Understanding How Umbrella Contractor Mortgage and Umbrella Companies Work

What is an Umbrella Company?

An umbrella company is an organisation that contractors can opt to work through instead of establishing their own limited company. Acting as the contractor’s employer, the umbrella company serves as an intermediary between the contractor and their recruitment agency or end client. It manages all administrative tasks and payroll, relieving umbrella company contractors of the accounting, tax, and other responsibilities associated with running a limited company.

What is an Umbrella Contractor Mortgage?

An umbrella company mortgage is a type of mortgage specifically tailored for contractors who are employed through an umbrella company. A limited company mortgage, on the other hand, is available for those who operate through a limited company and can be explored with the help of a broker. Many contractors often have irregular income and work on short-term contracts, securing a traditional mortgage can be challenging. However, mortgage lenders offering umbrella company mortgages understand the unique financial situations of these contractors and have designed products to accommodate their needs.

Umbrella Contractor Mortgage Criteria

Income Verification: Using the contractor’s daily or weekly rate, payslips, invoices, and possibly a reference from the umbrella company. Mortgage companies assess income for umbrella company contractors by evaluating these documents to determine lending criteria.

Contract History: Consistent contracts. Mortgage lenders have a range of experience requirements, but some lenders can consider from day 1 as a contractor, providing there is not a huge gap between regular employment and contracting, although some gaps can still be considered.

Employment Continuity: Minimal gaps between contracts and longer duration with the umbrella company.

Financial Stability: Good credit history (adverse credit can be considered), savings to cover any breaks in contract, 5% deposit options available

Contract Type and Industry: Some mortgage providers will have a minimum day/hourly rate, vat is not considered.

Specialist Lenders and Brokers: If high street lenders cannot help there are specialist lenders available who can work with contractors, those who understand the details of a umbrella contractor mortgage for better chances of approval.

Can Contractors Get Mortgages Working for Umbrella Companies?

Contractors working for umbrella companies can secure mortgages, but the process may differ from traditional employees. Lenders assess the contractor’s income based on their contract rates and financial stability, considering factors like the length of contracts and continuity of work.

How to Get a Mortgage as a Contractor working for an Umbrella Company?

Getting a contractor mortgage working for an umbrella company involves several key steps to demonstrate financial stability and eligibility. Start by gathering documentation that verifies your income, such as payslips from the umbrella company, contracts, and invoices to clients. It’s important to maintain a good credit score by managing debts responsibly and ensuring bills are paid on time. Saving for a deposit can also strengthen your application. Since mortgage lenders may view contractor income differently than salaried employees, consider working with specialist mortgage brokers who understand the complexities of contractor finances. They can help navigate lender requirements and present your application in the best possible light, increasing your chances of securing a mortgage that suits your financial circumstances and career status.

Speak to specialist mortgage lenders today

With over 10 years of industry experience and having helped hundreds of clients in our careers, we aim to work with our clients to find the right mortgage to suit your circumstances, taking your unique financial situation into account. The housing process is stressful enough, which is why we aim to eliminate the stress when submitting your mortgage application by providing sound, accurate and speedy advice, ensuring the outcome is correct first time.

We have strong relationships with numerous genuine contractor mortgage lenders who consider your income based on your gross contract value, not your gross pay after any deductions. You’ll still get access to competitive rates and high street lenders. Speak to a member of our specialist lender team today to find out more.

Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.