Can you get a mortgage as a contract worker?
The rise of contract work has opened up new opportunities for individuals, and mortgage lenders are adapting to this growing trend. While some may worry about how banks and building societies view non-permanent employment, the good news is that contractor mortgages are widely available.
As more people move away from traditional permanent roles, lenders are recognising the stability and potential of contract work, creating flexible solutions tailored to modern employment patterns. With numerous deals and different mortgage lenders to choose from, securing a mortgage as a contract worker is entirely possible.
Contract workers, often referred to as agency workers, enjoy the flexibility of regular work without the constraints of permanent employment. Whether working full-time or part-time, independent contractors and freelancers are thriving across various industries, such as construction, social work, retail, and other sectors where project-based roles are common.
For those with consistent experience in contract work, a strong employment history in their field, and an ongoing contract, the outlook is even brighter. Many mortgage lenders are updating their criteria to support the increasing number of individuals embracing this dynamic way of working, making it easier than ever to secure the right mortgage.
Who can qualify for mortgages for contract workers?
If you have been working as a contractor for a few years and have built up a good track record, and have a good credit score, it is worth speaking to a mortgage advisor who has experience of giving mortgages to contractors, so they can help you find the right product for you. These advisors can access specialist lenders who are more familiar with the nuances of contractor income, ensuring your application is assessed fairly and accurately.
First time contractors are not ideal from the perspective of a mortgage lender, but a few will consider lending. If you have a previous continuous history of employment in the same line of work, both permanent and contract, it will improve your chances of getting a mortgage. Demonstrating consistency and reliability, even in different roles, can significantly boost your application, as it shows lenders you are likely to maintain steady income streams.
Typically, those applying for a mortgage as a contractor can get a mortgage provided their income meets the lender’s requirements. There are differences between lenders in terms of how they assess your income as a contract worker from zero hours contracts to fixed term contracts, professional contracts, CIS workers, IT contracts, rolling contracts, contracts through umbrella companies and locum professional contracts.
If you don’t qualify for a mortgage from a typical lender, there are other options for you to consider. As specialist mortgage advisors, Greenacre Financial Services are here to help you with contractor mortgages. We specialise in finding solutions for clients with non-traditional employment structures, working closely with lenders who understand and value the flexibility of contract work.
We understand how different types of pay work with contractor status. We have access to specialist lenders who can help with competitive mortgages whether you are a limited company, a sole trader, fixed term or day rate, giving you options beyond high street lenders.
With the right support and advice from a specialist mortgage broker, with experience in mortgages for contract workers, getting a mortgage can be achievable and stress free.
What type of mortgages are available for contract workers?
Trying to navigate the differences between lenders on your own can be time consuming, confusing and often disheartening as a contract worker. Speaking to a whole of market independent mortgage advisors like us here at Greenacre, can help you to secure the best mortgage for your circumstances from the outset. Types of mortgages available to contract workers include:
Flexible Repayment Mortgages
With this type of mortgage, you can only borrow up to a certain percentage of your income. As your income increases, you can borrow more, but as your income drops, you won’t be able to borrow so much. If you can afford to pay back your mortgage in less time than the full term, you could save a lot of money in interest. This option is particularly attractive for those whose income fluctuates but shows a steady upward trend over time. This option is particularly attractive for those whose income fluctuates but shows a steady upward trend over time.
Interest-only mortgages
An interest-only mortgage allows you to pay off a lower monthly amount. As you are only paying the interest on the mortgage loan, you will need to save money in another account to cover the monthly repayments when the mortgage is due to end. When the mortgage ends, you have the option of either paying back the loan in full; or keeping the mortgage and continuing to pay back just the interest. This option is ideal for those with a strong financial plan in place, allowing them to invest elsewhere while managing their mortgage payments effectively.
How much can I borrow as a Contract Worker?
Permanent employees simply calculate up to four times their annual income. For example, if you’re earning £50,000 a year, you can borrow up to £200,000.
You can use this as a contractor mortgage calculator to give you rough idea of your mortgage potential:
- Take your current day rate and multiply it by the number of days you work in a week
- Multiply this figure by 48 weeks
- Multiply this total figure by 5
This is a general benchmark, different lenders take varying approaches to assessing the borrowing capabilities of contractors, and the amount you can borrow will depend largely on your specific circumstances. Contact us for a personalised assessment of your borrowing potential.
What else do I need to know about mortgages for contract workers?
The mortgage lender will need proof of your contact earnings. You will have to show them accounts or payslips, invoices and bank statements from your last two or three years of working which will give details of all your contract rates. This documentation demonstrates your financial stability and helps lenders gauge your earning potential over time.
If you have been contracting for less time, we can speak to the lender as part of the contractor mortgage process, as they may accept a letter from your accountants confirming your earnings, taking into account your current contract, previous contracts and future contracts. This flexibility ensures that even newer contractors are not excluded from mortgage opportunities, provided they can demonstrate earning potential and industry stability.
Additionally, maintaining an organised record of your contracts and ensuring you have a clear understanding of your income trends will streamline the application process and improve your chances of approval.
Read our Top tips to get a mortgage if you’re self-employed blog which includes practical steps to owning your dream home.
Getting the right mortgage advice
Contract work does not have to be a barrier to owning a home. Whether alone or with a growing family, it’s never too early to start speaking to a mortgage adviser. With expert guidance, you can confidently explore your options and find the most suitable mortgage for your circumstances.
We are a completely independent specialist brokers, abiding to a duty of care, offering a choice of around 100 lenders and up to 25,000 different mortgage schemes. Our independence ensures that your needs are prioritised, and we can access competitive deals that might not be available through high-street lenders. Let us help you make your contract work count towards your future home.
For more information about any of our services, including contract mortgages, please do not hesitate to get in touch by calling us on 0203 3939 222.
