IT contractors: maximise mortgage borrowing using your day rate
IT contractors earn big money. Despite that, traditional lenders don’t grasp the true nature of contracting. As a result, their mortgage offers are often unfavourable. Here, we’ll help you get the mortgage your income deserves:
- Why High Street lenders get your income wrong
- It’s okay to flit between PAYE and LTD/umbrella
- Why using your gross contract day rate is key
- How to optimise your considerable IT income
- Calculate how much you could potentially borrow
Use your gross contract rate to raise your borrowing ceiling
Working in IT, you’ve likely experienced the frustration of dealing with High Street mortgage lenders. They don’t understand your unique financial situation. They don’t understand short-term contracting.
As a result, their affordability assessments rarely grasp the true value of your contract income. As a result, unnecessary complications lead to mortgage offers that don’t meet your needs or expectations.
Since 2004, we’ve been haranguing lenders for fairer lending criteria for IT contractors. Today, using your gross contract rate, we can get you the mortgage your income deserves.
It doesn’t matter if you use a limited company, work through an umbrella payroll, or even work PAYE. We can maximise your income to substantially raise your borrowing ceiling.
Why IT contractor mortgages are different
Very few lenders at branch level will see past the nature of your short term contracts. Or, if they treat you as self-employed, they’ll insist on seeing your SA302 and/or accounts. These in no way reflect your employability or your borrowing potential.
To optimise your income, you need a lender who’ll use your gross day rate as a starting point. This is called ‘contract-based underwriting‘.
We’ve identified, and work daily with, lenders willing to work this way. These contractor-friendly lenders have dedicated, specialist underwriting teams who don’t work at branch level. They, like us, also understand the nature of short-term contracts.
Get the right mortgage no matter how you work
Our brokers, many of whom have been with us from the start, understand that IT professionals can adapt. If the next most lucrative IT contract means using a different payment structure, you’ll switch.
For example, imagine you’re a systems analyst, network engineer or software developer. Your current contract, which you’re working through a limited company, is coming to a close. As such, you’re on the lookout for the next gig.
If that next IT gig is on a full-time, PAYE basis, you’ll quit the LTD structure and go PAYE. While working there, you see a more lucrative short-term contract, albeit inside IR35. No problem.
Then, you’ll pivot – you’ll accept the offer but use an umbrella company to facilitate your incoming payments.
If the subsequent contract allows you to work outside IR35, again, you’ll switch. You’ll have no qualms about utilising a limited company payment structure to fulfil that role.
This flip-flop way of working will totally confuddle mortgage advisers at branch level. But not us.
We understand the reasons you move from one status to another as your career develops. The specialist underwriting teams at contractor-friendly lenders‘ head offices with whom we deal understand them, too.
How do IT contractors mortgages work?
We use your day rate as the basis of your affordability calculation. No accounts. No SA302s.
This way, we maximise your affordability to get a mortgage that reflects your income's true value.
Contract-based underwriting
We calculate your mortgage potential using your day rate, not ltd company accounts or payslips. This allows you to borrow more and secure a mortgage that truly reflects your earnings and status.
Simple documentation
All we need to 'evidence' your income is a copy of your current contract, an up-to-date CV, 3-to-6 months' bank statements, and a proof of ID. We handle the rest, ensuring a smooth, hassle-free application process.
Direct access to specialist underwriters
We've built strong relationships with specialist underwriters who understand IT contracting. This means we can get you a same-day agreement in principle and fast-track your mortgage application.
Ready to chat with us?
If lenders have let you down, you’ll have other questions, and/or need our help. After what you’ve been through, surely it can’t be as simple as we say, can it?
It often is. Where you’ve had problems is where your adviser or lender doesn’t offer specific mortgages for IT contractors. They either don’t understand your set-up, or their affordability assessment can’t accommodate how you work.
Our experienced brokers are here to help. If you need general mortgage advice, have a specific query, or want to discuss your options, talk to us. Fill out this quick form, and we’ll get back to you as soon as possible.
Connect with us now to start making your homeownership goals a reality. Call our advisers now on 020 8421 7999.
How we work out mortgage affordability for IT contractors
Underwriters begin their mortgage affordability calculation by ‘annualising’ your contract day rate. That means they multiply your day rate over either 46 or 48 weeks to gauge your pre-tax annual income.
They’ll then multiply that annualised amount by their ‘income multiplier’. This is usually ×5 if your credit is in good standing and you meet their other criteria. Some lenders even offer ×5.5 or ×6, based on their current deals and/or your situation.
This process, contract-based underwriting, really maximises what you can afford to borrow. It can help you secure a mortgage that reflects your true value as an IT contractor.
Calculate your borrowing power
Use the slider to enter your day rate into the calculator, below. This will estimate how much you could potentially borrow for a mortgage*.
For example, if you earn £500 per day, you could potentially secure a mortgage up to £575,000. The calculation is:
- £500 day rate × 5 days worked per week = £2,500/week
- £2,500/week × 46 weeks per year = £115,000 (annualised figure)
- £115,000 × 5 (income multiplier) = £575,000 potential borrowing.
*The exact amount depends on your specific circumstances and the lender best suited to your borrower profile. But, rest assured, we’ll help get you the best deal available.
Simple documentation is all you need
Getting a mortgage as an IT professional needn’t be complicated. All we need to evidence your income is:
- Your current contract (and sometimes an extension if it’s almost expired)
- An up-to-date CV
- 3 or 6 months bank statements (depending on the lender)
- Documents supporting your ID
We handle the rest, ensuring a smooth and hassle-free application process. And, because there’s so little paperwork, IT contractor mortgages can complete extremely quickly.
Some of the mortgages we provide
Our flexible, competitive mortgages simplify your mortgage journey because we only use contractor-friendly lenders. The range of mortgages available to IT professionals includes:
First-time buyers
Home mover mortgages
Remortgages
Buy-to-let mortgages
