How a Contractor Mortgage works
A true Contractor Mortgage works by calculating affordability based on the Contractors day rate.
For example £300 day rate X 5 days X 46 weeks = £69,000 equivalent income
Not all lenders will work off of day rates for Contractors and this needs to be borne in mind when seeking a Contractors mortgage.
Who can apply for a Contractor Mortgage?
The classic client for a Contractor Mortgage is the IT Consultant. But you do not need to be contracting in the IT industry in order to obtain a Contractor Mortgage.
Anyone who has a fixed term contract can be treated as a Contractor with a Contractor Mortgage specialist.
- Marketing Consultants
and many more
Lenders typically require that the Contractor has a minimum 12 months history contracting with at least one Contract renewal, and six months remaining on their current contract.
New to Contracting? No need to wait.
There are mortgage lenders that will consider a Contractor Mortgage for an applicant about to start contracting who has an employment history of at least two years in the same industry.
Applying for a Contractor Mortgage
When applying for a Contractor Mortgage, be prepared to provide copies of your current contract, and previous contracts going back up to 3 years. Business accounts are useful but are generally not necessary.
The lender may also ask to see your business bank statements so they can see a track record of contract payments entering the account.
Mortgage lenders do not typically offer a separate set of rates for Contractor Mortgages, nor set any special limits on loan to value. The Contractor Mortgage is simply an acknowledgement by the lender that the Contractor is a special case should be treated as such.
Mortgage lenders, when assessing Contractor Mortgage applications, are particularly keen to see a consistent track record. Gaps between contracts can be a problem, particularly when they exceed one month.
A Contractor in the habit of completing a Contract then taking several months off is likely to run into problems.
For assistance with a Contractors mortgage, call us now on 020 8979 9684