4.28 million self-employed workers in the UK.
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Unlike traditional salaried roles, the finances of contract workers and freelancers can, in theory, be more unpredictable, an instability that makes lenders more cautious when it comes to mortgage decisions.
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Despite what the name suggests, a contractor mortgage is no different to a standard mortgage but, because of the unpredictable nature of contract employment, not all lenders are comfortable dealing with contractors.
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We have access to a wide range of lenders and the tools to discuss a range of options to suit your circumstances.
Meeting the contractor mortgage lending criteria
High Street lenders have specific lending criteria that all customers looking to get a mortgage must meet.
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Depending on your circumstances, our independent professionals may determine that a specialist contractor mortgage lender would be the most suitable option, as they understand the nuances of self-employed income, in turn offering more flexibility.
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As a specialist contractor mortgage broker, we will undertake a thorough financial assessment of your income to evaluate your contract earnings and whether you can afford monthly mortgage payments. This includes gathering documentation including:
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bank statements
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invoices
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tax returns
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day rate details
Some mortgage lenders may prefer contractors who have a track record of consistent work over a certain period, such as 12 or 24 months. That said, we also have access to contractor friendly lenders who may consider a shorter period of time for a mortgage loan.
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Projected future earnings may also be taken into account for self-employed customers seeking a mortgage, as part of the lender's criteria for eligibility. This can be especially helpful for contractors who have recently completed a contract and are looking for their next project.
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Your credit history and deposit amount can also have a significant impact on how much you can borrow from contractor friendly lenders. The better your credit history and the higher your deposit, the more competitive the interest rates you will be able to access.
Limited company mortgages
If you run a limited company and draw a low salary while supplementing your income with other revenues, or if you work as a contractor for a limited company under the off-payroll rules, mortgage lenders will use only your earnings (salary and/or dividends) to determine your affordability.
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If you have no accounts to show, copies of your SA302 tax calculations could be used as proof of earnings.
No matter your circumstances, our independent professionals can help.
How to prepare for mortgage lenders
There are many ways to make your contractor mortgage application more attractive to a prospective lender.
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Build up a steady flow of work
In the 12 months before applying for a contractor mortgage, try to build up a steady flow of contracts if possible, and avoid any gaps between jobs.
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Actively seek contracts
Try to renew as many deals with existing businesses as possible, to demonstrate current and future stability.
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Assemble documentary evidence
Many lenders will not take a contractor's word that they have a steady income. They will want to see evidence in black and white, including invoices, bank statements and accounts to get the full picture.
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Boost your credit score
Even a good credit score can be improved, enhancing your profile among genuine contractor mortgage lenders. Ensure all your bills are paid on time, and that your details are correct. You can even take out a credit card as long as the balance is paid in full each month.
Why choose us as your contractor mortgage broker?
Our mortgage broker team has a wealth of experience in helping to guide contractors meet all lending criteria and get a competitive mortgage that suits their specific circumstances.
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We work with a wide range of contractor friendly mortgage lenders from which we can source the most suitable rates and terms for all contractor customers looking to get a mortgage.
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We will also support you with any issues that arise throughout the mortgage application process and beyond. As an online and telephone based brokerage currently, our systems allow clients to easily send documents to us securely, making the process seamless and stress-free.
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Plus, as independent professionals, we pride ourselves on giving comprehensive, unbiased advice for contractors, whether they are seeking an interest only mortgage or want to know more about buy to let mortgages.
Insurance protection
We do more than help clients get a mortgage. Our specialist mortgage broker service includes sourcing suitable insurance products to protect a mortgage, such as income protection or critical illness cover.
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We know that, for contractors in particular, they provide a crucial safety net against unforeseen circumstances that could impact your ability to work.
Contractor mortgage next steps
Ready to find out more about how to get a mortgage as a freelancer or contractor? Want to get started with the contractor mortgage application process?
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No problem.
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​You can email us at info@yourmortgageroom.co.uk, call 01273 039500, or fill in this contact form and we'll get the contractor mortgage ball rolling.