Which lenders offer contractor mortgages?
Many high-street banks, building societies, and other lenders claim to provide mortgages to anyone making a living as a contractor. But the reality is often more complex. Let's explore:
What you need to know about finding a lender
When searching for contractor mortgages, always look into the fine print. Comparison websites pulling in rates from lenders, for example, are unlikely to have been compiled based on contractor-specific criteria. More likely, they will simply list a range of mortgages that can be obtained by contractors - this doesn't necessarily mean they are competitive rates or good deals! Some may not even offer mortgages to contractors at all.
Which lenders offer contractor mortgages?
The good news is there are plenty of options out there for contractors (even contractors with bad credit) seeking a mortgage. You just need to find a reputable mortgage broker who understands the contractor niche and knows exactly how to package up your application for the best chance of acceptance.
It's also important to have a clear understanding of the lenders who genuinely offer contractor mortgages, and which are unable to base a decision on the individual terms of your contract. The second point is particularly pivotal, as it is the ability to leverage the specifics of your situation that will enable you to gain a competitive mortgage.
Below is a list of lenders who currently offer contractor mortgages:
Accord – Provide contractor mortgages to those with a minimum of 12 months left on their current contract. For contractors below this, they need to see evidence of two years’ worth of contracting income. They may also be willing to lend on a day-rate basis.
Bank of Ireland – The minimum contract value accepted by the Bank of Ireland is usually £50,000 and they will require evidence of 12 months’ contracting, with some time left on your contract.
Bluestone – Self-employed individuals only need to provide the previous year’s accounts and don’t need to have more than one year’s trading history. Contractors are also able to have six-month gaps in their earnings, so long as they have been providing contracting services for at least two years. Serious Adverse Credit Contractor Mortgages. CCJ's and Defaults considered, but expect to pay a premium.
Clydesdale – Accepts applications from day and hourly-rate contractors with a minimum of two years’ trading records, so long as you contract through your own limited company or a payroll umbrella.
Halifax – One of the most flexible lending policies around, they provide mortgages for the self-employed, freelancers and contractors (including day 1 contractors) whether charging a day or hourly rate.
HSBC - Accepts applications from those operating through limited companies and self-employed people and contractors, but will usually need to see at least two years’ worth of accounts.
Kensington – Will consider applications from day-rate contractors (both via a limited company or an umbrella) and have a good reputation for lending to those with an imperfect credit score since they overlook instances of defaults and CCJs over 2 years old.
Kent Reliance Building Society – Will consider day-rate contractors who charge a minimum rate of £275 and are ideal if you have a limited company or use a payroll umbrella.
Leeds Building Society – Will accept both day and hourly-rate contractors and typically grant mortgages up to 85% LTV.
Metro Bank – Offer mortgages assessed on a day rate across 46 weeks for those self-employed or operating under umbrella companies. Require a least three months left on your contract with evidence of previous contracts for the past twelve months (with a start and end date in writing). Multiple Contracts and no minimum day rate accepted here, go up to the age of 80, Yes mortgages up to 80 years old.
Nationwide – Doesn’t have a minimum income threshold and will lend to contractors based on their day or hourly rates.
NatWest – Will consider hourly and day-rate contractors, but only those who operate through their own limited company on their gross contract value.
Pepper Money – Provides contractor mortgages for contractors, self-employed persons, those operating via a limited company and under umbrella companies. They work out lending terms based on a day rate value, using a 12-month average – beneficial if you have increased your rates. Adverse Credit Contractor Mortgages considered here.
Post Office – Offer up to 90% loan to value mortgages and require a minimum of twelve months’ contracting with a minimum salary from contracting of £50,000 gross. They assess applications using currently held contracts but may also look at those from the previous twelve months.
Scottish Widows – Will consider day-rate and hourly-rate contractors and give preferential treatment to IT contractors.
Skipton – Accept applications from day-rate and hourly-rate contractors who have been in their profession for two years, with 12 months’ contract history.
Virgin Money – Accept applications from contractors charging by the day or hour and only from those operating through their own limited company, not umbrella company contractors.
The fact remains, some lenders are more contractor friendly than others. For instance, some high-street banks, such as Barclays and Santander, may advertise contractor mortgages but they can, in practice, be difficult to attain without the help of a specialist broker. If you need more information on which lenders offer contractor mortgages, get in touch with us today - we're happy to help.