Your contractor mortgage experts
If you are a contractor looking for a mortgage, our specialist contractor mortgage advisers are here to help find a lender that understands your circumstances and pair you with a mortgage tailored to your needs. We work with contractor friendly mortgage lenders to help find you the most flexible and suitable approach to your circumstances.
What is a contractor?
In the eyes of mortgage lenders, a contractor is an individual who works on a contract-by-contract basis, often through a limited company or as a sole trader. Under the contractor umbrella can include freelancers, self-employed individuals, and those working in the gig economy.
Contractors are often seen as higher-risk borrowers due to the unpredictable nature of their income and the potential for fluctuations in their earnings. Understanding this perspective is crucial for contractors seeking a mortgage, as it influences the lending criteria and the types of mortgage products available to them.
What is a contractor mortgage?
A contractor mortgage is a type of mortgage designed to help those without permanent employment purchase a home or mortgage their existing property. The contractor mortgage process involves unique steps, making it essential to work with a knowledgeable broker who understands these specific conditions.
Since its introduction as a sought-after mortgage type, the contractor mortgage range offers a broad variety of mortgage options, such as interest-only and offset mortgages, tailored to accommodate the unique financial situations of contractors. Whilst contractor mortgages can be difficult to navigate, they are designed with your unique circumstances in mind.
Getting a mortgage as a contractor can involve challenges such as demonstrating a consistent income, maintaining a good credit score, and providing additional documentation to lenders. Mortgages for contractors take into consideration your gross contract rate rather than individual payslips or accounts, helping contractors with irregular income buy their dream homes.
Definition and explanation of contractor mortgages
Contractor mortgages are specialised mortgage products designed for independent professionals, such as freelancers, contractors, and consultants, who do not have a traditional employment contract. These mortgages take into account the unique financial situation of contractors, who often have variable income and may not have a fixed salary. Contractor mortgages are designed to provide a more flexible and accessible way for contractors to secure a mortgage, despite their non-traditional employment status.
How much can I borrow with a contractor mortgage?
The amount you can borrow with a contractor mortgage will depend on several factors including your income and monthly outgoings.
It is crucial to seek expert mortgage advice from specialists who understand the unique challenges faced by contractors and freelancers.
A specialist mortgage broker will discuss the options available to you depending on which lending criteria you meet, including securing a mortgage based on your unique income situation, as this will determine which mortgages might suit your circumstances.
How contractor mortgages differ from traditional mortgages
Contractor mortgages differ from traditional mortgages in several keyways. Firstly, contractor mortgages often have more flexible lending criteria, which consider the contractor’s variable income and may not require a fixed salary.
In addition to its flexibility, contractor mortgages may have different documentation requirements, such as contracts, to verify your income. Contractor mortgages may also have different interest rates and repayment terms, which are tailored to the contractor’s unique financial situation.
An award-winning service
The team at Bower are overwhelmed to have won the award for Best Equity Release Adviser Customer Service for the 8th year running at the What Mortgages Awards 2020.
Delighting customers with a great customer experience is at the heart of everything that we do. To win this award is a testament to the importance Bower places on high standards of advice and service that we have been able to provide, even in these challenging times. Read more about our award winning service here.
Contractor mortgage specialists at Bower Home Finance
At Bower Home Finance, we are here to help you find the best mortgage for your circumstances. Our specialist mortgage advisers are experienced in navigating non-traditional income streams and tailoring mortgages to each of our clients, so they can move forward with peace of mind.
Whether you are looking to purchase your first home or remortgage an existing property, our specialist advisers can help guide you through the complexities of securing a mortgage loan as a contractor, whilst helping you secure the best deal for your circumstances.
Fulfil your property dreams
From helping you to get on the property ladder to remortgaging your home with a mortgage for contractors, our specialist mortgage advisers are on hand to help you fulfil your property dreams.
Frequently Asked Questions
Yes, if you meet the specified lending criteria you will be able to get a mortgage as a contractor. Many contractors find specialist contractor mortgages are more suited to their circumstances as some lenders will see their contractor status as higher risk. This is why our mortgage advisers work with specialist lenders to help you find the best deal.
Lending criteria for contractors can vary between lenders, but typically include the following:
- Minimum Contract History: Lenders usually require a minimum contract history to demonstrate income stability.
- Income Requirements: A minimum day rate or annual income is often necessary to qualify.
- Credit History: A good credit history is essential to meet lending criteria.
- Proof of Identity and Income: Contractors must provide proof of identity, income, and employment.
- Proof of Contract and Address: Documentation to verify current contracts and residential address is also required.
Lenders may also consider the contractor’s industry, experience, and qualifications when assessing their application. Meeting these criteria can enhance a contractor’s chances of securing a mortgage.
Contractor mortgages offer several benefits tailored to the unique financial situations of freelancers and self-employed individuals:
- Flexibility: These mortgages can be customized to accommodate irregular income and variable expenses, providing a more personalized lending solution.
- Competitive Interest Rates: Specialist lenders often offer competitive interest rates for contractor mortgages, which can help reduce monthly repayments and save money over the life of the loan.
- Increased Borrowing Power: Contractor mortgages can provide higher borrowing power than traditional mortgages, as lenders consider the contractor’s day rate and contract history.
- Simplified Application Process: Specialist mortgage brokers can guide contractors through the application process, making it easier to secure a mortgage.
By leveraging these benefits, freelancers and self-employed individuals can find mortgage solutions that align with their financial goals and circumstances.
FTo prove income as a contractor, lenders typically require the following documents:
- Bank Statements: Showing regular income deposits.
- Contracts and Invoices: To verify ongoing and completed work.
- Tax Returns and Accounts: Providing a comprehensive view of financial health.
- Proof of Dividend Payments: If contracting through a limited company.
- Proof of Identity and Address: Standard documentation to confirm identity and residence.
Specialist mortgage brokers can assist contractors in gathering these documents and preparing a strong mortgage application, ensuring all necessary information is accurately presented.
Mortgage Specialist
With access to over 500 lenders, Bower will help you release equity and create liquidity to acquire property, whenever you want to buy
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IMPORTANT TO KNOW
Bower Home Finance provides independent, impartial whole of market mortgage advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed, would a typical advice and administration fee of £495 be payable.
Speak to one of our dedicated customer specialists or arrange your free, initial no-obligation quote by calling us on 0800 411 8668.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Some buy to let mortgages are not regulated by the Financial Conduct Authority.