Contractor mortgage, how much can i borrow?

Navigating the UK mortgage landscape as a contractor can be a bit like trying to solve a complex puzzle. Unlike traditional employees, contractors face unique challenges when it comes to borrowing for a mortgage. The amount a contractor can borrow is influenced by various factors, including how lenders assess their income and the specific criteria of different mortgage products. Let’s delve into the details to help UK contractors understand how much they might be able to borrow.

Understanding Contractor Income Assessment

  1. Day Rate Calculation: Most lenders will calculate a contractor’s annual income based on their day rate. They typically multiply this rate by the number of working days in a week (usually five), and then by the number of weeks worked in a year (often around 46 to 48, allowing for holidays and gaps between contracts).
  2. Annualised Income: Some lenders might consider the contractor’s annualised income. This approach involves reviewing the gross income over the last two to three years to determine an average yearly income.

Factors Influencing Borrowing Capacity

  1. Contract Duration and History: Lenders often prefer contractors with a stable work history. A minimum of one year’s contracting history is common, with some lenders requiring evidence of income continuity over two or three years.
  2. Deposit Size: The size of the deposit significantly impacts how much a contractor can borrow. A larger deposit typically leads to a better mortgage deal and can increase the borrowing capacity.
  3. Credit Score and Financial Health: A strong credit history and sound financial status can positively influence the amount a contractor can borrow. Lenders assess these factors to gauge the risk level of the borrower.
  4. Lender’s Policy and Criteria: Different lenders have varying policies when it comes to contractor mortgages. Some may be more lenient and offer higher borrowing amounts based on day rates, while others might be more conservative.

Tips for Contractors Seeking a Mortgage

  1. Prepare Your Documentation: Have all your contracts, bank statements, and a strong CV ready. This helps to demonstrate your professional stability and income reliability.
  2. Seek Professional Advice: Consider consulting with a mortgage broker who specialises in contractor mortgages. They can guide you to the right lenders and help package your application effectively.
  3. Consider IR35 Status: Your IR35 status can impact how lenders view your income. Being outside IR35 might be more favourable in the eyes of some lenders.
  4. Be Realistic: Assess your financial situation realistically. Consider all your outgoings and commitments to ensure you can comfortably afford the mortgage repayments.


For contractors in the UK, the amount that can be borrowed for a mortgage hinges on several factors, including how lenders view and calculate their income. By understanding these factors and preparing thoroughly, contractors can enhance their chances of securing a mortgage that suits their needs. Remember, each lender has its unique criteria, so it pays to shop around or seek professional advice to find the best mortgage solution for your situation.



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