capitalfortune

Call us today to speak to an expert

0207 7 100 400

Capital Fortune is a national and
award winning mortgage, buy-to-let
and insurance broker.

Call today to speak to an expert

0207 7 100 400

REQUEST A CALLBACK
Image
As Featured
Our customers have rated our service
Feefo logoIndependant User Feedback Feefo logo98%
Customer - Buy to let remortgage
Excellent communication and speed of service throughout the process ...Read More

Mortgages For Contractors

The number of people in Britain working on fixed term contracts has risen significantly over the past decade. Many of these people are effectively self-employed and work for one or a few large clients on specialised project run on fixed term contracts. Others are part of the growing gig economy, with drivers for firms such as Uber and Deliveroo working on zero-hours contracts. Tech firms, accountancy firms and even professional services firms are also increasingly moving from full-time PAYE employment contracts to fixed term contract employment.

For those working in this way, there are multiple benefits – flexibility of working hours and location being the obvious ones. One downside however, is that it’s still harder to get a mortgage if you don’t have a full time job than it is if you do.

This is primarily down to rules that govern mortgage lenders brought in after the financial crisis. Long gone are the days when you could self-certify your income and the lender would hand over a mortgage. Now, lenders must see evidence of your income and expenditure before they decide if you can afford the mortgage repayments.

This is what presents a challenge to some contract workers, particularly if your income varies month to month. Lenders want to see a ‘guaranteed’ level of income each month to cover the mortgage payments and your other fixed expenses.

Image

What Our Customers Say

Customer - Further Advance
Very good! ...Read More
26 days ago

David Balgobin - Residential Purchase
I can highly recommend Capital Fortune and would definitely recommend Capital Fortune to anyone seeking a property loan in the UK. I can say unequivocally, that I would not have been successful in being approved for a property loan (mortgage) ...Read More
1 months, 2 days ago

Declan - Buy to let purchase
My experience with Capital Fortune was excellent. My case was a bit complicated and the product I was looking for was a niche mortgage product but the team at Capital Fortune made everything clear for me from their initial call. ...Read More
1 months, 3 days ago

Customer - Further Advance
As someone who finds tackling mortgages an anxious time I am very appreciative of how James Drury and Stephen Marsh saw me through the process with as little fuss and stress as possible. ...Read More
1 months, 4 days ago

Find out more

How Much can Contractors Borrow on a Mortgage?

Different lenders have different rules about how they assess how much you can borrow against your contract earnings. They will look at the length of your contract, the number of contracts you have and your monthly income.

Don’t forget that as you will have to complete a self-assessment tax return, you will only have your net monthly income to cover expenses, so you’ll need to factor in your tax liability when working out what you can afford too.

They will want to see a track record for what you’ve earned and if it shows consistent levels of income, so much the better. Some lenders will ask for a little as six months bank statements, but most will want to see a minimum of one-year’s worth of signed off accounts, with some lenders requiring two or three years.

If you have a number of years working as a contractor, lenders are likely to take your average annual income into consideration when assessing your mortgage application. If your income has been volatile however, they may just look at the most recent year or they make restrict the amount you can borrow against to a percentage of your annual income.

Some lenders will look at your income if you charge clients a day-rate – though these mortgages are harder to come by.

Image

Limited Company

There are different rules again if you are set up as a limited company and your contract income comes into this rather than to you directly. Rather than assessing your income based on your full earning as they would outside of a limited company, lenders typically look at your salary and dividend income and calculate what you can afford on the mortgage based on this.

This can be challenging as tax accountants seek to minimise tax payable on income, sometimes by reducing the salary you take and maximising dividend income which, while taxed less, is more variable and not seen as so reliable by all lenders.

Image

Work closely with your adviser

There are still options however, it’s just important to work closely with your adviser to ensure you get the mortgage. Some lenders are more able than others to look at your business in the round and assess your ability to repay the mortgage on this rather than just straightforward salary income.

A mortgage adviser with experience working with lenders that specialise in helping contractors to buy their own home should be able to help you work out how much you can borrow and which lender will be right for you. Speak to an adviser now.

Image

Self-employed and own a company?

Click here to find out your options.

Find Out Current Rates

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Commercial Mortgages and some forms of Part Commercial & Buy to Let mortgages are not regulated.

Image

Get competitive rate mortgages

Award-winning
Mortgage Advisers

Fast Decisions

National Coverage

Holistic Approach

Comprehensive Panel

Direct Access to Underwriters

no obligation quotes

Get a quote for these services

No Sale, No Fee, Fixed Price

Low Cost, National Coverage

Instant Online Quotes