Mortgages for Contractors

Need a genuine contractor mortgage but are tired of in-branch advisors fobbing you off? We hear you. What’s more, we can secure you a mortgage based on your contract rate alone.

Use our slider calculator to find out how much you could potentially borrow for a contractor mortgage, based on your day rate:

"On-" or "Off-Payroll", limited company or umbrella contractor, CIS or zero-hour contractor, we can help. And, in this turbulent time, everyone needs help to get the most competitive mortgage deal for their income and status.

We began approaching lenders to adapt their lending criteria to fixed-term contractors in 2004. This short video introduction to Freelancer Financials details how:

• we've taken the lead in developing contractor mortgages with lenders;
• we've let our knowledge and client experience shape what we do today;
• our ethos has helped thousands of contractors buy a home with contract-based underwriting;
• the industry has recognised our innovation and competence with multiple awards:

If you’ve been to a few mainstream mortgage lenders, you’ll have worked something out, already. Few banks and building societies welcome limited company contractors and umbrella employees with open arms.

Believe it or not, there are contractor-friendly lenders out there. Heck, chances are you’ve walked right into one already.

But here’s the thing. You won’t find underwriters who deal with specialist payment structures like yours at branch level.

All we’re going to ask of you today is this. Let us present your mortgage application to one of those receptive lenders in a way we know works.

Okay? Awesome; let’s do this…

Bypassing the High Street lending model

Few High Street lenders train call centre and branch staff in contracting’s nuances. There’s no 'Dummies Guide' to accounting that will help them out, either. And, rest assured, most generic advisors will ask for your accounts, up to three years of them.

We won't. Our expert brokers know that your accounts in no way reflect your true mortgage affordability. But we’re not like in-branch staff or call centre agents. They’re restricted to their own lending models and mainstream mortgage products.

Yet most mainstream lending criteria are useless for contractors, so why use them?!

Simple. We don’t.

Bypassing the gatekeepers: appealing to underwriters direct

Instead, we take the time to understand you and the way you work. We can then make your mortgage application appeal to underwriters, the decision-makers.

We've built relationships with underwriters over many years. Having a direct line to them and knowing what they look for in advance are game-changers. Without that understanding and access, any affordability assessment wouldn't recognise your borrowing potential.

My guess is that advisors you’ve seen to date have asked for volumes of accounting documents. Even when you’ve provided everything they asked for, they’ve still turned you down, right?

I’m not surprised. Untrained building society or high street bank staff have a set view of mortgage funding. They know their system, their affordability calculations, and what to look for in an applicant. Anything beyond that remit, forget it.

But, the good news is: you can put those limited company accounts away. We don’t need them. All we’re interested in is your best asset: your contract rate.

Access to High Street mortgage rates, zero payslips and accounts

We cater for all trading vehicles and payment structures for contractors. There are many, with each business model and owner status different from the next.

It doesn’t matter if you operate through your own limited company or a UK payroll umbrella. Zero-hour or CIS contractor? Again, no problem! We know how to assess your relevant earnings for lending purposes.

Limited company contractor accounts, SA302 tax returns and/or umbrella payslips? They’re not a true reflection of your mortgage affordability.

Your accountant gears your income for tax efficiency. That’s okay; it’s their job. But those resultant accounts don’t reflect your true disposable income, your borrowing potential.

More good news: our contract-based underwriting model disposes of the need for accounts, payslips and SA302s.

Including retained profits is a more accurate way of assessing contractors' true mortgage affordability. And, because contract-based underwriting works of your gross day rate, it incorporates your entire income before tax!

That may come as a surprise, given the hassle you’ve had with High Street lenders already. But we’re not going the High Street route.

Why you're better off basing mortgage affordability on a contract rate

We’ve sat around the tables with many mortgage lenders and their underwriting teams. Our aim? To show them how to use contract rates as the basis of a contractor’s affordability.

The accounts with which they’re familiar for assessing self-employed people are misleading. When it comes to an independent contractor, their true worth is in retained profit. Accounts and tax returns are not a true measure of what they can afford.

Some lenders ran with us (others ran away from us). Some have since had time to reflect and have now signed up to underwrite contractor mortgages.

That's because, through us, they can offer bespoke mortgage products for contractors. They trust us with the vetting process, which means they only need to check what's important in an application to meet their lending criteria. You'll rarely find that service in-branch or with a call centre agent.

Using your contract rate to get a bigger mortgage

You may think that discovering you can borrow using your day rate is cause for celebration alone. But, hold on: there’s even better news.

Using your contract day rate allows you to borrow much more for a mortgage loan. In contrast, if lenders use their standard affordability assessment criteria, you’re doomed.

They'd use your net, post-tax 'salary' plus dividend drawings to work out how much you can afford. Once an accountant's worked their magic, your 'salary' would garner a minuscule mortgage offer from the lender.

Working out how much you can borrow for a bespoke contractor mortgage

To make the most of your contract rate, you need to start with your day rate. If a lender isn't on board with this idea, treat it as a warning flag! They're not the mortgage provider for you.

Here you can calculate how much you have the potential to borrow with this simple formula. If you've had derisory offers from lenders up until now, this may surprise you:

• take your current contractor day rate;
• multiply that by the number of days you work per week;
  • lenders use the default 5 days, but can adjust their calculation if you work fewer days;
• then multiply that by 46 weeks, the number of weeks per year used to calculate your 'annualised' salary;
• finally, multiply that annual gross income by 4.5*;
  • lenders use that "multiplier" to determine your true mortgage affordability in their eyes.

Extended potential borrowing example

Let's extend that formula, using a contractor earning £500 per day, working 5 days per week. Using contract-based underwriting criteria, they could borrow £517,500 to buy a home. Yep, as much as that. Here's how we work it out.

Take the £500 day rate × 5 (days worked per week) to work out a weekly wage. So, 5 × £500 = £2,500.

Then multiply that × 46, the weeks worked per year to establish a 'gross salary'. That's £2,500 × 46 = £115,000.

Finally, multiply that £115,000 × 4.5 (affordability multiplier), giving us £517,500!

*Update on lenders' contractor mortgage affordability multipliers

*During the pandemic, many lenders dropped their affordability multipliers from anywhere between 4.49 and 2!

Now that things have settled down, we're back to normal levels. In our calculations, we use 4.5. But some lenders will give contractors a generous 5 × their 'annualised' income to work out their affordability.

(back to example)

Documents a contractor needs to apply for a mortgage

Simplicity is at the heart of contract-based underwriting. That efficiency extends to the documents we need from you.

To present your contractor mortgage application in a way that satisfies underwriters we need copies of your:

• current contract, confirming your contract rate;
• updated CV*;
• last 3-6 months' bank statements;
• proof of ID
  • (passport, driving license or utility bills).

It is that simple.

It's taken hard work over many years to develop our strong relationships with lenders. But it's been worth it.

We've stripped down what qualifies as relevant contractor earnings for lending purposes. No accounts or payslips. We use your contract rate, which can incorporate your retained profits.

Need a mortgage fast?

With so few documents involved, contract-based underwriting can speed up the mortgage process. Trimming the excess helps everyone in the chain when time is of the essence.

Our "no-trimmings" service, while in no way surrendering potency, reflects that speed. This means we can find the best mortgage for your status in double quick time.

If it’s a "decision-in-principle" you need, we can jump on that for you, too. We can get you yours within 24 hours.

As well as giving you a guideline as to what you can borrow, DIPs are a great bargaining chip for homebuyers. If there are two prospects in the hunt for the same house, the vendor may favour the one with the DIP.

Knowing how much you can borrow to buy a home can also help. An upper ceiling can help restrict your search to homes within your budget. An AIP can also be the ace up your sleeve if you need to get things moving fast!

Our approach to contractor mortgages takes into consideration all these eventualities.

Key is ensuring your mortgage broker packages your application just so for the specialist underwriting team. Only then will it go straight to the decision-makers and bypass the front-desk staff in branch.

Our range of contractor mortgage products

Developing the base underwriting process with mortgage lenders was our opening gambit. Since then, lenders have adopted the core concept to their own ethos.

Experience told us that contractors on all rungs of the property ladder needed help. They need access to all types of mortgage repayment vehicles.

Whether you’re a first-time buyer, moving home or looking to remortgage for a better rate, we can help. Our range of contractor mortgages suits almost all personal circumstances:

• First Time Buyer: get your foot on the first step of the housing ladder;
• Moving Home: home mover mortgages can help you move up the property ladder;
• Remortgaging: save money or raise capital by switching lenders without moving house;
• Buy to Let: whether you’re new to investing or expanding your property portfolio, we can help;
• Help to Buy: use government-backed schemes for contractors with only 5% deposit;
• New Build: Getting a mortgage fast for 'Off-Plan' homes from developers;
• Bad Credit: Adverse Credit, CCJ, defaults. You’re not alone, we can help get you a mortgage.
• IT Contractors: mortgages for the chosen ones, Information Technology Professionals, are a breeze;
• Foreign Nationals: mortgages for foreign nationals on HSMP, Tier 1 and Tier 2 VISAs.

We also have mortgages to help you best manage your monthly payments:

• repayment (capital and interest), with tracker, fixed and variable rate interest;
• offset, balancing your savings against the mortgage balance;
• interest-only mortgages, many contractors’ preferred repayment vehicle;
• buy-to-let mortgages for single and portfolio landlords.

Mortgages tailored to your specific requirements

Freelancer Financials are specialists in advising and arranging mortgages for contractors and freelancers. Our clients include, but are not limited to:

• IT Programmers to Business Analysts;
• Engineers to Telecom consultants;
• Management Consultants to Operational Risk Managers;
• Change Management to Marketing Consultants;
• Accountants, Actuaries, Architects, Surveyors, Oil & Gas Contractors, Doctors, Medics, Teachers…
• …we’re sure you get the picture.

When you approach most mortgage lenders on the High Street, you have to consider this. Their view of what qualifies as relevant earnings for lending purposes is simplistic. Or, if we're honest, outdated and biased towards PAYE permies.

In contrast, we work with lenders who understand how contractors work.

This allows us to present your application to senior underwriters direct. In turn, it ensures that they take into account your full earnings potential, including ltd company retained profits.

Why choose Freelancer Financials for your mortgage?

Freelancer Financials offers a clear and impartial contractor mortgage service. We're 100% independent, so can approach any lender in the country.

Forget the frustrating rejection from lenders who look at your income as if it was written in another language. You can bypass all that nonsense.

We can secure you the most competitive contractor mortgages on the market. That’s regardless of how you bill your clients. It's regardless of your status as a limited company, umbrella, CIS or zero-hour contractor.

We know that most contractors draw a low salary and restrict dividend drawings. It’s a sound and legitimate strategy to avoid higher rate personal tax. No mortgage provider should penalise you for this!

In short, the benefits of using a specialist contractor mortgage broker

We want to hear from you if you value any of the following traits in a mortgage broker:

• bespoke "contractor friendly" underwriting terms with several high street lenders;
• a single point of contact for your mortgage application;
• a proactive, tireless work ethic to ‘complete’ in the shortest possible time;
• mortgage application updates every step of the way;
• access to mortgage-related products, such as:
  • tailored income protection;
  • Relevant Life cover policy
  • critical illness cover.

We’ve secured thousands of mortgages for contractors over the years. They know first-hand why we’re the best and most reliable specialist mortgage broker in London. You’re more than welcome to use the leverage we have to get the benefit of our years of experience.