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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
Mortgage products specifically developed for contractors are created with the variable income structure you will be familiar with, and allow flexibility in terms of the financial reporting information they require. These mortgages are based on the contract rate and are accessible to contractors with a good credit rating with lower interest rates available to low-risk applicants.
Financial information required to apply for a contractor mortgage
In acknowledgement of the income streams of contractors, lenders have different criteria for contractor mortgages. You do not need three years worth of financial accounts, but instead will need to be able to demonstrate the value of the contract you are working on.
Eligible applicants for a contractor mortgage
These mortgage products are aimed at:
- Contractors who are employed on a short term or fixed period aligning with the contract
- Self-employed contractors who are engaged through one core client
The criteria vary between lenders and the type of mortgage required, but having prior experience in the same industry strengthens the application. Get in touch with the experts at Revolution Finance Brokers today, and we can advise on the types of products specifically created for your needs!
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Types of contractor mortgages:
- Self-employed contractors with a minimum 6-month contract
- Fixed-term contractors with prior industry experience
- Contractors working through an umbrella company, with a year's worth of experience
- Zero-hours contractors who can demonstrate a year’s worth of income
- Agency workers with a year’s worth of demonstrable experience
Which mortgage type is best suited to you depends on your circumstances, and our first step is assessing your needs to be able to advise on which lenders fit with your requirements.
Applying for a contractor mortgage
To successfully apply for a contractor mortgage, you will need to be able to show the details of the contract, and demonstrate your experience in the industry.
Mortgages for new contractors
If you are just starting out working as a contractor, it is still possible to secure mortgage finance, although most lenders will require your contract to be running for a minimum of 6-months. Being able to demonstrate experience and a good track record in a similar market is preferable. Give us a call today on 0330 304 3040 and we will be able to advise on how to build up a work history!
Mortgages for short-term contractors
There are mortgages available for contractors working on a short-term basis. Being able to show a sustainable income stream will help show the lender that the application is viable. If you need help putting together an application, creating a record of income history or deciding which product is right for you, get in touch with Revolution Finance Brokers today!
Deposits for contractor mortgages
Different lenders have different deposit requirements, and typically a 5% deposit is acceptable. The deposit value you have available will impact the interest rates lenders can offer, and the higher the deposit the more cost-effective the lending terms. However, ongoing affordability is a more key criterion. To understand which lenders offer products that match your circumstances, get in touch with our team and we will be delighted to advise.
Borrowing limits for contractor mortgages
The amount available to borrow through a mortgage is often calculated based on your day rate multiplied by the number of days you expect to work per week. This total is then worked out on 48-weeks per year to provide an anticipated annual income that lenders can base their offer against. Depending on the type of mortgage and your requirements, most lenders will look at around five times your annual income to arrive at a borrowing limit. Making sure you choose a lender who aligns with your business and your type of contract is essential to securing the best deal!
Right to Buy mortgages for contractors
Right to Buy mortgages are available to contractors as with applicants of any employment status. However, you will need to select a lender who accepts this kind of application since not all lenders can consider contractor Right to Buy lending. Your lender may require a personal deposit, but provided you choose a lender who offers this type of product, there is every possibility of securing a Right to Buy mortgage.
Buy to Let mortgages for contractors
Since Buy to Let mortgages are usually based on the available rental income of the property, your employment status does not affect your eligibility to apply. However, some lenders will request a minimum contract term left to run to ensure that the lending is affordable. Our specific lending calculators will help assess what you could borrow, and help identify the best lenders with the ideal Buy to Let mortgage options for you!
Help to Buy mortgages for contractors
The Help to Buy government scheme provides low-interest loans to assist buyers with property purchases and provide a suitable deposit. The scheme is open to contractors, so if you are looking to help in increasing your deposit, give us a call and we will help find the best lender for you, and advise on the pluses and negatives of the Help to Buy programme.
Shared ownership mortgages for contractors
A shared ownership mortgage for contractors is a specialist product, and will not be available through most mainstream lenders. There is no reason that you cannot obtain mortgage lending via shared ownership, but will need to consider niche lenders who can support this form of lending! Get in touch at [email protected] and we will work with you to find the specialist mortgage options to help you go ahead with your property purchase.
Contractor mortgages with bad credit ratings
Whilst you might be concerned about having a bad credit rating, you can still find a contractor mortgage for you. The best solutions will depend on the credit issues you have experienced, and our team can help work out the best route for your application.
Which lenders are the best for contractor mortgages?
Given the more variable income earned by most contractors, it is essential to choose a lender who is familiar with contract work and can consider your application. The property experts at Revolution Finance Brokers have years of experience working with contractor clients and will be able to deliver mortgage lending options suited to your needs.
Mortgages for agency workers
As an agency worker, you will need to be able to provide information about your income and agency work, such as a copy of your contract and a record of your experience in the industry. This helps specialist lenders understand your level of affordability, and assess the amount of lending they can extend. Whilst the application process may take slightly longer, with the right advice and the right lender you have every opportunity of securing mortgage lending!
Achieving the best mortgage rates for contractors
Applying to the best lenders means you can access the same competitive interest rates as any employee. If you have a strong deposit value, you will be able to secure an even better interest rate. Contractors have access to all the same types of mortgages as any other kind of worker and will need to choose between options such as fixed repayments, variable interest rates and tracker interest rates.
Advice for contractor mortgages
Here are Revolution Finance Brokers we pride ourselves on being to help clients in niche markets, specialist areas of work, and with varied income structures to help them achieve their property investment aspirations! We combine our experience with an outstanding network of lenders and specialist mortgage brokers providers to deliver the best mortgage rates for every client; no matter your sector or your circumstances.
To apply for a contractor mortgage you will need to ensure you are working with a specialist lender who provides this sort of mortgage. The application process will include a more detailed examination of your income and contract terms to make sure that you can afford the repayments before the lender is able to make an offer.
Yes, you can! Most types of contractors will need at last a 12-month work history, or have a 6-month contract in place. Contractors can include self-employed people, those with fixed-term contracts, agency workers and those on zero-hours contracts.
You can, although the number of lenders who will be able to make a mortgage offer will be reduced since many will require a minimum duration of work history to be able to offer lending. If you have experience in the industry that predates your contract this can be very valuable in demonstrating the sustainability of your contractor income.
The minimum deposit will vary between lenders but usually the minimum starts at around 5% of the property value. The higher deposit value you have available, the easier it will be to secure an offer, and the better rates you will be able to achieve.
How much you can borrow will depend on your income, and how long you have been a contractor for, or the length of time remaining on your current contract. Typically, lenders will look at your regular income and calculate an average income per year to reflect the salary that an employed applicant would be assessed against. The standard is that mortgage lending can be offered at up to five times your annual income, although this will vary between lenders and be dependent on several criteria including the deposit available, your work history and the value of the property.
Yes, they can. Just as a self-employed person is able to apply to Right to Buy provided they can demonstrate their anticipated income, so too can a contracted person.
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As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.