Bank of Ireland contractor mortgage lending criteria
At first glance, you may think Bank of Ireland’s contractor mortgage policy lacks depth. But delve a little further, and you’ll find Bespoke by the Bank of Ireland. This ‘broker-only’ range offers many more contractor-friendly options.
To qualify for a contractor mortgage with the Bank of Ireland, you must work through either:
- a limited company;
- an umbrella company;
- self-employment.
If those describe the way you work, you must then meet the five golden rules of Bespoke underwriting. set out below.
The five golden rules of Bespoke underwriting
Here’s what you need to qualify for a Bank of Ireland ‘Bespoke’ mortgage:
- You must meet (or surpass) their minimum credit score;
- You must receive your income in pounds sterling (GBP);
- Your mortgage must be at least £150,000 and cannot exceed 90% LTV (i.e. a 10% deposit) exclusive of fees, for residential property;
- The property must meet their standard property criteria;
- You must also meet their minimum income requirements as follows:
- for a repayment mortgage, one applicant must earn £40,000 per annum;
- for an interest-only mortgage as a sole applicant, you must earn £50,000 per annum;
- for an interest-only mortgage as joint applicants, your combined income must be £75,000 per annum.
Self-employed fixed-term contractor criteria
If you’re self-employed, the following criteria apply:
- Bespoke will base your mortgage affordability on 80% of your gross contract income, which must be at least £50,000 per annum;
- the least contracting history Bespoke accepts is 12 months in your current occupation, however…
- the contract doesn’t have to be with the same agency or employer;
- their underwriters can consider less than 12 months’ history in favourable circumstances;
- the contractor must have at least one month remaining on their current contract;
- for income assessment, Bespoke requires:
- either the original or a certified copy of the current contract, plus
- copies of all other contracts held over the past 12 months;
- underwriters may accept short gaps between contracts in the last 12 months (and holidays, etc., which are permitted).
Criteria for umbrella company contractors
Bespoke offers contractor mortgages to professionals who use an umbrella company’s payroll services. To qualify, those contractors must:
- have been contracting for longer than 12 months, and
- earn over £50,000 per annum.
Underwriters assess annualised income using the last 3 months’ payslips (from the umbrella company), which must show:
- basic pay;
- holiday pay;
- any additional pay, e.g. commission
They’ll then average the last 3 months’ pay at 80% of the gross income earned after all the umbrella deductions have been made (e.g. employer National Insurance, umbrella margin and Apprenticeship Levy).
In addition, they’ll ask for all copies of all contracts covering the last 12 months. There should be no gaps between contracts of more than one month over that period.
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Contractor mortgage affordability calculation
Bespoke’s affordability calculation is slightly different from other contractor-friendly lenders. To work out how much you can borrow for a Bespoke contractor mortgage, use the following:
First, multiply your daily rate by the number of days you contract per week. Then, multiply that figure by 52 to give you an ‘annualised’ figure. Bespoke’s underwriters will use 80% of that figure as the basis of their affordability assessment, so multiply it by 0.8.
As an example, imagine you are on a day rate of £200. If you work five days per week, multiply that by 5, giving you £1,000/week. Multiplied by 52 (weeks per year), your annualised income is £52,000.
Finally, multiply that by 0.8 to give you the base figure for underwriting purposes. In this example, that’s: £52,000 x 0.8 = £41,600. They then multiply that figure by whichever multiplier is relevant to your situation (4.0, 4.5. 5.0, etc.).
Find out how much you can borrow
Documentation requirements
In addition, the Bank of Ireland will need proof of ID. Therefore, the full set of documents the lender requires is:
- proof of ID, such as a passport or driving license;
- two proofs of address, such as a utility bill or council tax bill;
- your current contract, signed and dated;
- your previous contract, if necessary to demonstrate 12 months’ contracting history and copies of all other contracts held in the last 12 months;
- three months’ personal and business bank statements.
Check your eligibility for Bank of Ireland Bespoke
Construction Industry Scheme (CIS) contract workers
Bank of Ireland won’t lend to Construction Industry Scheme (CIS) contract workers under their contractor criteria. But they can consider them under their self-employed income criteria - speak to one of our brokers for details.
Zero-hours contract workers
The Bank of Ireland will consider income earned from a zero-hour contract if the applicant can provide a suitable two years' employment history. However, its criteria aren't the best, but we have relationships with other lenders that offer more favourable terms. Speak to one of our brokers for advice.
Agency employment
Bank of Ireland is not keen on accepting income earned from temporary employment through an agency. Again, we have other lenders to fill this gap and our brokers can advise the best lender for your specific circumstances.
Foreign nationals
Bank of Ireland asks for confirmation that applicants have the right to live and work in the UK (ILTR/settlement status). In addition, applicants must have resided in the UK for long enough to have accrued a meaningful credit score and employment history, which is normally at least three years. See the panel below for details of the LTV limitations that apply to your settlement status.
For foreign national contractors, settlement status dictates the maximum allowable LTV
If your VISA status meets the following criteria, you can apply for Bespoke’s maximum LTV:
- Irish Nationals;
- EU, EEA and Swiss Nationals with ‘settled status’;
- Non-EU, EEA and Swiss Nationals with ‘indefinite leave to remain’;
- applicants who are born outside of the UK, but have received UK naturalisation.
Workers with the following limitations can apply up to 75% LTV:
- EU, EEA and Swiss Nationals with ‘pre-settled status’;
- Non EU, EEA and Swiss Nationals with limited rights to work/remain in the UK with either any of these visas:
- Innovator Founder visa,
- Global Talent visa (previously Tier 1),
- Skilled Worker visa (previously Tier 2), or
- Ancestral Visa.
- The underwriter must be satisfied that adequate time remains on the visa to warrant granting a long-term loan.
That’s a lot to take in. If you’re unsure of any of Bank of Ireland’s ‘Bespoke’ lending criteria, reach out to one of our specialist brokers. They’ll tell you exactly what you need to make the best first impression. Thereafter, they will support you throughout your mortgage journey.
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