Contractor Mortgages
Are you looking for a contractor mortgages?
With increasing flexible working style and contracts, over the years there has been a greater shift to those working as contractors as opposed to employees. Contracts may last 6 months or longer and some contractors are concerned about how they will be viewed when they come to applying for a mortgages.
The good news is that there are a number of lenders in market who appreciate & understand the financial setup of those working on contracts.
If you are running your operation via a Limited company, there may be a difference between your salary and divends versus your day rate.
At R3 Mortgages, we have assisted a number of contractors secure mortgages. We will assess how to present your case depending on your day rate or information on your limited company.
FAQs
Are Self Employed Applicants who work under an Umbrella Company an acceptable form of employment and source of income for affordablity assessement?
Yes, there are lenders who will accept scenarios where contractors are working under umbrella companies. On this basis you will treated as employed and basis this on your PAYE income.
How do lenders assess contracator income based on day rate?
For lenders who accpet a ‘day rate calculation’, they will usually multiply it by 5 then multiply that by the number of weeks in a year in their criteria.
For example, If the day rate is £500 per day and the lender works on 48 weeks, the calculation would be as follows:-
Day rate * 5 * number of weeks = Income for affordability
500 * 5 * 48 = income for affordability
£120,000 = Income for afforability
Do all lenders who work on day rate calculation use the same number of weeks per year?
No, each has their own calculation. However 46 - 48 weeks is quite common as the lender factors in holidays, sickness and breaks between contracts.
I’ve heard I need to provide a CV is this correct?
In some cases this can assist an application as it gives the underwriter confidence about your previous and future employment prospects as well as your skills set.
