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Ian Rutherford - Buy to Let Remortgage
They got us a great deal on our mortgage and pushed everything through just in the nick of time. I would definitely recommend. ...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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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.


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.


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 Rates

Property Value
Mortgage Amount
Reason for Mortgage
Mortgage Type
LenderInitial RateTypeForThenAPRC*ERC*Fee
Progressive BS Northern Ireland Co-Ownership 2 Year Discount No Fee Purchase BPG3.23%Discount2 years6.49%6.02%2 years £0
Progressive BS 2 Year Discount No Fee Purchase BPG3.23%Discount2 years6.49%6.02%2 years £0
Scottish BS 2 Year Discount £995 Fee Purchase BSO3.29%Discount2 years6.99%6.6%2 years £995
Scottish BS 2 Year Discount £995 Fee Professional Purchase BSO3.29%Discount2 years6.99%6.6%2 years £995
Bath BS 2 Year Discount £999 Fee Rent a Room BBB3.29%Discount2 years6.29%6%2 years £999
Bath BS Complete FS 2 Year Discount £999 Fee Rent a Room BBB3.29%Discount2 years6.29%6%2 years £999
Bath BS Brightstar 2 Year Discount £999 Fee Rent a Room BBB3.29%Discount2 years6.29%6%2 years £999
Newcastle BS Direct / Semi Exclusive 2 Year Discount £999 Fee NBS3.29%DiscountJan-20254.91%4.9%31-Jan-2025 £999
Progressive BS 2 Year Variable No Fee Purchase Foreign Currency Loan BPG3.33%Discount2 years6.49%6.04%2 years £0
Skipton BS 2 Year Tracker £1995 Fee SBS3.39%Tracker2 years4.89%5.6% £1995


Rates are updated daily and can be withdrawn at anytime withoutnotice by lenders.

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.

*APRc = Annual Percentage Rate Change
*ERC = Early Repayment Charge
The mortgage products displayed above are as a result of the following search: Reason for Mortgage: Purchase; Property Valuation: £200000; Mortgage Amount: £120000;Payment Method: Repayment; Mortgage Term: 25 years; Mortgage Product: All Offset: No Product Term Period From: 0 Months; Product Term Period To: 300 Months;Lender Fee: not added.The mortgage deals shown above are subject to individual status and a suitable security property. You may not be eligible for some or all of the deals shown given your status and/or the nature of the security property. For a more accurate indication as to mortgage deals you are eligible for, please contact us to discuss your specific situation and/or property.

Discounted Rates

Progressive BS Northern Ireland Co-Ownership 2 Year Discount No Fee Purchase BPG3.23%
then 6.49
DiscountRead More
Progressive BS 2 Year Discount No Fee Purchase BPG3.23%
then 6.49
DiscountRead More
Scottish BS 2 Year Discount £995 Fee Purchase BSO3.29%
then 6.99
DiscountRead More

5 Year Fixed Rates

HSBC RETENTION Direct 5 Year Fixed £1499 Fee C/A Premier Standard HSB4.71%
then 5.54
FixedRead More
HSBC RETENTION Direct 5 Year Fixed £999 Fee Standard HSB4.74%
then 5.54
FixedRead More
Virgin Money 10 Year Fixed £995 Fee Purchase £1000 Cashback BNR4.89%
then 6.49
FixedRead More

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