Here at Willow Brook Mortgages we understand that finding a contractor mortgage can carry more challenges.
Our experienced advisors will be able to discuss your full working scenario to ensure that we find you the best mortgage deal.
Lenders have varying criteria when it comes to contractor income. We have access to over 100 lenders so we can find the best lender.
What is a contractor mortgage?
If you do not hold a full time permanent position and receive your income as part of a contract you could be considered a contractor.
A contractor is usually a professional who offers there skills for a set rate of pay and timeframe. This can be on a day rate, weekly rate or monthly rate of pay.
Contractors can chose which work to accept and they might work for the whole year or take gaps between contracts.
A contractor mortgage is where a lender agrees to lend money to an applicant, based on the income from contract work.
Can contractors get a mortgage?
The short answer is yes. As with all mortgage lending, lenders have to ensure that the mortgage affordability is sustainable.
This means that for a contractor mortgage, lenders will look at the contract as well as the history in contracting and the time left on the current contract.
Willow Brook mortgages have experienced mortgage advisors to find the best mortgage deal for a contractor mortgage. Furthermore with access to over 100 lenders, we can look at which lender will give the best mortgage. Some people will want to focus on getting the best mortgage deal while other people will want to look at the maximum amount they can take on a mortgage.
How much can a contractor get on a mortgage?
This varies between lenders, so speaking with a mortgage broker will give you the best opportunity to explore what a range of lenders will offer to you.
Some lenders will look at your current contract for your rate of pay and then annualise this figure. They will take your income over a maximum of weeks to allow for holidays and time between contracts.
Additionally there are also lenders who will look at contractor income in a similar way to self employed clients. These lenders will look at the income received across 2 years. For a sole trader this would be net profit and if the income is put through a limited company it would be the salary and dividends drawn from the company.
Construction industry scheme (CIS) contractors
If you work in the construction trade in the UK you are often employed under the CIS scheme. You will receive payslips with some of the tax deducted but also be classed as self employed. Your income can be assessed on a self employed basis or on an employed basis by lenders. Lenders criteria varies for CIS contractors. Therefore speaking to a mortgage broker will ensure that you get the best mortgage deal for your contractor mortgage.
Fixed term, IT AND IR35 contractors
If you are employed for a fixed period of time with a set pay daily, weekly or monthly you could be on a fixed term contract. You will be able to look at a mortgage depending on factors such as the time left on your contract, how long you have been contracting for and the time you have in the industry.
Income is calculated differently by lenders so we can assist with our wealth of knowledge to help you get the best mortgage deal for your circumstances.
Agency and zero hours contracts
Income from these areas can be more variable but they are very common. Lenders require a track record and look at varying numbers of payslips to determine your income.
Our specialist advisers will be able to look at your options with you
Junior Doctor Mortgages
Junior Doctors normally work on a fixed term contract while they are training and moving between trusts. NHS payslips can be complex with various different areas of pay. We understand what areas lenders will accept to ensure your hard work pays off.
People working within the NHS often work on fixed term contracts. Bank work is also often paid seperately.. Payslips can vary with different areas of income such as banding, area allowances and overtime.
Our experienced advisers can work with you to ensure all of your income is used by lenders.
Contractor mortgages when working through an umbrella company
Working on a fixed term contract or with a day rate can be done through an umbrella company. The umbrella company might arrange a contract for you, collect the money from the employer and pay you via their payslip system. Some lenders criteria are more complex for a contractor through an umbrella company. Our specialist contractor mortgage advisors can work with you to get the best mortgage deal.
Top tips for getting a contractor mortgage
- Ensure you have a copy of your current contract which includes the start date, end date and your rate of pay. This contract will need to be signed by you and your current employer
- Get a copy of your previous contract as most lenders will need to see your work history
- Download 3 months of bank statements for your account where your income is received. Lenders will want to ensure they can see the income from your contract coming in to your account
- Avoid breaks between contracts or keep them to a minimum. Lenders understand that everyone needs time off and that contractors won’t received holiday pay so this is normally taken between contracts. However long breaks can highlight problems getting a new contract
- Save your deposit – for a contractor mortgage most lenders will require a minimum of 10% deposit