How to Get a Mortgage as a Contractor
Being a contractor comes with huge advantages — freedom, flexibility, and often strong earning potential. But when it comes to buying a home, many contractors worry that getting a mortgage will be more complicated than if they were in permanent employment.
The good news? With the right preparation and the right lender, contractors can access the same mortgage rates and products as anyone else. The key is understanding how lenders view contractor income and what you can do to present yourself in the best possible light.
Step 1: Understand How Lenders Assess Contractor Income
Every lender has its own approach, and this is where contractors often get confused. Broadly, lenders will use one of three methods:
- Day rate calculation – Some lenders take your contract day rate and project it as an annual income (e.g. £500 × 5 days × 48 weeks = £120,000). This usually gives contractors the best borrowing power.
- Salary + dividends – Other lenders treat contractors like standard self-employed applicants and base affordability on your declared salary and dividends.
- Company profits – A few lenders look at the net profit of your limited company. This can work if you draw higher profits but may limit borrowing if you keep your drawings low for tax efficiency.
👉 Choosing a lender that understands day rates can make a six-figure difference in what you’re able to borrow.
Step 2: Know Where IR35 Fits In
IR35 rules can impact how your income is assessed:
- Inside IR35 – You’re often treated more like an employee, with tax deducted at source. Some lenders are happy to still use day rates, while others will default to a self-employed model.
- Outside IR35 – You’ll generally have more flexibility, but lenders will want to see clear evidence of contract renewals and ongoing demand for your skills.
Don’t worry if this sounds technical — the right mortgage broker can match your setup with a lender that works for you.
Step 3: Build a Strong Application
Lenders look for stability. As a contractor, you can make your case stronger by:
- Showing at least 12 months of contracting history (though some lenders will consider less).
- Having 3–6 months left on your current contract or evidence of renewal.
- Minimising long gaps between contracts.
- Keeping your tax returns, company accounts, and bank statements clear and up to date.
- Building a solid credit profile by paying bills and debts on time.
Step 4: Decide on Your Deposit and Affordability
Contractors can access the same deposit requirements as anyone else:
- 5–10% deposit – The minimum needed for most standard mortgages.
- 15–25% deposit – Opens up more lenders and usually gives access to lower interest rates.
Like all applicants, borrowing is typically capped at around 4.5–5.5 times your income (depending on the lender and your circumstances). The crucial point is how that income is calculated — which is why lender choice matters so much.
Step 5: Work with Contractor-Friendly Lenders
Not all banks are set up to deal with contractor income smoothly. Some high street names, like Halifax, NatWest, and Nationwide, are known to be flexible in certain cases. But criteria change frequently, and what works for one contractor may not work for another.
This is where specialist advice pays off — a mortgage broker who works with contractors daily can point you straight to the lenders that match your situation.
Step 6: Get the Right Support
The difference between a declined application and a smooth approval often comes down to preparation. An experienced mortgage broker can:
- Present your income in the best light.
- Approach lenders who assess contractors fairly.
- Save you from wasted applications that could damage your credit file.
- Help you secure competitive high-street rates rather than being pushed towards expensive specialist deals.
If you’re a contractor, one of the best ways to improve your chances of getting a mortgage is by working with a specialist broker who understands how lenders view non-traditional income. Instead of relying on payslips, lenders often need to assess contracts, day rates, or umbrella company arrangements. By using an experienced broker like Strive Mortgages you can present your income in the best possible way, avoid unnecessary rejections, and access lenders who actively support contractors. If you’d like tailored support, Strive Mortgages works with contractors across all industries, helping them secure competitive deals with minimal hassle.
Key Takeaway
Getting a mortgage as a contractor isn’t harder — it’s just different. The main thing is to know how your income will be assessed and to prepare your application carefully. With the right lender and guidance, contractors can access the same mortgage products and borrowing power as permanent employees, often without paying higher rates.
If you’re a contractor thinking about buying or remortgaging, the smartest move is to line up your finances, keep your contract paperwork organised, and speak to a broker who understands the world of contracting.
