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Mortgages for Agency Staff Employed Through an Umbrella Company

Uncover all the relevant information about buying a home as an agency worker or proving your regular income for a mortgage application if you're employed through an umbrella company.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-14
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Umbrella Company Employee Mortgage Deals

Many contractors and agency staff work through umbrella companies. This option has increased since IR35 rules about 'off-payroll' workers comes into force from April 2021.

This set-up can be complicated for a mortgage application. The key is to ensure you apply through an experienced broker to lenders familiar with this working scenario.

Let's run through how mortgages work for umbrella company employees and how to get the mortgage you need! For more advice and assistance, contact Revolution Brokers on 0330 304 3040, or send us a message to [email protected].

Can I Get a Mortgage If I Am Employed Through an Umbrella Company?

You can, yes. Umbrella company mortgages are designed for contractors, agency workers or professionals employed through this type of company structure.

These mortgages are relatively specialised, so it is crucial to work with an independent broker, as many high street banks will be unable to offer a mortgage.

The complication is unpicking your income, understanding your employment stability, and including variable pay (such as regular overtime or bonuses).

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Are There Benefits to Applying for an Umbrella Contractor Mortgage?

If you are employed through an umbrella company, it's almost certainly the easiest way to find a mortgage.

  • Lenders will evaluate the value of your contract rather than variable payslips. If you regularly work overtime or earn bonuses, this makes the process much more streamlined.
  • The umbrella company can provide a history of regular earnings, making it simpler than applying for a self-employed mortgage or a contractor mortgage needing tax returns or accounts to verify your income.
  • Flexibility is greater since even applicants who are new to a role can show their contract as evidence that they have an ongoing role through an umbrella organisation.
  • You can borrow more than a self-employed applicant since the mortgage affordability is based on the value of your contract, not on net profits declared on a self-employed tax return.

Are There Downsides to an Umbrella Company Mortgage?

The big drawback is that this is a niche mortgage product and not available through many mainstream lenders.

Some mortgage providers are uncomfortable dealing with variable income and will only include your basic rate salary in the calculations - and therefore not offer the mortgage value you require.

What are the Mortgage Eligibility Criteria for Umbrella Company Contractors?

Policies vary between lenders, but typically any mortgage provider will assess:

  • Your work history with umbrella companies - a year or more of experience is preferable.
  • Whether your contract has already been renewed, with at least one previous renewal being positive.
  • The structure of your work, whether through one primary business or delivering agency work or contractor jobs to multiple end clients.
  • Your age - some lenders have a minimum contractor mortgage age of 25.
  • Whether you have any bad credit history, with this making it harder to find competitive mortgage lending. In some cases, a specialist bad credit lender is the best option.
  • The average income per year, with the higher the average, the more you can usually borrow.
  • What property you wish to mortgage. Standard constructions made of bricks and mortar are the easiest type of property to borrow against. Some lenders will refuse mortgage applications against unusual builds, such as thatched cottages or timber-framed properties.

How Do Contractor Mortgages Work for Umbrella Company Workers?

In general, a lender will look at your day rate and multiply that by five to estimate your weekly income. They then take that weekly rate and multiply it by around 48 times to predict your annual income, taking into account holidays.

From there, the maximum you can borrow is usually around four or five times your annual earnings.

If you earn £200 per day, for example, you might be offered:

  • A maximum mortgage of £192,000 from Lender A, who offers up to four times your average annual earnings.
  • Up to £240,000 from Lender B, who uses a more generous five times salary calculation.

Is It Better to Get an Umbrella Company Mortgage or a Limited Company Mortgage?

Some applicants look at setting up a limited company to manage their business through, rather than being a contractor through an umbrella company.

Generally, both types of home loan require specialist advice from an independent broker. Lenders will decide whether to make an offer on a case-by-case basis.

Limited company mortgages are better in that you usually have a higher take-home pay rate, given that tax isn't deducted at source. However, you will also usually need at least two or three years worth of history, whereas you can get a self-employed mortgage with just a year or so of trading records.

Professional Advice on Umbrella Contractor Mortgages

There are many agency workers and contractors employed through umbrella companies. While high street banks might not lend in this scenario, many niche lenders can.

To help identify the right mortgage product for you and compare the best rates available on the market, contact mortgage advisors on 0330 304 3040, or email us at [email protected].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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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.

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