A contractor mortgage is a mortgage designed for people who work on a contract basis as opposed to being permanently employed by a business or organisation. Contractors may find it harder to obtain a mortgage as their income can vary month-to-month and year-to-year. They may also have a limited employment history.
Contractor-friendly lenders may take a different approach when assessing their affordability when it comes to applying for a mortgage. While the mortgage itself will work generally the same way as a standard residential mortgage, the difference comes from how the lenders assess your income.
Depending on the circumstances, a lender may consider factors like:
- Your current contract and day rate
- The length and stability of your contracting history
- Your previous contracts and employment history
- Your expected annual income
- Your profession or industry
- Whether you operate through a limited company
- Your deposit
- Your credit history
- Your overall monthly commitments and affordability
Some lenders will use the day rate to calculate an annualised income. They do this instead of relying solely on your salary or drawings from a limited company. However, it’s important to note that every lender has its own criteria. Some of the documents they might ask you for include:
- Your current contract
- Recent bank statements
- Proof of income
- Tax calculations
- Accounts
- Details of previous or upcoming contracts
- Identification documents
- Proof of address
A contractor mortgage isn’t a separate type of mortgage; it’s a generally standard mortgage that’s assessed using criteria that are more tailored to people earning a living through contracted work. If you require assistance, help and support with your contractor mortgage, then hire the help of a professional mortgage advisor, such as the ones we have here at View Finance.
