What is a contractor mortgage?

A contractor mortgage is a mortgage designed for people who work on a contract basis rather than in a permanent salaried role. In practice, it is not always a separate mortgage product. More often, it means using lenders who understand contract income and assess affordability differently from standard employed applicants. Instead of relying purely on SA302s, salary and dividends, some lenders will use your day rate or current contract value to calculate borrowing potential. For example, a lender may annualise your day rate across 46 to 48 working weeks to estimate income. This can often result in higher borrowing than traditional self-employed underwriting. Contractor mortgages can work for limited company directors, umbrella company workers, fixed-term contractors, IT consultants, CIS subcontractors and freelancers, depending on the lender’s criteria. The key is using lenders that understand irregular income structures, contract renewals and retained profits. At Hearthstone Mortgages, we help contractors present income in the strongest way possible so lenders can assess the real affordability picture rather than just the headline tax figures. 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.