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The service I received from Capital is indeed 7 stars. I know their charge is more than other brokers but they deserve every penny for ...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.

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What Our Customers Say

Customer - Purchase
Peter Bartlett has been professional, quick to respond and successfully supported us with a complex overseas mortgage funded in Euros. ...Read More
2 months, 29 days ago

Samantha Morris - Purchase
Fantastic service - they made the process easy from start to finish. ...Read More
3 months, 4 days ago

Customer - Purchase
Capital Fortune has been professional, responsive, accurate and timely. In our efforts to obtain a mortgage in the UK from the USA, we had no personal experience. Capital Fortune has made the process much easier. ...Read More
3 months, 5 days ago

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Peter Bartlett was completely responsive to any need or request of ours ...Read More
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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.

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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.

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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.

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Find Out Current Best Rates

Property Value
£
Mortgage Amount
£
Reason for Mortgage
Mortgage Type
LenderInitial RateTypeForThenAPR*ERC*Fee
Platform Intermediary 2 Year Fixed £1499 Fee £250 Cashback CTS1.06%FixedJul-20234.34%3.9%31-Jul-2023 £1499
Halifax Intermediary FTB 2 Year Fixed £999 Fee BHX1.11%FixedJun-20233.59%3.4%30-Jun-2023 £999
Halifax Intermediary 2 Year Fixed £999 Fee Purchase BHX1.11%FixedJun-20233.59%3.4%30-Jun-2023 £999
NatWest GREEN Intermediary 2 Year Fixed £995 Fee £250 Cashback Purchase CNW1.12%FixedAug-20233.59%3.2%31-Aug-2023 £995
Santander UK Plc 2 Year Fixed £999 Fee Porting Cashback CAN1.13%FixedAug-20233.35%3%02-Aug-2023 £999
Skipton BS 2 Year Fixed £995 Fee SBS1.13%FixedJul-20234.64%3.8%31-Jul-2023 £995
Santander UK Plc 2 Year Fixed £999 Fee Purchase Cashback CAN1.13%FixedAug-20233.35%3%02-Aug-2023 £999
Santander UK Plc 2 Year Fixed £999 Fee Purchase Cashback (Scottish) CAN1.13%FixedAug-20233.35%3%02-Aug-2023 £999
Santander UK Plc 2 Year Fixed £999 Fee Porting Cashback (Scottish) CAN1.13%FixedAug-20233.35%3%02-Aug-2023 £999
NatWest Intermediary 2 Year Fixed £995 Fee £250 Cashback Purchase CNW1.14%FixedAug-20233.59%3.2%31-Aug-2023 £995
Mortgage product availability is subject to status and availability. Although great care is taken to ensure that product details are as accurate as possible no liability can be accepted for errors or omissions.
*APR = Annual Percentage Rate *ERC = Early Repayment Charge
*These figures are only illustrative. An assessment of your needs will be confirmed before a recommendation can be made. A Key Facts Illustration, which is personal to your circumstances, will be provided if a recommendation for a mortgage product is made.

Best Discounted Rates

LenderRateType
West Bromwich Building Society 2 Year Discount £999 Fee Purchase Free Val WBB1.39%
then 3.99
(variable)
DiscountRead More
Furness BS 2 Year Discount £999 Fee Cashback BFU1.49%
then 5.14
(variable)
DiscountRead More
Progressive BS 2 Year Discount No Fee Purchase BPG1.49%
then 4.35
(variable)
DiscountRead More

Best 5 Year Fixed Rates

LenderRateType
Platform Intermediary 2 Year Fixed £1499 Fee £250 Cashback CTS1.06%
then 4.34
(variable)
FixedRead More
Halifax Intermediary FTB 2 Year Fixed £999 Fee BHX1.11%
then 3.59
(variable)
FixedRead More
Halifax Intermediary 2 Year Fixed £999 Fee Purchase BHX1.11%
then 3.59
(variable)
FixedRead More
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