What is a contractor in the eyes of a mortgage lender?

To be approved for a contractor mortgage with mortgage lenders, a contractor needs to meet the following criteria:

  • Someone who works on a specific contract or a specific project
  • Someone who has a specified day / hourly rate
  • Someone who bills their client(s) on a weekly/monthly basis with a consistent income
  • Someone who has particular experience in a specific industry
  • Someone who either works for their own limited company, umbrella company or who is paid PAYE by the end client (if on a fixed term contract)

Can contractors get approved for mortgages?

The simple answer is yes when you’re speaking with the right specialist broker.

Not every lender will offer a contractor mortgage and some lenders will simply not be able to lend due to not having a structure in place to account for or process the income arrangement.

For many years it’s been a myth that contractors need to supply 2 years company accounts and will struggle to get a mortgage if this is not supplied. However, this is not always the case, it’s best to speak to a mortgage broker or us at Connely Roberts Mortgages Services who can advise based on your circumstances.

Instead, speaking with the right broker will help to position your income in the correct way, usually by annualising the contract rate to an equivalent salary – almost if you were permanently employed. This is referred to as an annualised contract rate.

What types of contractor mortgages are available?

The types of mortgage products available are the same as any other type of applicant. These include:

  • Fixed rate mortgages
  • Tracked rate mortgages
  • Capital and interest (repayment) mortgages
  • Interest only mortgages
  • Buy-to-let mortgages and;
  • Offset mortgages

Contractors are not penalised for the way they are paid; it’s just not every lender offers this type of mortgage.

What are the main contractor mortgage criteria?

There are additional criteria that lenders look at when assessing a mortgage for a contractor. This is due to contractors being viewed as higher risk due to working on a contract basis that are generally short term.

Contractor friendly lenders will often look at:

  • The industry experience the client has previously (any previous permanent employment will also help)
  • Their years of contracting experience (usually 2+).
  • A minimum length of time someone has spent contracting. This is dependent on the lender, some lenders will require 6-12 months contracting experience before they consider lending, however there are options out there with lenders who don’t require any length of time contracting (subject to being in contract and having a specified start date).
  • A minimum contracting income determined by the day rate and what the annual equivalent is. Some lenders have a minimum income of £50,000 – some even £75,000
  • A minimum amount of ‘gaps in contract’ across a 12-month period. The usual amount of gaps allowed with most lenders is 6 weeks in the last 12 months, however we have relationships with lenders who allow for larger gaps depending on the reason.

Once these criteria are met, underwriters may also take into consideration further factors that will determine their final mortgage offer including:

  • The value of the mortgage itself
  • How much money is set aside for the deposit
  • The timeline that the mortgage will be repaid over
  • Any existing financial commitments
  • A credit rating
  • If there are dependants and their ages (this can help with a family income benefit applications also)

How do we prove your income as a Limited Company Contractor?

To apply for a mortgage loan as a contractor, it’s crucial to position your income correctly. Since some contractors work through their own limited company, certain lenders or brokers may classify them as “self-employed.” This means they may require two years’ worth of accounts and average the taxable earnings (salary and dividends).

While this approach may be effective in certain instances, it can often be challenging to secure the desired mortgage amount since the income drawn from a limited company is typically low for tax efficiency reasons. While this is beneficial for reducing tax bills, it can make it difficult to obtain a first mortgage.

One alternative to this is to use the Contract Rate to demonstrate the gross annual income, which provides a more accurate representation of the contractor’s yearly earnings. To achieve this, the contract rate is annualized over a period of typically 46 or 48 weeks (to account for holidays and days off) depending on the lender’s requirements. This approach should enable contractors to secure a larger borrowing amount.

How do we prove your income as an Umbrella Contractor?

The same applies to umbrella contractors, as the number of people working via umbrella companies has risen since the implementation of IR35 in April 2021. It’s common for contractors to assume that because they receive payslips that show a gross income each week or month, they would be classified as PAYE applicants. However, most lenders do not consider them as such. This is due to the fact that umbrella payslips frequently reflect a small salary, with the majority of the income being shown as additional income (such as bonuses or commissions), which can create difficulties when attempting to demonstrate income to a lender.

Proving income as an umbrella contractor is similar to proving income as a Limited company contractor, as the application still requires a contract to verify income. However, the key difference is that most lenders now request payslips in addition to the contract, which they typically use to calculate the gross pay. Lenders often apply a deduction of around 11-14% from the gross income to account for the umbrella company’s costs and employers’ NI, which is often visible. However, not all lenders use this method, and some rely solely on the contract rate. If the lender intends to deduct a percentage from the gross annualized amount, they will follow the same calculation method as for limited company contractors, i.e., dividing the weekly pay by the number of weeks in a 46 or 48 week year.

What documents are usually required to get a Contractor Mortgage?

During a mortgage application, all applicants must provide:

  • Identification and proof of address.
  • When using a contract rate to establish affordability, the primary document required is a copy of the current contract, with many lenders requesting copies of contracts from the previous 6-12 months to demonstrate self employed contracting experience.
  • A CV: While it may seem unusual to request a CV when applying for a mortgage, lenders are primarily interested in contracting experience and track record, and a CV can be a useful accompanying document to support the application. A CV also helps contractors to show their work history, which in some cases can help reduce risk. For any mortgage applicant, lower assigned risk ultimately results in a lower interest rate.

Depending on whether the contractor operates via a Limited Company or Umbrella company the documents required will differ:


  • Latest 3 months’ Personal Bank Statements
  • Latest 3 months’ Business Bank Statements


  • Latest 3 months’ Personal Bank Statements
  • Latest 3 months’ Umbrella Payslips

 How are gaps in a Contract viewed by a lender?

Contractor specialist lenders typically have different contractor mortgage criteria regarding gaps in contracts and the length of time they will accept. As contracting often involves shorter assignments of 3, 6, or 12 months, it is crucial for many lenders to ensure that income will be sustainable. The easiest way for lenders to do this is by reviewing the contracting history.

As a standard, most lenders will allow a maximum of 4-6 weeks of gaps in the 12 months preceding the application. However, some lenders are more flexible with gaps depending on their duration and cause. We’re often able to overcome gaps providing there is a strong track record of contracting and a new contract in place moving forward.

Do ‘normal’ lenders offer Contractor Mortgages?

Many large high street lenders have provisions in their lending criteria that allow contractors to apply for a mortgage based on their contract rate instead of their taxable earnings. This is true for many well-known high street banks. However, even though many lenders now offer mortgages to contractors, it can be challenging to navigate the process without assistance. This is why having a specialised mortgage broker can be invaluable. Applying directly to the lender may result in an incorrect assessment of your income, which can limit your borrowing ability. This is mainly due to the lack of familiarity of high street bank advisers with contractor income, as they don’t have the same level of expertise as a specialist.

Do you pay the same interest rates as a Contractor compared to everyone else?

Many contractors often ask whether they will be subjected to higher interest rates due to their short-term employment status. However, this assumption is incorrect as contractors have access to the same interest rates as anyone else, and their working pattern doesn’t affect this. However, it’s important to note that not all lenders offer mortgages based on the contract rate, which can reduce the available options for contractors.

Why should I use Connely Roberts to get my Contractor Mortgage?

With nearly a decade of experience, we’re specialist mortgage brokers who have worked with contractors from various backgrounds and industries. Our journey began at the UK’s largest contractor mortgage specialist, where we gained invaluable expertise before embarking on our own journey. Our mission is to help contractors secure the mortgage they deserve, and we strive to make the application process as stress-free as possible.

If you need further information about applying for a mortgage as a contractor, visit our contractor mortgages page, or feel free to contact us to learn more about our services. 

Your property may be repossessed if you do not keep up repayments on your mortgage.

We typically charge a broker fee of £495, however the amount we charge can depend on your individual circumstances.

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