Contractor Mortgages
Mortgages based on hourly/daily rate, we are experts with over 10+ years experience working with contractors.
Unlock your true borrowing potential as a self employed applicant, with numerous ways of proving income.
Contact UsWith approximately 4 million self-employed workers in the UK, it is fair to say that many of those are likely to of experienced issues or rejection when applying for a mortgage. Whether you are a director of a limited company, partner of a LLP or a sole trader, challenges may arise with proving your income or getting enough borrowing.
This is where we can help. With over 10 years’ experience specialising in mortgages for the self-employed, the key to a successful application is talking to the right broker who understands your business. We are here to tell your story.
See how you’d be assessed as a self employed applicant
The beauty of running your own business is being able to control your personal income. Unfortunately in some cases this may cause issues when making a mortgage application.
When lenders are assessing the income of company directors, most will use an average of the latest 2 years’ salary and dividend drawing. Depending on the decisions made throughout your accounting year, this could affect your borrowing capacity. Especially if your accountant has advised you to take a fairly ‘modest’ income!
Some lenders have offered an alternative to this: Profit + Salary. It’s a brilliant way that a company directors’ income can be assessed, whether it be your pre or post tax profit. Lenders will typically look at the latest 2 years accounts and take an average.
There are some lenders who may consider just one years trading figures or the most recent year trading, however it can depend on the line of work you’re in, previous industry experience you have and the level of previous income.
Using the profits in your business along with the salary you pay yourself may allow you to borrow more.
Many self-employed workers in the UK opt to trade as a sole trader before embarking on becoming a company director. Having a track record of your self-employed income is an important aspect of the mortgage application process.
Assessing a sole trader’s income is simple. Lenders will use the net profit figure shown on your tax calculations and typically look at the latest 2 years, then take an average.
There are some lenders who can consider just one years figures or the most recent year, however it can depend on the line of work you’re in, previous industry experience you have and the level of previous income.
Certain industries often decide to join forces and form a partnership with a colleague or colleagues. This is common with Doctors, Dentists, Accountants, Architects and Vets to name a few.
The way income is usually evidenced when part of an LLP is by looking at the share of profits showing on a tax calculation or the accounts.
If you are part of an LLP in a certain profession such as a Doctor, lenders often apply more discretion with the amount of accounts they ask for.
We have access to some lenders who can consider just 1 years accounts, although most will ask for at least 2.
The industry you work in and your professional experience can determine how many years accounts you’re asked for with some lenders.
Lenders set their own criteria, therefore you may find your income is proven differently depending on the lender we’re applying to.
The most common way is to use salary + dividend drawings or salary + profits.
There are a number of reasons why it can sometimes seem challenging to get a mortgage as a Limited Company owner, the main concern from a lender is how sustainable your income / business earnings are likely to be.
It can often seem lenders look at self employed applicants harsher than maybe a permanently employed applicant. Getting a mortgage when self employed is possible, we’re here to tell your story and prove your income in the correct way.
No, you will not pay a higher rate just because you run your own business. However, there may be certain lenders who can’t take a view of your income / lend enough which could then impact the rates available to you.
It is possible to obtain a mortgage when your business earnings are less in the most recent year than previous years.
Each case is different and it will depend on why the income is lower, how much lower it is and whether this is likely to be the case in future years.
Not necessarily, lenders understand that there are certain businesses and industries that may have been impacted by COVID.
They will assess how COVID has impacted your business and whether you’re now back to normal trading levels. We will assess your trading history and the recent income into the business and discuss this with the lender and establish whether they’d be comfortable lending.
We have access to some lenders who can consider just 1 years income proof, although most will ask for at least 2.
The industry you work in and your professional experience can determine how many years income proof you’re asked for with some lenders.
No. You will not be penalised when it comes to the rate you’re charged because of the way you work. However there may be some lenders who will not consider lending based on length of time self employed, amount of income, length of time in industry etc.
If you’ve claimed the SEISS (Self-Employed Income Support Scheme) throughout COVID then the lender will need to know about it. This doesn’t mean they’re going to decline your application.
Most lenders are ok with the SEISS, but we will assess the amount claimed and confirm with the lender we’re looking to apply to that they’re comfortable with this.
5th July 2023
Mortgages based on hourly/daily rate, we are experts with over 10+ years experience working with contractors.
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