Aldermore Bank contractor mortgage lending criteria
Aldermore Bank is an award-winning bank that provides mortgages for fixed-term contractors. The lender specialises in contractors with less-than-perfect credit history and low mortgage deposits. Its criteria recognise hybrid employment types: those between permanent employment and self-employment.
In 2024, Aldermore expanded its mortgage range for professional individuals. It now also caters for:
- self-employed contractors operating via a limited company or as a sole trader;
- contractors employed via an umbrella company;
- day rate contractors.
Mortgage products for contractors
All contractors can access Aldermore’s standard mortgage products. Self-employed contractors can access up to 90% loan to value (LTV). For contractors working via an umbrella company or a fixed-term contract, they can access up to 95% LTV borrowing.
Contracting history requirements
Aldermore has two types of qualifying work history for contractors:
- at least 12 months’ contracting history, or
- 24 months’ history in the same line of work
Day-one contractors
Aldermore accepts day-one contractors; obviously, the 24 months’ history in the same line of work criterion kicks in for them. If you’re a first-time contractor with between 12-24 months’ history, they may accept you.
This ‘between’ situation falls into a grey area, which Aldermore’s underwriters assess on a case-by-case basis. If that describes your situation, they will at least consider your application. We’d strongly advise speaking to an advisor experienced in dealing with contractors before you proceed.
No matter your work history, if your income has shot up as a result of becoming a contractor, Aldermore’s underwriters will need to clarify the nature of this increment.
Umbrella company workers
Aldermore only considers gross income for affordability based on income received by the contractor from the umbrella company. And then, only once ‘umbrella expenses’ have been removed.
The annualised calculation uses a contractor’s average weekly amount over the latest month (before tax and NIC), multiplied by 46 weeks.
Aldermore will include any umbrella contractor’s holiday pay and pension salary sacrifice in the gross income calculation.
To evidence income for umbrella contractors, Aldermore asks for:
- your latest full contract;
- previous contracts for the past 12 months (if applicable);
- and either:
- the latest month’s/4-weekly payslips, including the YTD figure covering the last 3 months, or
- the last 3 months’ payslips.
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Limited company day rate contractors and sole traders
Aldermore calculates gross earnings for affordability purposes as follows:
- Gross daily rate (shown on the latest contract) × 5 days per week × 46 weeks per year, or
- Hourly rate × 8 hours per day × 5 days per week × 46 weeks per year.
To evidence their income, day-rate contractors and sole traders will need to provide:
- a copy of their latest contract, showing the daily or hourly rate;
- a copy of any previous contracts for the past 12 months;
- their latest business bank statements and personal bank statements.
Where the current contract has less than 2 months remaining, Aldermore requires the client’s evidence of intention to renew the contract.
Income criteria
Aldermore’s affordability calculation takes either the contractor’s day- or hourly rate (of their current contract), and then annualises it over 46 weeks. The underwriters prefer to work with contractors on six-month contracts. However, they know that contracts in some industries can be shorter, so are willing to look at specific cases.
No matter the applicant’s contract length, Aldermore expects two months remaining on it at time of application. However, if the contractor has a long history of renewals, they may make an exception.
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Gaps in contract history
Aldermore considers up to six weeks of gaps between contracts as the norm. If the contractor has a longer gap but can validate it (bereavement, maternity/paternity, illness, etc.), they'll consider that, too.
Problems arise when there are continuous gaps between contracts of over six weeks. If underwriters are willing to look at such circumstances, they may ask for 24 months' history, or more.
Multiple contracts worked at the same time
Like Accord, Aldermore will consider income from two simultaneously-worked contracts. They must, however, be in the same line of work.
The underwriters will look at the hours worked to accommodate those contracts to ensure they're 'sustainable'. To that end, contractors must also provide a history of working these dual contracts.
CIS workers (Construction Industry Scheme)
Aldermore uses its self-employed lending criteria to assess CIS workers. Underwriters use their net profit from end-of-year tax documents upon which to base mortgage affordability. Contract information is not relevant in this instance.
Zero-hours contractors
Aldermore isn't keen on zero-hours contracts. In some cases, we’ve managed to get an exception for certain professions. But, if you're a CIS worker, you'd need to discuss your situation in depth with one of our brokers.
Aldermore in a nutshell
Aldermore is a great contractor mortgage provider when contractors:
- have longer gaps between their contracts;
- are working up to two contracts at the same time;
- are “day-one” contractors;
- need a flexible approach because of some adverse credit.
Talk with our expert broking team today to see if an Aldermore Bank mortgage is right for you.
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