How contractor mortgages work

Contractor mortgages work by assessing income in a way that reflects how contractors are actually paid. Rather than treating you exactly the same as a standard employed applicant, some lenders use specialist underwriting criteria. This often includes reviewing your current contract, day rate, contract history, time in industry and evidence of ongoing work. A common method is to take your daily rate, multiply it by the number of days worked per week and then annualise it over 46 to 48 weeks. For example, a £400 day rate over 5 days per week could be assessed as around £92,000 to £96,000 annual income. Some lenders will instead use salary and dividends if you operate through a limited company, while others may look at net profit or retained profits. The best route depends on how you trade and which lender is most suitable. This is why contractor mortgage advice is less about a single product and more about matching your circumstances to the right lender criteria. (Vantage Mortgages) Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.