Atom bank contractor mortgage lending criteria
Atom Bank takes a common-sense approach to contractor mortgage lending, offering criteria tailored to each applicant’s merits. So, like many smaller mutual societies we deal with, their lending criteria aren’t cast in stone.
The result is that underwriters process and underwrite every mortgage application manually. This allows the lender to consider a broad range of complex situations, with mortgage options for each type of contractor .
All professional contractors welcome with no sector off-limits
Atom Bank can help day-rate professional contractors, such as IT contractors, business consultants and project managers.
The lender also accepts umbrella workers/contractors, but may request payslips to support their application.
No industry sector or occupation is off limits, providing the contractor meets their criteria.
Contracting history criteria
Any applicant must have at least 12 months’ contracting history, so no ‘day-one contractors’ are accepted. This includes a minimum of one year’s previous employment in same line of work (which can be evidence by way of previous P60).
For umbrella contractors, they must supply 12 months’ payslips to evidence their income. Limited company contractors will be assessed on their day rate stated in contract and assignment schedule. This evidence can cover either a single contract or a combination of contracts. However, that income flow must show no more than two months ‘downtime’ between each.
If the applicant has less than six months remaining on their contract, they must evidence an extension or renewal. If the contractor has many years under their belt, Atom Bank may forego this requirement.
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Contractor mortgage affordability
To qualify for an Atom Bank mortgage, contractors must earn £250/day or £50,000 per annum. Underwriters will base day-rate contractors’ affordability on the rate stated on the contract and assignment schedule.
To work out a salary equivalent for affordability, Atom Bank ‘annualises’ the day rate as follows:
- Day rate (£) × 5 (days worked per week) × 46 (weeks per year)
The contractor can then borrow between 4.49 and 6.0 times that annualised figure for a mortgage, up to £750,000. The least deposit they’ll need is 5% (95% LTV), but will get a better rate if they can find 10% deposit or more.
Atom Bank will consider contractors with slightly impaired credit. This will affect the maximum multiplier and the eventual interest rate, though.
The lender also welcomes foreign nationals, but they must have indefinite leave to remain.
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Mortgages for qualified professionals
There are many qualified professionals who work in irregular patterns, including key workers. Bank/supply contracts, locum doctors, NHS contractors, bank nursing, and supply teachers are just some examples. Atom bank recognises these patterns and offers mortgages accordingly.
Any qualified professionals fitting that bill must meet the following criteria; they:
- must earn at least £20,000 per annum;
- can utilise either their own limited company or work via an umbrella company;
- can work either directly or through an agency;
- must have at least one year’s previous employment in the same field, which they could evidence with a previous P60;
- must supply their annual income figure if they have contract income in addition to salaried income in the same field (e.g. nursing overtime).
Any income evidence must show that their temporary contracts have produced a regular income flow over at least one year. This can be either through a single contract or a combination of contracts (with less than two months ‘downtime’ between each).
Agency workers (including zero-hours contracts)
Atom bank recognises employment where qualified professionals are engaged in irregular working patterns and zero-hour contracts, and will accept income from these workers based on the following standard criteria:
- minimum time in current employment 24 months;
- last month’s payslip and last two P60s;
- eligible income will be the average of the last two years income evidenced by P60*;
- *if the latest P60 figure is lower or the annualised YTD figure from the latest payslip is lower, the lower figure will apply.
Construction Industry Scheme (CIS)
Atom bank treats CIS contractors as self-employed. Therefore, to evidence income, they’ll need to provide:
- two years’ accounts, or
- two years’ self-assessments (SA302s or 2 years’ tax calculations from their HMRC online account).
Atom bank in a nutshell
Atom Bank’s manual underwriting process endears itself to complex situations. The range of irregular work patterns the lender accommodates stands testament to this.
Atom bank is also unusual in that it tries not to rely on physical valuations of property, which we find useful when the contractor needs to rely on a desktop valuation.
Does Atom bank sound like the right lender for you?
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