Mortgages for contractors

A contractor mortgage is an ordinary residential or buy-to-let mortgage where the lender can work out income from the contract rather than from accounts. Instead of averaging two years of company profit, the lender annualises the current day or hourly rate and applies its normal income multiple, subject to its own contract-history rules.

The method exists because many contractors pay themselves a low salary and take dividends through a limited company, so their accounts understate what they earn. Reading the contract rate gives a figure closer to real earning power, which can make a large difference to the amount a lender is willing to offer.

Contractors are a subset of self-employed borrowers, and the wider rules on accounts, documents and affordability are set out in the guide to self-employed mortgages. This page focuses on the parts that are specific to contract work.

Lenders that assess on contract rate usually multiply the day rate by five working days and by a fixed number of working weeks a year. The number of weeks is set by each lender's own criteria and is not the same everywhere. Hourly contracts are converted the same way, and the annual figure then feeds the lender's affordability checks.

As a worked example with example figures, not market data: a day rate of £450 multiplied by 5 days and 46 weeks gives an annualised income of £103,500. A lender using 48 weeks would read the same contract as £108,000. The difference in weeks alone changes the income figure by £4,500.

Lenders then apply their normal income multiple and affordability model to that figure, so the final loan depends on deposit, outgoings and credit as well.

Contract-rate lenders want to see a track record of contracting and a current contract with time left to run. The minimum history differs from lender to lender, so the same applicant can meet one lender's rule and miss another's. Some lenders accept a shorter record where the applicant did the same work as an employee before switching.

Gaps between contracts are read as a sign of how reliable the income is. Short gaps for holidays or project changes are usually accepted, while long or repeated gaps may lead a lender to use accounts instead of the day rate. Renewals with the same client count in the contractor's favour.

Applicants with a short contracting history should expect a smaller choice of lenders and more questions about the work they did before. A CV that shows the same skills in earlier employed roles helps a lender see the contract as a continuation of an existing career rather than a fresh start.

Contractors inside IR35 or paid through an umbrella company receive payslips with tax deducted, so many lenders treat them more like employees and assess the gross pay or the contract rate. Contractors outside IR35 who run their own limited company may be assessed on the day rate, or on salary plus dividends from their accounts.

Whether a contract sits inside or outside IR35 does not, on its own, decide whether a lender will offer a mortgage. What changes is the evidence used: umbrella payslips and the contract for inside IR35 work, and the contract, company accounts or tax calculations for outside IR35 work through a company.

Contractors who own their company and prefer to be assessed on accounts fall under the director rules. Those rules, including how lenders treat retained profit, are explained on the page for limited company director mortgages.

Construction workers paid under the Construction Industry Scheme have tax deducted at source by the contractor who pays them, and receive monthly payment and deduction statements, according to GOV.UK, Construction Industry Scheme guide, accessed 26 Oct 2026. Lenders that accept CIS income usually ask for these statements alongside bank statements.

CIS workers who also file Self Assessment returns can be assessed either on their tax calculations or on recent CIS statements, depending on the lender. Where earnings vary week to week, lenders tend to average a period of statements rather than take the highest recent week.

Because CIS income can look irregular on paper, the choice of lender matters more than usual. Contract length, the regularity of work for the same main contractor and the gap between jobs are all read before an offer is made.

Contractors are usually asked for a copy of the current contract, evidence of previous contracts, a CV or contracting history, recent bank statements showing contract payments, and ID. Lenders assessing on accounts also ask for tax calculations, tax year overviews and company accounts, the same as other self-employed applicants.

A contract that states the day rate, the start and end dates and the notice terms is easier for a lender to read than an informal agreement. Where a contract has been extended, the extension letter helps show continuity, and a letter from the agency or end client can confirm the expected renewal.

Umbrella workers should also keep recent payslips, and CIS workers their payment and deduction statements. Brokers who place contractor cases know which lenders take which evidence, and choosing one is covered on the page for self-employed mortgage brokers.

The cost of a contractor mortgage is driven by the same factors as any mortgage: deposit size, credit history, the type of lender and the product chosen. Contract work does not carry a fixed premium, but specialist lenders that accept short contract histories or unusual pay structures may price higher than high-street lenders.

Repayment and interest-only options are assessed the same way as for other borrowers. Interest-only lending usually needs a credible repayment plan and a larger deposit, and some lenders set a higher minimum income for it. Broker fees, lender arrangement fees and valuation fees are added costs to compare alongside the headline pricing.

The rate offered on any contractor case depends on the full picture, so published headline pricing is only a starting point. Comparing the total cost over the initial deal period, including fees, gives a fairer view than the headline rate alone.