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Can I Get A Mortgage As A Contractor?

Yes you can…

Now I’m sure no-one would appreciate it if I were to just leave it there but breaking things down to as simple as possible for just a second before we get into the complications and scenarios. Yes it is possible to get a mortgage if you are a Contractor.

When you look at the mortgage industry it is easy to understand why certain questions exist;

Can I get a mortgage as a Contractor?

Can I get a mortgage with bad credit? 

Can I get a mortgage if I’m self employed?

As when you look at it, in its  simplest form the answer is Yes but in reality it isn’t as simple as that. With there being easily over 90 mortgage lenders in the marketplace, that is potential for 90 different variations of criteria and how a lender would assess you and that could happen for every bit of your mortgage application. 90 different approaches to your employment, 90 different approaches to your credit history, to your deposit, to your existing debts like Car Loans & credit cards, whether your pension deduction needs to be factored into affordability or not and the list goes on and on.

So when looking at things specifically for Contractors what type of things are they looking at?

Length Of Time Contracting

One of the first things that will be considered is how long have you been contracting for? Somebody with a lot of contracting experience will be attractive to a lender as you will be able to evidence the feasibility of your role and being able to find future contracts due to your experience in the industry.
Somebody who may have just started or not had their first contract renewed can be a little trickier as a lender won’t have a track record of sustainability of income or the ability for you to find work when your contract finishes.
To have access to most of the marketplace contracting for two years will put you in good stead but even without this there could still be options.

Length Of Time In The Industry

A lender will also look at how long you have been in the industry for, this could be of benefit to those who may not have been contracting for long but have been in the industry for some time as it can evidence the need for your work and role but the benefits of contracting may suit you more than being a permanent employee

Income Type

The lender will want to look at how your contract is set up in terms of how you are paid. Is it set up in the form of a basic salary which will make the calculations simple or if you are paid with a Day Rate.

Day Rates are calculated slightly differently and it’s normal to see calculations such as Day Rate x Contracted Days x 46 weeks to give an annual income.

Is There A Minimum Income?

It’s not across the board but some lenders do have a minimum income or minimum day rate for those who contract. For those that do implement this it is normally around £250 per day or £50,000 per year.

What else could make a difference?

As a Contractor mortgage is not your standard mortgage application lenders look in depth at the overall strength of the case when making their decisions. So it’s important to consider what else could help you.
Deposit – Cases with good sized deposits are always viewed favourably as it reduces the risk to a mortgage lender so could afford you some flexibility in other areas

Credit History – With a strong credit history, evidencing your ability to maintain your payments and scoring strongly on the internal lenders scorecard will make your application a very appealing one

Other Income – Do you have any other income that could be factored into affordability to evidence how affordable the payment will be? This could be Buy To Let income, investments. or if you are completing a joint application, is your fellow applicant in full time employment so a type of income that will make a lender feel very comfortable

What Next?

Hopefully this information gives you some confidence in the ability to obtain a mortgage as a Contractor. If you want to talk through your own situation and how a mortgage could be possible for you then please Contact Us and we can talk through your options of getting a mortgage as a contractor.

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