NatWest, one of the ‘big four’ High Street lenders, adopts a contractor-friendly stance in its mortgage offerings. The bank specifically caters to contractors operating through their own limited companies, assessing them based on their gross contract value. This includes both day rate and hourly rate contractors.
Contractor Mortgage Policies at NatWest NatWest’s criteria for contractors entail a minimum gross contract value of £75,000, equating to a day rate of £327 based on a 46-week year. Contractors on hourly rates are also considered, provided their contract meets the £75,000 minimum.
A 12-month contract duration is a prerequisite, so if you’ve been contracting for seven months, NatWest expects an additional five-month contract commitment, or a nine-month contract with three months remaining, totalling a year.
NatWest requires some remaining contract duration, typically around four weeks. They understand the short-term nature of contracts and do not demand an extensive remaining period. For contracts with less than four weeks left, NatWest might request evidence of an impending extension or a new contract.
NatWest exclusively considers contractors running their own limited companies. The assessment includes the cumulative shareholding of the company. For instance, if you hold a 75% shareholding, only 75% of your gross contract value is considered.
Employment History and Gross Contract Value Calculation NatWest prefers a continuous employment history, tolerating brief breaks like holidays. However, several months off within a 12-month period might necessitate considering other contractor-friendly lenders. NatWest is quite accommodating, accepting applications with up to six weeks between contracts.
For gross contract value calculation, NatWest multiplies the daily rate by five (for a working week), then this figure by 46 weeks. They do not use the previous year’s average to determine the daily rate.
For example:
- £327 per day x 5 days x 46 weeks = £75,210 gross contract value.
- £43.50 per hour x (stipulated hours or 37.5 hours default) x 46 weeks = £75,037.50 gross contract value.
Application Requirements To prepare your application, NatWest requires:
- Proof of ID (e.g., Passport or DVLA Licence).
- Two proofs of address (utility bill and council tax bill).
- Current and previous contracts to evidence a 12-month contracting history.
- An up-to-date CV demonstrating a strong work record.
- Three months of personal and business bank statements.
- Proof of deposit for purchases (bank statement or gifted deposit letter, with a template provided for the latter).
Having these documents upfront facilitates a seamless application process, enabling a swift and positive decision from NatWest’s underwriters.
Expertise in Contractor Mortgages With extensive experience in contractor mortgages, our expertise ensures that your application is managed with the utmost care, enhancing the likelihood of successful approval on the first attempt.
NatWest’s Contractor Mortgage Criteria
NatWest, one of the UK’s ‘big four’ High Street lenders, offers competitive mortgage solutions tailored specifically for contractors. Understanding the unique financial situations of contractors working through their own limited companies, NatWest evaluates applicants based on their gross contract value, making their mortgage products more accessible to both day-rate and hourly-rate contractors.
NatWest Contractor Mortgages
NatWest has developed clear guidelines to cater to contractors, starting with a minimum gross contract value of £75,000 per annum. For day-rate contractors, this translates to a daily rate of £327, assuming a 46-week working year. Contractors working on an hourly rate are equally eligible, as long as their contract value meets the £75,000 threshold.
A key condition is that applicants must have a contract lasting at least 12 months. For those with shorter contracts, NatWest requires that the combined length of current and future contracts equals a year. For example, if you have been contracting for seven months, you’ll need a five-month extension, or if you’ve been working for nine months, a three-month extension is required.
Another important aspect is that NatWest requires a minimum of four weeks remaining on the current contract. They are mindful of the short-term nature of contracts, so while they don’t demand an extensive period left on the agreement if your contract is about to expire, they may ask for proof of a pending extension or a new contract.
NatWest exclusively supports contractors who operate through their own limited companies. When assessing mortgage eligibility, they factor in the shareholder’s stake in the company. For example, if you own 75% of the company, only 75% of the gross contract value is considered for the mortgage application.
Employment History and Gross Contract Value Calculation
Consistency in employment is crucial for NatWest, though they are flexible when it comes to short gaps between contracts. Minor breaks, such as holidays, are acceptable, but if there are extended periods without work, it may be worth considering other contractor-friendly lenders. Typically, NatWest allows up to six weeks of downtime between contracts without affecting eligibility.
To calculate the gross contract value, NatWest uses the following formula:
For day-rate contractors
The daily rate is multiplied by five (representing the working week) and then by 46 weeks (taking into account holidays and potential contract gaps).
For example:
£327 per day x 5 days x 46 weeks = £75,210 gross contract value.
For hourly-rate contractors
The hourly rate is multiplied by the number of hours stipulated in the contract (or 37.5 hours as a default) and then by 46 weeks.
For example:
£43.50 per hour x 37.5 hours x 46 weeks = £75,037.50 gross contract value.
NatWest does not base the assessment on your previous year’s earnings; instead, they use your current contract terms to determine affordability.
Essential Documents for Your Application
To ensure a smooth and timely mortgage application process, NatWest requires several key documents:
Proof of ID (e.g., Passport or DVLA Licence)
Two proofs of address (utility bill, council tax bill)
Copies of your current and previous contracts to verify a 12-month history of contracting
An up-to-date CV outlining your work experience and career progression
Three months of personal and business bank statements
Proof of deposit, such as a bank statement or a gifted deposit letter (a template for this is provided if needed)
Having these documents readily available can significantly streamline the application process, improving your chances of a quick and favourable decision from NatWest’s underwriting team.
Expert Support for Contractor Mortgages
Managing the complexities of contractor mortgages can be complicated, but Mortgage Knight’s extensive expertise in this area ensures your application is handled with precision and care. Our tailored approach maximises your chances of securing approval on the first attempt, giving you peace of mind and confidence in your mortgage journey with NatWest.
