Contractor Mortgages

Getting a mortgage when you are paid a day rate

For a full time employee, it’s easy to demonstrate your income. You simply state your salary and supply payslips to confirm it. But when you’re paid a day rate,  your income depends on how many days you work in any given month. That could vary significantly depending on your profession.

To the lender, your contract rate is less important than your annual turnover and profit. So your company accounts will be their main focus. 

If your income varies a lot year to year, it doesn’t necessarily mean that you can’t get a mortgage, but you might find that you’re offered products with higher interest rates. 

How mortgage affordability is assessed for a contractor?

The affordability assessment is how a lender decides how much it will offer you.

Contractors working for a long time find that lenders often calculate their annual income as an average, based on their earnings over a few years.

But if your earnings change dramatically from year to year, they could end up basing their assessment on your lowest annual profits – or sometimes just your most recent year. This could mean that you’re unable to borrow as much as you expected. Or, similarly, you might not be offered the most competitive mortgage rates. 

How do you strengthen your mortgage application as a Contractor?

To secure a mortgage loan there are a few things that might help. If you’re fairly new to contracting, it might be best to wait until you have a couple of years’ accounts – 12 months at the least – before buying a home. 

Secondly, make sure your accounts are in order. Talk to an accountant to see if there are other reports or information that can present your business in a positive light. 

Third, if you’re able to apply for a joint mortgage with someone who’s employed full time, it could increase your chances of being accepted. 

Finally, as always, if you can put down a decent deposit – more than 20 per cent of the property value, for example – that will make you a more appealing customer. It will potentially get you more competitive mortgage rates too. 

How can a Mortgage Broker help if I am a Contractor?

Authorised and regulated Mortgage Brokers are experienced at helping all kinds of clients – from contractors and the Self-Employed to people with bad credit. It’s their job to know the market and find a specialist lender that will accept your personal situation.

Whether you’re looking for residential loans or buy to let mortgages, at fixed or variable rates, we can help. We can help you to learn which stains are hardest to remove, and find the right solutions to clean them. As accredited advisors registered in England, we will explore your unique circumstances and recommend the best ways to achieve your home ownership goals. Visit our registered office or call us to get started.