Gen H contractor mortgage lending criteria
Gen H, established in 2020, is a new lender striving to make home-buying simple, transparent and fair.
Its USP’s include income and deposit booster features. These give first-time buyers more options by including friends and families on the mortgage.
The lender’s contractor-friendly policies have lower barriers to entry than many of its peers.
Lending criteria for limited company day-rate contractors
Gen H will assess limited company contractors as self-employed if they meet either of these two criteria:
- Their limited company has more than one employee, or
- The contractor works more than one contract.
Single contract, sole employee day-rate contractors
If, as is usual, the contractor is the sole employee and only working one contract, the lender offers generous lending criteria. Gen H:
- imposes no minimum day rate or annual income requirements;
- accepts contractors from all industry sectors;
- will consider day-1 contractors, subject to them having a 12-month track record in a similar industry and at a similar salary*;
- *this work history can be as a self-employed entity, PAYE employee, etc.;
- insists on the applicant having at least three months remaining on their current contract**;
- **if the contractor has less than three months remaining, they must have already secured a subsequent contract;
- calculates affordability as day rate (£) × 5 weekly working days × 46 weeks per annum.
Evidencing income for limited company day-rate contractors
Gen H will require single-contract, sole-employee day-rate contractors to provide the following documentation as evidence of income:
- a copy of their current contract;
- their latest two months’ payslips or invoices.
Gen H will ask for one or more of these documents to verify the contractor’s minimum twelve months’ employment history:
- their latest P60;
- the previous financial year’s payslips covering period 12/52;
- their latest tax calculation and corresponding Tax Year Overview;
- respective previous contracts, or the last 12 months’ bank statements.
Criteria for umbrella payroll day-rate contractors
The lending criteria for contractors working through an umbrella payroll is almost identical to that of single-contract, sole-employee day rate contractors’ criteria.
The sole difference is whence Gen H derives its information for its annual affordability assessment. Rather than use a contractor’s day rate from their contract, Gen H will use an umbrella employee’s payslips.
To work out that annualised figure, Gen H’s underwriters will use the contractor’s last two payslips. This will ensure that the contractor’s accepted income aligns with their net earnings (after umbrella payroll deductions).
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Fixed-term contractors
Gen H’s lending criteria for fixed-term contractors is almost identical to that of umbrella contractors (above). The difference is how Gen H’s underwriters assess income.
Similarly, they use the contractor’s last two payslips’ average for their annualisation calculation. However, they cross-reference those payslips against the contractor’s year-to-date income and track record.
Construction Industry Scheme contractors
Gen H accepts Construction Industry Scheme (CIS) workers if they have 12 months’ continuous employment in the same line of work. The lender offers a certain amount of flexibility.
Those 12 months don’t need to be from the same employer; it’s the role that has to be consistent. Plus, the 12 months’ history can be from past and future guaranteed work contracts.
In this vein, Gen H also accepts day 1 subcontractors. They must have a 12-month track record in a similar industry and at a similar salary. Again, this history can be as an employee or as a self-employed entity.
Underwriters will calculate annualised income based on the average of the CIS worker’s last two payslips. They will then ask the contractor to provide their year-to-date and track record to corroborate their income.
Proof of income requirements for CIS subcontractors
As well as their last two payslips, Gen H will verify the contractor’s twelve months’ employment history by asking for one or more of these documents:
- their latest P60;
- the previous financial year’s payslips covering period 12/52;
- their latest tax calculation and corresponding Tax Year Overview;
- any previous contracts, or the last 12 months’ bank statements.
Zero-hours contract, locum and agency workers
Gen H’s criteria for zero-hours contractors, locums and agency workers are an amalgam of criteria from across their other policies. The lender:
- imposes no minimum day rate or annual income requirements;
- accepts contractors from all industry sectors;
- will consider day-one contractors, subject to them having a 12-month track record in a similar industry and at a similar salary
this work history can be as a self-employed entity, PAYE employee, etc.; - underwriters will calculate annualised income based on the average of their last two payslips;
- they will then ask the applicant to provide their year-to-date and track record to corroborate their income.
Flexibility and adverse credit considerations
Gen H’s underwriters assess applications on an individual, case-by-case basis. They offer a degree of flexibility when reviewing employment history. They also accept short gaps between contracts if the applicant has a strong contracting history and consistent income.
The lender also offers a degree of flexibility if the applicant has adverse credit. This includes taking a view on:
- missed payments;
- defaults;
- CCJs.
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Gen H in a nutshell
Gen H’s manual underwriting approach, low barriers to entry and flexibility make this new lender a viable choice for contractors across the board.
If you’re interested in pursuing this intermediary-only contractor-friendly lender, talk to one of our experienced broking team today.
Does Gen H sound like the right lender for you?
Take the first step towards the mortgage you deserve by getting started here.
We will assign you a dedicated broker as soon as we receive your enquiry. They will help, inform and update you at every step, from initial enquiry to completion.
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Established more than 20 years ago, we have a proven track record of arranging over 30,000 mortgages for contractors, umbrella company workers, CIS subcontractors and the self-employed.
Our specialist broking team will support you throughout your mortgage journey, and we have nearly 1000 5-star reviews from clients to prove it. Whatever your mortgage needs, it’s time to talk to the experts.
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