Contractor Mortgage Options
Contractors often find standard mortgage assessments don't reflect their true earning capacity. Taking a modest salary and dividends for tax efficiency can make company accounts look less impressive than your actual earning power. Specialist contractor mortgages address this by calculating affordability based on your daily rate and remaining contract length rather than accounts alone.
Whether you're remortgaging your home or purchasing a new property, contractor-specific products can significantly increase your borrowing capacity compared to standard self-employed assessments.
Day Rate Calculations
Specialist contractor lenders multiply your day rate by a standard number of working days (typically 46-48 weeks allowing for holidays) to calculate annual income. For example, a contractor earning £500 per day would be assessed on approximately £115,000-£120,000 annually, regardless of what their company accounts show.
Requirements typically include a minimum day rate (often £400+), minimum remaining contract length (usually 6-12 months), and evidence of contracting history (usually 12 months minimum). Some lenders also require that contracting is your primary occupation.
IR35 Considerations
IR35 status affects your tax position but doesn't necessarily prevent mortgage access. Contractors working inside IR35 through umbrella companies have PAYE income, making standard employed criteria applicable. Those outside IR35 operating through personal service companies typically need day rate or contractor-specific assessment.
Some lenders are cautious about IR35 complexities, while others have developed expertise in contractor income assessment regardless of IR35 status. Our brokers can navigate these nuances and match you with appropriate lenders.
Which Lenders Accept Contractors?
Several lenders have contractor-friendly products, including Kensington, Accord, Halifax, and others. Each has different minimum requirements for day rate, contract length, and contracting history. Some building societies also offer flexible assessment for contractors.
Working with a broker experienced in contractor mortgages saves time and ensures your application goes to lenders most likely to approve based on your specific circumstances. Complete our form for free, personalised contractor mortgage advice.