Clydesdale Bank contractor mortgage lending criteria
Clydesdale Bank is a pioneer in the contractor mortgage sector. It was the second lender to introduce a day-rate lending policy, and continues to offer flexibility after IR35 rule changes.
The lender’s flexible and common-sense approach to underwriting makes it a strong option for contractors. Its range considers contractors:
- from any industry sector;
- inside or outside IR35;
- using either payroll umbrella, limited company or self-employed payment structures.
Mortgage affordability for umbrella contractors
Umbrella employees or contractors working inside IR35 must produce the last two months’ payslips to evidence income.
Clydesdale’s underwriters will deduct statutory and payroll service costs from an umbrella contractor’s gross income before working out baseline affordability. These costs include:
- employer’s National Insurance,
- Apprenticeship Levy, and
- payroll services costs.
Underwriters will then use an umbrella employee’s weekly rate × 46 to generate their annualised income figure.
Evidencing income for day-rate contractors
Clydesdale accepts day rate contractors and contractors who use a limited company payment structure, so long as the applicant is the sole entity using that company.
The contractor must also only be working one contract at a time. And, if the contractor has recently earned a significant pay increase, Clydesdale may want more detailed information.
Should the contractor meet those criteria, the following then apply:
- Day-rate contractors must have a fixed rate of pay, a confirmed work schedule and a set contract duration;
- Income will be calculated using the current contract rate × days worked per week × 46 weeks per year;
- Contractors must provide evidence of a contract extension/renewal if they have less than one month remaining on their current contract;
- The maximum gap between contracts is six weeks*;
- *if the contractor has more than six weeks’ gaps, the lender will manually underwrite the application.
Compare Clydesdale Bank's latest mortgage deals
Loan-to-value criteria
How long an applicant has spent contracting and what they earn also affect the type of mortgage borrowing they can access. If a contractor meets either of the following criteria, they can access up to 95% LTV:
- either
- earn more than £50,000 per annum, and
- have more than one year’s contracting experience, and
- have earned at least one contract renewal.
- or
- earn less than £50,000 per annum, but have
- two years’ contracting experience, and
- earned at least one contract renewal.
Lenders will consider contractors with less than one year’s contracting experience. However, the maximum they can borrow reduces considerably, from 95% LTV to 70% LTV (30% deposit). The contractor must also have worked in the same industry for the last two years.
Find out how much you can borrow
Construction Industry Scheme (CIS) subcontractors
Clydesdale also welcomes contractors who don’t work off a day rate. This includes CIS contractors.
CIS workers and those not working off a day rate must use Clydesdale’s self-employed lending criteria. This is no bad thing, as Clydesdale’s are amongst the most flexible and competitive self-employed criteria on the market.
Why choose Clydesdale Bank?
Clydesdale’s flexibility towards contractors also extends to:
- access to Joint Borrower/Sole Proprietor mortgages;
- a more accommodating stance on later-life lending;
- consideration of applicants with mild adverse credit.
Talk to one of our experienced brokers about how to make the most of these other Clydesdale specialisms.
In a nutshell
Clydesdale’s comprehensive policies, flexibility and contractor-friendly approach make the bank a standout choice for limited company, umbrella and sole trader contractors.
Does Clydesdale 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.
Freelancer Financials is a multiple award-winning brand of Mortgage Quest Ltd. You can find details of our FCA accreditation here.
Talk to the contractor mortgage experts
As the leading mortgage broker for contractors and the flexible labour workforce, you’ll be in safe hands with Freelancer Financials.
Freelancer Financials is an independent broker with access to every mortgage from every lender, meaning we can offer truly unbiased advice and find you the best deal for your unique circumstances.
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.
Choose your mortgage
First-time buyer mortgages
Home mover mortgages
Remortgages
Buy-to-let mortgages
Mortgages for affordable housing schemes
