We Discuss Contractor Mortgages (And How To Get One)

Podcast: Let’s Talk Money and Mortgages

Host: Gemma

Guest: Ifthi – Trained Accountant, Mortgage Advisor, and Founding Director at WIS

Topic: How contractors can get a mortgage

Q1: How easy is it for a day-rate contractor to get a mortgage?

Answer:

Contractors are assessed differently than regular employees.

Day-one contractors can get a mortgage, provided they:

• Have experience in the same line of work
• Meet the lender’s conditions

There are fewer banks offering mortgages for new contractors, but it is definitely possible.

Standard underwriting still applies: credit history, deposit, financial management.

Income calculation:

Banks base income on your day rate × expected weeks worked per year.

Example: £500/day × 5 days/week × 46 weeks = annual income for mortgage purposes.

Q2: Can I get a mortgage solely based on my day rate?

Answer:

Yes.

Some banks consider day-one contractors using only your day rate.

Different banks have slightly different formulas (e.g., 46 vs. 48 working weeks).

Banks may require:

• Minimum contract history (6 months to 1 year)
• Some remaining time left on the current contract

Q3: How long do I need to be a contractor before applying?

Answer:

Experienced contractors: can be considered from day one.

New contractors without prior experience: typically 12 months in contracting.

Longer contracting history opens up more lenders and options.

Documentation that helps:

• Limited company accounts
• SA302 tax return summaries for 2+ years

Provides more flexibility for lenders to approve a mortgage.

Q4: How do multiple contracts or switching between inside/outside IR35 affect mortgage applications?

Answer:

Banks previously struggled with inside/outside IR35 changes, but now it’s more lenient.

Lenders evaluate each case individually, considering:

• Contract history
• Umbrella or agency payroll arrangements
• Switching between contracts

Experienced brokers know which banks are more flexible and can get exceptions approved.

Q5: How much contract time needs to be left when applying?

Answer:

Typically, 6 weeks remaining is enough for some lenders if you have contracting history.

Others may require 3–6 months.

Banks can sometimes approve exceptions, particularly for long-term, experienced contractors.

Q6: How does WIS help contractors get mortgages?

Answer:

WIS has extensive experience with contractors through:

• Accounting services
• WS Umbrella

Contractors working through WIS can leverage existing relationships with lenders.

WIS advisors understand:

• Umbrella and limited company structures
• Day-rate assessments
• Inside/outside IR35 variations

This expertise increases the likelihood of mortgage approval and helps navigate complex cases.

Q7: What options are available for contractors?

Answer:

Contractors can apply using:

• Day-rate calculation
• SA302 tax return summaries
• Limited company accounts

Multiple routes make it easier to maximize mortgage options.

Q8: Should contractors use a specialist mortgage advisor?

Answer:

Absolutely.

Contractors’ mortgage applications are often complex due to:

• Umbrella structures
• Multiple contracts or overseas contracts
• IR35 considerations

Experienced brokers know:

• Which banks are suitable
• How to navigate exceptions
• How to secure the best mortgage outcome

Conclusion:

Contractors can get mortgages, even from day one, but bank options may be limited.

Longer contracting history and proper documentation increase available options.

Specialist advice is strongly recommended to navigate complex scenarios.

Reminder: Your mortgage is secured against your property, and repossession is possible if repayments are missed.