Contractor Mortgage Guide (UK)

Getting a mortgage as a contractor doesn’t have to be difficult. Whether you’re working through a limited company, umbrella company, or as a freelancer, lenders have options tailored to your needs. Here’s how the contractor mortgage process works -step by step.

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What Is a Contractor Mortgage?

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A contractor mortgage is simply a mortgage offered to someone who works on a contract basis rather than as a permanent employee. This could include:

• IT professionals
• Freelancers and consultants
• Construction workers
• Interim managers
• Healthcare locums

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Because your income can vary or fall outside the “norm,” many mainstream lenders apply stricter criteria - but specialist lenders understand your working model and may be more flexible.

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Who Qualifies as a Contractor?

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You may be considered a contractor if you:

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• Work via a limited company or umbrella company
• Are self-employed on short or long-term contracts
• Have fixed-term contracts or freelance work with regular income
• Earn on a day rate, hourly rate, or project basis

How the Contractor Mortgage Process Works

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Here’s what to expect when applying for a mortgage as a contractor:

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1. Gather Your Financial Documents

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Before applying, prepare the following:

• Current contract (showing day rate, start and end dates)
• History of previous contracts (usually 12–24 months)
• Bank statements (personal and/or business)
• Proof of deposit
• ID and address documents
• Limited company accounts (if applicable)
• SA302s and tax overviews (for self-employed applicants)

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2. Speak to a Specialist Broker

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Contractor mortgages aren’t one-size-fits-all. A broker will:

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• Assess how best to present your income (e.g., day rate vs. salary/dividends)
• Find lenders that understand contractor income models
• Help you avoid rejections from lenders who don’t cater to contractors

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3. Get a Decision in Principle (DIP)

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This is a statement from a lender estimating how much you could borrow, based on:

• Contract income (e.g., daily rate x 5 days x 48 weeks)
• Credit score
• Deposit amount
• Outgoings and financial commitments

A DIP strengthens your position when making an offer on a property.

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4. Find a Property

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Once you know your budget, start property hunting. Your broker or lender can guide you on affordability to avoid overextending.

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5. Submit a Full Mortgage Application

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Once you’ve found a property, your broker will help you complete a full mortgage application. This includes:

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• Proof of income (contract, invoices, payslips)
• Financial documents (see Step 1)
• Property details
• Solicitor information

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6. Lender Valuation and Underwriting

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The lender will:

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• Conduct a valuation of the property
• Assess your income and affordability
• Review credit history, deposit, and any risks

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7. Receive Mortgage Offer

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If approved, you’ll receive a formal mortgage offer, usually valid for 3–6 months. Your solicitor will handle the legal work from here.

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8. Exchange and Completion

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Once contracts are exchanged and funds are released, you can complete the purchase and move in — just like any other buyer.

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Tips for Contractors Applying for a Mortgage

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• Keep your accounts up to date – especially if you run a limited company
• Avoid long gaps between contracts
• Maintain a good credit score
• Save a larger deposit if possible – 10–15%+ gives you more lender options
• Consider working with a specialist broker – they know which lenders take a flexible view

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Common Contractor Mortgage Myths

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"Contractors can't get a mortgage." Yes, they can — with the right lender.

"You need 3 years of accounts." Not always. Some lenders accept 6–12 months’ history.

"You’ll pay higher rates." Not necessarily — contractor mortgages can be competitive.

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How Is Contractor Income Assessed?

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Depending on your setup, lenders might assess income differently:

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• Day rate contractors: Daily rate x 5 days x 48 weeks = annual income
• Limited company directors: Salary + dividends (or full contract value)
• Umbrella company workers: Payslips, similar to PAYE employees
• Sole traders: Usually based on average net income over 2–3 years

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Final Thoughts

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Getting a mortgage as a contractor is absolutely possible — and increasingly common. With proper advice, clear records, and the right lender, the process can be just as smooth as it is for permanent employees.

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Need Help with a Contractor Mortgage?

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Our expert advisers specialise in contractor mortgages and can guide you every step of the way - from pre-approval to getting the keys.

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Your home may be repossessed if you do not keep up repayments on your mortgage.