If you’re a contractor, you’ve probably heard it before: “It’s harder to get a mortgage when you’re not permanently employed.” And while it’s true that contractors don’t fit neatly into the traditional tick-box criteria many lenders still use, that doesn’t mean getting a mortgage is out of reach – far from it.
At Hearthstone Mortgages, we help contractors secure mortgage deals every day – from IT consultants on day rates to locum GPs, project managers, engineers, and creatives. We understand how you earn, how lenders think, and most importantly, how to bridge the gap between the two.
This guide is designed to walk you through the process, dispel some of the myths, and show you how working with a specialist adviser can open the door to more flexible, competitive mortgage options.
Securing a mortgage as a contractor brings its unique set of challenges compared to traditional employees. Lenders often view fluctuating incomes and irregular employment patterns with caution, complicating mortgage approval. However, this guide is here to break down vital strategies and insights specifically for contractors. Whether you’re a seasoned freelancer or new to contract work, understanding these nuances will empower you to approach lenders with confidence. Let us explore the landscape of contractor mortgages and provide you with the knowledge to transform perceived barriers into opportunities for successful home financing.
Why Do Contractors Struggle with Mortgages in the First Place?
The issue isn’t that lenders won’t lend to contractors. The problem is that many lenders — especially high street banks — still rely on traditional underwriting models. That means they’re looking for:
- A permanent job with a basic salary
- Regular payslips
- At least 12 months in the same role
- Predictable monthly income
If you’re contracting, you’re likely working through your own limited company or umbrella firm. Your income might fluctuate month to month. You may take breaks between projects. You might even work multiple short-term contracts throughout the year.
To a risk-averse lender following outdated models, that can raise red flags – even when your earnings are higher than someone in full-time employment.
Understanding Contractor Mortgages
Contractor mortgages stand apart from traditional home financing, catering specifically to those whose employment lacks regularity and stable income reflection. Securing a mortgage as a contractor can seem challenging, given lenders often prioritise conventional employment and regular pay-checks. The key lies in understanding how contractors’ unique income structures are evaluated differently by lenders. As existing misconceptions around self-employed earnings persist, it’s essential to recognise how specialised underwriting approaches, like contract-based evaluations, can significantly enhance a contractor’s mortgage prospects.
What Is a Contractor Mortgage?
A “contractor mortgage” isn’t a specific product. It simply refers to mortgages assessed using criteria tailored to contractors, often based on your gross contract rate rather than company accounts or payslips, often referred to as contractor friendly mortgages.
Some lenders understand that contractors, freelancers, and locums have different income structures and offer bespoke underwriting to match. When looking at contractor friendly mortgages these lenders look at your:
- Day rate or contract value
- Length of contract (and any renewal history)
- Time in the industry or profession
- Limited company or umbrella setup
- Gaps between contracts
- Future work pipeline
The goal is to get a realistic view of your income, not just what your last payslip says, so your affordability is assessed fairly.
What’s Considered Contractor Income?
There are two common approaches lenders use to assess contractor income:
1. Contract-Based Underwriting
This method uses your gross day rate (or hourly rate) and multiplies it by the number of days you typically work.
Example:
If you’re on a £450/day contract, working 5 days a week, lenders may calculate your income like this:
£450 x 5 days x 48 weeks = £108,000 annual income
This is often more favourable than going off company accounts or salary/dividends, which may understate your actual earnings.
Contract-based underwriting is generally available to contractors who:
- Work on a fixed-term or rolling contract
- Have been contracting for 6+ months (or have a solid track record in a related role)
- Can show current and future contracts
2. Limited Company Accounts
Some lenders will assess income based on your last 1-2 years’ company accounts. They’ll look at:
- Salary + dividends drawn
- Retained profits
- Overall business health
This can be fine if you’ve been trading a while and draw a healthy income, but for many contractors, especially those who keep profits in the business for tax planning, this doesn’t reflect their true affordability.
Check out our contractor mortgage calculator to see how the numbers stack up, but as always, these are just guides and you are aways better off speaking with an adviser like Ajay or Jordanne at Hearthstone Mortgages.
Contract-Based Underwriting Explained
For contractors, understanding the intricacies of contract-based underwriting is pivotal in securing a mortgage approval. Unlike traditional methods that lean heavily on standard payslips or accounts, this approach evaluates your gross contract rate, providing a more accurate reflection of your earning potential. This assessment style aligns perfectly with the dynamic nature of contractor work, alleviating some of the common barriers faced with conventional mortgage applications. By leveraging this method, contractors can unlock possibilities that might otherwise seem unattainable, aligning their unique income structures with lender requirements and broadening their homeownership opportunities.
Utilising Your Gross Contract Rate for Mortgage Approval
Your gross contract rate is a powerful tool in the contract-based underwriting process, often serving as the cornerstone for mortgage approval. Traditional lending practices tend to fall short when assessing contractor income due to its irregular nature. However, by focusing on the gross contract rate, lenders obtain a transparent view of your financial potential, allowing for mortgage terms that genuinely reflect your earning capacity. This method disregards the unpredictability of contract gaps or fluctuating workloads, concentrating instead on your capacity for sustained income generation through contracts. For contractors, this means that even with a non-traditional work setup, obtaining a mortgage aligning with your income becomes feasible, reducing the frustration often encountered in more conventional undertakings.
Addressing Employment Gaps in Contractor Mortgages
For many contractors, employment gaps are a natural part of the job, but they can become stumbling blocks in the mortgage process. Traditional lenders often scrutinise these gaps, considering them risks. However, understanding how to approach these employment intervals strategically can ease the path to mortgage approval. By focusing on how lenders assess your contract history rather than employment gaps, and with the help of specialist advisers, contractors can effectively address these periods without impacting their borrowing potential.
Finding Solutions for Intermittent Work Patterns
Intermittent work patterns are inherent to the contractor lifestyle, often leading to breaks between assignments for various reasons, such as project transitions or desired downtime. These gaps can initially concern lenders who favour continuous employment. However, providing a robust package that showcases financial stability, such as a history of consistent contract renewals and future engagements, can reassure lenders. Moreover, emphasising savings, investments, or a sizable contract rate highlights your ability to manage during ‘off’ periods. Engaging with a mortgage advisor familiar with the contractor landscape can be invaluable. They understand lender criteria and can argue effectively on your behalf, ensuring these natural work intervals do not reduce your mortgage eligibility. Partnering with professionals who have total market visibility will give you tailored options that respect the realities of your chosen work style while enhancing your mortgage success rate.
Lenders will typically ask about gaps of 6 weeks or more. But short gaps aren’t usually an issue if you can show:
- A strong history of contracts
- Industry demand for your skills
- Savings to cover downtime
- A new contract lined up or in negotiation
At Hearthstone, we help you frame this correctly. We’ve worked with contractors who’ve had time off for travel, family, or switching clients, and still secured high-value mortgages. It’s all about context and presentation.
Maximising Borrowing Potential as a Contractor
As a contractor, optimising your borrowing potential involves leveraging distinctive strategies tailored to your unique work patterns. By understanding and enhancing key aspects of your financial profile, such as maintaining a strong credit score and building substantial financial reserves, you can strengthen your mortgage application. It’s also crucial to utilise the expertise of specialists who appreciate the complexities of contractor finances. This section outlines effective strategies to bolster your position in the eyes of potential lenders, ensuring you present the strongest possible application.
Strategies to Enhance Your Mortgage Application
Enhancing your mortgage application as a contractor begins with a keen focus on financial presentation. Start by maintaining a clean credit history, as lenders scrutinise this intensely. Regularly monitoring your credit score through reliable tools can help identify areas for improvement. Accumulating savings to serve as a deposit or as a financial buffer during contract gaps can also bolster your application. Documenting future contracts and potential earnings reassures lenders of your ongoing fiscal stability. Additionally, consider leveraging professional advisors familiar with contractor needs. Such experts offer guidance tailored to your income structure, ensuring that your unique earning potential is conveyed clearly and favourably in your application. By combining these financial and strategic insights, you position yourself as a credible and attractive borrowing prospect.
Here are a few practical steps to strengthen your mortgage application as a contractor:
- Keep contracts up to date Make sure your contract terms are clear, ideally with confirmation of duration, rate, and renewal options.
- Maintain a good credit profile Check your credit score with Experian or Equifax, and resolve any missed payments or defaults.
- Build a financial buffer Having savings that cover a few months’ expenses shows lenders you’re prepared for contract gaps.
- Work with a specialist mortgage adviser This is key. A good adviser will know which lenders cater to contractors, how to present your income, and how to avoid unnecessary rejections.
Can I Get a Mortgage If I’ve Just Started Contracting?
Yes, although your options may be more limited. Many lenders prefer to see a minimum of 6–12 months contracting experience, but there are exceptions.
You may still qualify if:
- You’ve just moved from permanent employment in the same industry
- Your contract is long-term or has guaranteed extensions
- You can show a strong career track record and future pipeline
For example, we’ve helped IT professionals secure mortgages in their first few months of contracting by leaning on their prior employment history and contract value.
What Documents Do I Need as a Contractor?
Every lender has slightly different requirements, but here’s what we typically recommend preparing:
✅ Your current contract
✅ Proof of day rate or total contract value
✅ Company accounts (if applicable)
✅ 3–6 months of personal and business bank statements
✅ Proof of ID and address
✅ Evidence of deposit
✅ Credit report (we can check this with you)
In some cases, lenders will also ask for:
- CV or work history
- Invoices or payslips from umbrella companies
- SA302s and tax year overviews (for self-employed contractors)
We’ll guide you through exactly what’s needed depending on your setup.
How Our Contractor Mortgage Specialists Make the Difference
Getting a mortgage as a contractor doesn’t need to be difficult, provided you’re working with people who understand how you work. At Hearthstone Mortgages, we specialise in helping contractors secure mortgages that reflect their real earning potential, not just what fits a standard payslip.
Unlike some brokers, we don’t try to fit contractors into a one-size-fits-all process. Instead, we take the time to understand your contract terms, working history, and income structure so we can present your case clearly to lenders who actually understand the contractor market.
Our team has in-depth knowledge of which lenders are genuinely contractor-friendly and how to navigate their underwriting criteria, from gross day-rate assessments to gaps between contracts. That means less time wasted, and better options on the table.
We’ll also advise you on strengthening your application, whether that’s keeping your accounts in order, managing credit profiles, or preparing the right documentation. It’s this level of specialist insight that gives our clients the edge.
At Hearthstone, we don’t just submit applications, we shape them around your goals. If you’re a contractor looking for expert advice, competitive deals, and a stress-free process, speak to our team today.