Darlington Building Society contractor mortgage lending criteria
Darlington Building Society has a refreshing, flexible outlook for mortgage underwriting. The lender considers applications from all contractor types, including foreign nationals on skilled visas, and underwrites each application manually.
While Darlington BS outlines its lending criteria for each profession type, by its own admission, none of its criteria are “cast in stone”. These are the headline criteria for each contractor payment structure:
Fixed-term contractor criteria
Darlington asks that contractors have two years’ work history in the industry they’re in at time of application. This experience needn’t necessarily be as a contractor, though. This makes them a flexible lender for professionals newer to contracting (three months minimum).
At the time of application, a contractor’s contract must have at least half of its duration left to run. So, if you’re on a six-month contract, you must have at least three months left before the contract expires. If you have less time remaining, you’ll need to evidence a renewal or contract extension.
DBS then works out your baseline affordability directly from your contract. To determine that annualised figure use:
- Day rate in £ × days worked per week × 46 (weeks per annum)
Your income bank statements (business or personal) must match the rate and terms outlined in your contract. You must then provide three months’ bank statements to corroborate your income.
Criteria for umbrella employees & contractors inside IR35
Darlington BS accepts contractors whose contract falls inside IR35, including those who use an umbrella payroll to facilitate payment.
If the contractor doesn’t use an umbrella, their bank statements must reflect their entire contract value. If there’s a discrepancy, the contractor must fully explain those differences.
Umbrella employees/contractors who use an umbrella must provide their last two months’ payslips. To work out their affordability, underwriters will use:
- the gross amount the contractor receives minus statutory costs (employer’s NICs, etc.) and any payroll service fees;
- the subsequent net figure × 46 (weeks) as the baseline annualised amount.
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Summary of contractor criteria key features
Here are the at-a-glance lending criteria that make Darlington Building Society so flexible:
- Underwriters manually assess each applicant, making affordability calculators redundant;
- A contractor has only to have three months’ contracting history;
- Darlington BS imposes no minimum income requirements;
- Contractors from all industry sectors, roles and occupations can apply;
- The lender has no set criteria for gaps between contracts, great for contractors returning to contracting or those who’ve recently experienced life events;
- Darlington BS offers mortgages with as little as 5% deposit (95% LTV);
- Contractors need at least 50% (can be flexible) of their contract remaining, great for contractors on shorter-term contracts
- The lender welcomes foreign nationals working in the UK on skilled visas.
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CIS workers
Darlington classes CIS contractors as subcontractors. Therefore, DBS will direct any CIS contractors to its self-employed lending criteria.
Zero-hours contract workers
DBS will accommodate zero-hours contractors, but only if the zero-hours contract isn't the sole source of income.
Contractor applicants must either show another source of income besides their zero-hours contract, or have a second applicant on the application with them.
In addition, the contractor must have one year's continuous contracts with the same employer. The last three months of that experience must also be in the same role.
Locum/bank work
Locums and bank workers must have two years' work history in the same industry as at time of application. In addition, they must provide evidence of the last six months' income. DBS underwriters will then use the average of those last six months' income for their affordability assessment.
Seafarers
As seafarers' roles can be so varied, DBS has adopted a flexible lending policy towards those roles. Whether an officer or captain or in hospitality and entertainment on cruise liners, the Society will assess each applicant on a case-by-case basis.
Only applicants who are UK residents can access DBS's seafarer mortgages. If the applicant resides outside for more than 6 months a year, they will have to apply for an expat mortgage, instead.
Mortgages for recently-qualified professionals
Darlington has a special mortgage for independent professionals who’ve recently qualified for their chosen profession. If you are newly qualified, practising and registered in any of these professions, the lender will consider your situation:
- accountant;
- actuary;
- barrister;
- dentist;
- engineer;
- medical doctor;
- optometrist;
- pharmacist;
- solicitor;
- veterinarian.
The underwriter for each application will confirm that your definition fits the building society’s criteria for each role. They will also verify affordability (up to 6 × salary) at time of application.
The applicant must support this decision with evidence and clarification of their career progression.
Darlington Building Society in a nutshell
Darlington Building Society assesses all applications on a manual, case-by-case basis. This approach lends itself perfectly to contractors whose circumstances may not be straightforward. Covering all bases DBS may be the lender you need if mainstream lenders don’t appreciate your situation.
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