Contractor mortgages

The problem

Most lenders assess you one of two ways: as employed, or as self-employed. A contractor is neither, so you get put in whichever box the system prefers and assessed on the wrong numbers.

Treated as self-employed, you may be judged on two or three years of accounts, or on retained profit rather than what you actually take. Treated as employed, your PAYE salary might look small next to your real earnings.

How day rate lending works

Some lenders will assess you on your contract rate instead. The usual shape of it: your day rate, multiplied by the days you work in a week, multiplied by a number of weeks a year, with an allowance for gaps between contracts.

That's often a considerably higher figure than an accounts-based assessment gives you. Same income either way. It's just being read properly.

What lenders typically want to see

• Your current contract, showing the rate and the end date
• A history of contracting, though some lenders will consider you with less
• Evidence you've been renewed before, if you have
• Bank statements showing the income arriving

Who this covers

Day rate and hourly rate contractors. Fixed-term contractors. Umbrella company contractors. Limited company contractors. IT, engineering, construction, medical and professional locums. CIS subcontractors.