How are mortgages for contractors assessed?
Mortgage applications for contractors are assessed in differently from traditional mortgage applications. Instead of looking at traditional forms of income assessment, lenders will use underwriting criteria specifically for the contractor and freelancer community. A normal mortgage application will be assessed on the basis of your salary - which meant that, in the past, many contractors faced difficulty securing the mortgage they wanted. A contractor mortgage application however, is examined on the basis of your gross contract rate. A mortgage lender will assess a contractor mortgage application on a case by case basis, using a combination of factors which might include:
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Tips for finding mortgages for contractors
Find a specialist contractor mortgage broker
- a mortgage broker that is used to working with contractors could help you to get the best deal available.
Aim for a high deposit if possible – the higher the deposit you can put into a property, the less risk the lender is taking on. This can mean lower rates for buyers.
Check your credit score
– this is important for all mortgage borrowers, but it’s especially important for people seeking a contractor mortgage as it reassures the lender that you have a good history of making repayments.
Gather all your documentation
– most importantly, you will need an up-to-date copy of your contract, indicating your payment rate for the work as well as its duration. This gives lenders a clearer picture of your income. You may also need to show your accounts for the past few years, although this is not always required, so check with your chosen mortgage provider.