Each contractor brings a different challenge when applying for a mortgage, but luckily there are specialist lenders out there who will look at your application.
I’m self-employed or a sub-contractor
If you’re self-employed or a sub contractor, and pay your own tax through either self-assessment or an accountant, you will usually be required to have a work history of at least 12 months when applying for a self-employed or sub-contractor mortgage.
Lenders will then work out your affordability by multiplying the net profit or salary and dividend you declare by four or five times.
What if I’ve only recently become self-employed?
If you’ve only got a self-employed history of less than 12 months then lenders may still consider your application but their criteria becomes stricter and will vary on a case by case basis.
I’m a fixed term or short term contractor
As long as you have a minimum of six months remaining on your contract, with a minimum of six months already behind you in contracting, then you stand a good change of your application being accepted.
Lenders will also look favourably on your application if your contract has been renewed at least once, as this shows a more stable source of income.
If you only have six months of contract history then certain specialist lenders will still look at your application, but may restrict the amount of money you can borrow.
I’m a contractor for an umbrella company
Lenders often struggle to work out how sustainable the income is in these situations due to the employee working for an umbrella company, but if certain criteria is met, for example if you’ve got a working history of at least 12 months or have had your contract renewed, then you could still see your application accepted.
I’m on a zero hours contract
If you’re on a zero hours contract, but have at least 12 months recorded income, lenders may still review your application and work off the figures provided, as long as that income was to continue.
I’m an agency worker
Since the Agency Workers Regulations act came in in 2011, agency workers now see the same rights as permanent workers, meaning lenders do consider agency work mortgages.
I’m a professional contractor
If you’re a professional contractor, such as an accountant or solicitor, lenders can sometimes review your application without proof of a salary, as long as a detailed service history and rates are available.
As with all contractor mortgages, the amount you can borrow depends on your personal circumstances such as credit history and affordability.
For advice on getting a contractor mortgage, speak to one of our expert advisers who will be able to help you with the next steps.