Mortgages for Contractors

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Mortgages for Contractors

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Mortgages for contractors are regarded as a specialist area. As a result we help lots of contractors get mortgages. If you’re reading this, that probably means people like you. As you might expect, it can be more difficult to get a mortgage if you are a contractors. However, we are experts and when it comes to these types of mortgages, you have come to the right place. Below you can find out more about mortgages for contractors. This should hopefully answer any questions you have. But if you want to find out more, simply get in touch and we will be happy to help. 

Click the questions below to read more

Firstly, there is no such thing as a mortgage that is exclusively for contractors. Mortgage products are generally available for anyone to apply for. Some lenders allow contractors, and others may not. But this is due to their overall lending criteria. If you’re a contractor looking for a mortgage, it’s important to understand this. 
 
It can be more difficult to get a mortgage if you’re a contractor than it may be for a permanent employee. However, this is not always the case. 
 
Some lenders don’t favour contractors, whilst others do. This is why it is important to speak to a mortgage broker that knows how to get a mortgages for contractors. 
The criteria between mortgage lenders varies dramatically for contractors.  The definition of a contractor will vary between different lenders. Typically, a contractor would be some who is:
 
  • Self-employed but working only for 1 company
  • Employed but on a fixed term or temporary contract
There are many things that can affect a mortgage application for a contractor. In all cases the other things that will play a part will be:
 
  • Age
  • Credit rating
  • Income
  • Length of contract
  • The type of contract that you have currently
  • How long have you been contracting for?
  • How long you have worked in that industry
  • Were you working in the same industry before becoming a contractor

Contractors typically fall into the following categories:

  • Self employed contractors working for a single company on a day rate – can often apply for a mortgage straight away based on the day rate of the contract so long as it is at least 6 months long.
  • Short term or fixed term employed contractors – typically require previous experience contracting in the same industry. 
  • Umbrella company contractors – 12 months working history is normally required before you can apply for a mortgage.
  • Zero hours contract workers – usually a minimum of 6 months continuous work on the contract. However, some lenders may require 12 month. 
  • Agency workers – typically require 12 months continuous working before applying for a mortgage.

As you can see, mortgages for contractors can vary depending on the specifics of the situation. 

If you are a contractor working through and umbrella company, you may want to speak to a specialist mortgage broker. 

There are normally plenty of options for umbrella contractors. However, the criteria can vary dramatically between mortgage providers. 

You will normally need at least a 12 month track record working through an umbrella company. Ideally having had your contract extended at least once. 

Speak to one of our expert mortgage team to see how we can help. 

The good news is Yes, you can get a mortgage if you are a zero-hours contractor. A lot of lenders do not allow zero-hours contracts. For this reason it is advisable to speak to a specialist mortgage broker. 

You will typically need to have at least a months track record. Most lenders that allow zero-hours contractors will need 12 months. Since the COVID-19 pandemic, a 12 month requirement is more more common. However, if you haven been on a zero hours contract for less than 12 months, get in touch and chat to one of our mortgage experts to find out more.

Certain types of occupation can carry more weight when it comes to getting a mortgage as a contractor. This could be:

  • Dentists
  • IT Contractors
  • Accountants
  • Doctors
  • Solicitor / Barrister
  • Pharmacist
  • Vet
  • Teacher
  • Engineers

With these types of occupation, there can be more flexibility in terms of the track record etc. This is mainly because the roles mentioned are seen to be more secure. Typically, the mortgage affordability could be calculated using the day rate on the contract. 

The short answer to this question is Yes. You can get a buy-to-let mortgage if you are a contractor. 
 
As we have already mentioned, lending criteria varies a lot between mortgage providers. However, with buy-to-let applications, affordability is based on the rent the property commands. Not the personal income of the applicant. Some buy-to-let mortgage lenders do specify a minimum income, and some don’t. The important thing is that it is possible to get a buy-to-let mortgage as a contractor. 
 
Get in touch and our super friendly expert mortgage team can help with your buy-to-let mortgage.
Of course, a bad credit rating will effect your ability to get a mortgage, no matter what your working status is. 
 
A mortgage application ultimately comes down to affordability and risk. It is the job of the underwriter to make the decision. If you are a contract and you have bad credit, this can make things tricky. Contractors will benefit from speaking to a mortgage expert. Be sure to provide them with a copy of your up to date credit report. The longer it is since the adverse credit, the more likely you are to get approved for a mortgage. Typically, we can help contractors get a mortgage even if you have any of the following in the past:
 
  • Missed payments
  • Defaults
  • CCJ
  • Bankrupcy
  • IVA
  • DMP

When applying for a mortgage there are some standard documents everyone need to supply, such as Passport, driving licence, and bank statements. 

When a contractor is applying for a mortgage, evidencing income is vital. We would typically need to see:

  • Copy of your contract
  • Umbrella staff will need to provide payslips
  • Temp or fixed term contract employees – you will need to provide payslips
  • Self-employed contractors should provide tax calculations and tax overviews covering the the last 3 years where possible. If you have not been self-employed this long provide what you have.

When you are a contractor, mortgages can be complicated. Thankfully, as whole-of-market mortgage brokers we specialise in helping people like you. Because of this we can make the experience as painless as possible for you. Get in touch today and have a chat with one of our friendly team of experts to fid out how we can help you get a mortgage.