Nottingham Building Society contractor mortgage lending criteria
Nottingham Building Society has recently tweaked its lending criteria to help its policies appeal to more contractors. The lender prides itself on a common-sense approach to underwriting, assessing all applications manually.
This case-by-case approach does allow the building society to award higher-than-usual multipliers if the applicant ticks the right boxes. The net effect is that contractors in good standing can borrow more to buy a home.
The new criteria remain in line with the lender’s risk appetite, and work best for umbrella contractors taxed at source. All other types of contractors fall into Nottingham’s self-employed bracket. The details are below:
Day-rate contractors: limited companies and CIS workers
Contractors using a limited company and CIS workers can apply for a mortgage with The Nottingham. However, underwriters will treat them as self-employed and work out their income using:
- Drawn salary and dividends for limited company contractors
- Payslips/invoices/statements for CIS workers
To evidence income, limited company contractors must provide their last two years’ tax calculations and tax overviews. CIS contractors would have to provide SA302s and any relevant supporting documents.
Day-rate contractors: umbrella payroll, inside or outside IR35
Contractors who use an umbrella payroll (taxed at source) can take advantage of Nottingham’s day-rate income assessment.
The lender welcomes contractors from many industries and imposes no minimum income threshold. Neither does it require any set time remaining on a contract.
To qualify, each applicant must have at least 12 months’ history as a contractor. If there have been gaps between contracts, underwriters will ask to see evidence of a consistent 12 month work history.
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Nottingham Building Society affordability assessment
If the contractor meets those criteria, underwriters will work out their income for affordability purposes as:
- Day rate (£) x 5 days (per week) x 46 weeks (per year)
They would then subject this annualised figure to their multiplier to arrive at the contractor’s potential upper ceiling threshold.
To evidence their income, contractors would have to provide their latest umbrella payslips.
Where there is a good argument, Nottingham is prepared to consider exceptions. Any contractor feeling they can make a case despite not meeting the criteria should ask one of our brokers to contact a Nottingham BDM on their behalf.
Adverse Credit
Nottingham does have a limited amount of flexibility for contractors with adverse credit, but only if the blip happened more than three years ago.
The lender accepts up to two missed payments, even if those were missed mortgage payments. This is unusually benevolent when applying for a mortgage. The result of assessing adverse credit would be subject to an internal scorecard at the Decision in Principle stage.
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Applications from Locums, Recruitment agency, Zero-hours contracts and Nurse bank staff
Nottingham Building Society doesn’t accept mortgage applications from either zero-hours contractors or agency workers.
There is a scenario, however, where the building society will lend to a locum. That is when an NHS professional with a main permanent job worked as a locum for a second job. Only then would underwriters consider using the locum income.
Even then, the contractor would have to provide 12 months’ consistency of income for that locum position over and above their main job.
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.
Nottingham in a nutshell
With manual underwriting and higher multiples, Nottingham Building Society is a solid option for PAYE umbrella contractors. All other types of contractors could probably find more sympathetic lending criteria at the longer-established contractor-friendly lenders.
To begin your enquiry, talk to our experienced advisors today.
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