How to Get a Contractor Mortgage in the UK: A Freelancer's Guide

Getting a mortgage as a contractor in the UK can often feel like a complete blag. Many lenders struggle to assess contractor income properly, leading to unnecessary rejections. However, securing a mortgage isn't impossible—specialist lenders now offer tailored solutions specifically designed for freelancers and contractors.

At Chetwood Lloyd Mortgages, we know the unique challenges contractors face when trying to buy a home. This guide will walk you through how contractor mortgages work, how lenders assess income, and how to increase your chances of approval.

Understanding Contractor Mortgages

Contractor mortgages aren’t a separate mortgage product but are assessed differently from standard mortgages. Instead of using salary slips, many specialist lenders calculate affordability based on your contract rate.

For example, if you earn £350 per day and work five days a week for 46 weeks a year, your annual income would be calculated as:

£350 × 5 × 46 = £80,500

This often allows contractors to borrow more than traditional income assessments based on salary and dividends.

Why Contractors Face Challenges

Many high street lenders categorise contractors as self-employed, requiring two to three years of accounts. This can be problematic since contractors often structure their finances for tax efficiency, making their declared income appear lower than their actual earnings.

Challenges include:

• Gaps between contracts

• Fixed-term nature of contracts

• Inconsistent income patterns

Specialist lenders, however, take a more flexible approach, considering your contract rate instead of your net profits.

Proving Your Income as a Contractor

To secure a mortgage, you’ll need to provide:

• A copy of your current contract

• Three months of personal and business bank statements

• Your CV (to demonstrate industry experience)

If you operate through an umbrella company, you’ll also need payslips showing consistent earnings.

Meeting Lender Requirements

Most lenders require at least 12 months of contracting history. However, some specialist lenders, like Saffron Building Society, may consider applications from contractors with just three months' history.

Deposit Requirements:

• 5% deposit: Limited mortgage options

• 10-15% deposit: Better rates and greater lender choice

• 25-40% deposit: Access to the best mortgage deals

How Gaps Between Contracts Affect Your Mortgage

Lenders generally accept contract gaps of up to six weeks per year. If your gaps exceed this, you may need to provide additional evidence, such as:

• An explanation for the gap (e.g., parental leave, illness)

• Evidence of continued work history in your sector

The Importance of a Specialist Mortgage Broker  (That’s us!)

Many contractor-friendly mortgage products are only available through brokers who have established relationships with specialist lenders. A good broker will:

• Identify the right lenders based on your contract type

• Maximise your borrowing potential by using contract-based underwriting

• Guide you through the application process to avoid unnecessary rejections

Submitting a Strong Mortgage Application

To improve your chances of approval:

• Check your credit score: Lenders scrutinise your financial history.

• Avoid new debts: Hold off on large credit applications before your mortgage.

• Time your application wisely: Apply while you have at least six months remaining on your current contract.

Securing a contractor mortgage may seem complicated, but with the right approach, it’s entirely possible. Specialist lenders recognise the financial stability of contractors and offer competitive mortgage deals.

At Chetwood Lloyd Mortgages, we specialise in helping contractors navigate the mortgage process with confidence. Whether you’re a first-time buyer or looking to remortgage, our expert team can connect you with the right lender and secure the best possible deal for your situation.

Ready to secure your contractor mortgage? Get in touch with us today!

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