Contractor-friendly mortgage lenders
We have relationships with lenders across the UK to suit your circumstances as a contractor regardless of how much contracting history you have, your immigration status in the UK or your credit history.
Here, we’ll set the record straight. We only use genuine contractor mortgage lenders, many of whom we’ve helped develop their contractor policies.
We want to bring you access to those specialist lenders.
True, a few you can access yourself on the High Street. But that’s no guarantee they’ll understand your income.
That’s because your contract income — agency, umbrella or direct — needs a specialist to interpret it for lenders. That’s one reason many lenders only offer their specialist mortgages through brokers like us.
This ever-growing list of contractor-friendly lenders will help you decide whose criteria make the most of your unique situation. If you need more help, request a callback via the form provided.
Halifax
The Halifax was the first ‘Contractor-Friendly’ lender. Today, it continues to lead the way in bringing affordable mortgages to independent professionals.
In May 2013, the bank took the huge step of offering mortgages to non-IT contractors. The policy change fortified the bank’s reputation as the go-to lender for contractors.
We’ve outlined the full scope of its lending criteria. This will help you recognize what Halifax expects of its customers. It also offers insight into the relationship it continues to build with our community.
Skipton Building Society
Skipton for Intermediaries has a refreshing perspective on contractor income. Rather than separate different structures, they use your day rate whether you’re a limited company, umbrella or sole trader (freelancer) contractor.
They accept RSU at 100% and only require payslips if asked to take bonuses and commissions into account.
With ‘no minimum income’ mortgages for locum doctors and supply teachers who work on a contract/day rate basis, Skipton has spread its welcome mat wide.
Accord Mortgages
Accord Mortgages pander to the highest-earning contractors. The least one can earn to qualify is £400 per day or £75,000 per annum.
To counteract these terms, Accord offers some of the most competitive contractor mortgage rates today.
The lender, part of The Yorkshire BS Group, also has one of the highest multipliers. For mortgages < £500k, Accord offer up to 5.49 × [your annualized contract rate x 0.8].
Clydesdale
Clydesdale Bank sets itself aside as a mortgage lender that understands contractors. They understand how contracts work. They also get that limited company accounts don’t always show the big picture.
Working alongside its expert underwriting team, we’ve forged strong relationships with Clydesdale. They’re not afraid to offer innovative products. They’re flexible enough to update lending criteria to suit the market when needed. In all, Clydesdale is a great brand to work with.
We detail their full criteria for those eager to work with a responsive lender. Even if your situation isn’t an exact match to their lending policy, they are prepared to listen. Leverage our relationship to get their full attention.
Nationwide Building Society
Not all contractors work in IT or Oil and gas. They don’t all earn in excess of £300/day.
Nationwide Building Society acknowledges these factors and much more. They don’t punish modest income, a few weeks off a year or working in a non-preferred industry.
They do ask that you’ve been contracting for 12 months in the same industry. So, if you have but don’t meet other lenders’ strict criteria, Nationwide offers a solid, viable alternative.
NatWest
NatWest Bank has set the level of entry for its contractor mortgages high. £326/day is the least income they’ll accept from limited company applicants.
That said, the high earning level is in line with other “Big Four” lenders who do the same. They, more than any, are wary of Responsible Lending guidelines upheld by the FCA.
But do you feel more comfortable with one of the UK’s biggest lenders? If so, NatWest’s full limited company contractor mortgage lending criteria could be perfect for you.
Leeds Building Society
Leeds Building Society only launched its contractor mortgage range in 2015. Since the success of the pilot scheme, it has not let the grass grow under its feet.
The Society has no restrictions on which sector contractors must work in to qualify. The low earning threshold also makes mortgages accessible to the majority.
Few lenders offer as wide a range of contractor mortgages as Leeds. Interest-only, buy-to-let, repayment (fixed and variable rate) and offset mortgages are just the highlights.
Scottish Widows
Why add Scottish Widows when Halifax and BM Solutions already offer contractor mortgages? Well, Lloyds has seen the opportunity to extend its offering without upsetting the applecart.
With Scottish Widows contractor mortgages, you get the same market-leading products that Halifax offers. But you also have options of interest only and offset mortgages.
If you want to make your cash work for you, offset mortgages are a tempting alternative. Our criteria proffer an example of repayment v offset to help you make up your mind.
Metro Bank
After the credit crunch, the government demanded a new challenger bank. From the ashes of economic instability, a phoenix rose in the shape of Metro Bank.
What we didn’t expect, at least this soon, was that the new bank would open its doors to contractors. In reality, Metro Bank has done more than that.
No minimum income, no preferred industry and only 12 months’ prerequisite contracting? Now, they’re criteria we can all work with.
Virgin Money
Virgin Money: a real case of “Guys, what’s going on?” In the past, using our relationship with Virgin’s underwriters, we could get ‘exceptions’.
What’s one of those? It’s where an applicant’s circumstances aren’t a direct match for Virgin’s lending criteria. Yet, we believe they are low enough risk for a mortgage.
In the past, we would present our case, and Virgin’s underwriters would appraise it on its own merit. If they agree with us, back of the net, mortgage sorted.
But those days are gone, and the bank’s attitude toward contractors has changed. Our guide has more in-depth about that.
There is an exception, though. Are you a contractor who’s changed from an Umbrella to a Limited Company in the last two years? Then Virgin’s contractor mortgages could be right for you.
Kensington
Kensington is one of the new kids on the contractor mortgage block. That’s not to say they’re just a copycat of other lenders, far from it. They’re pushing boundaries to some extent unprecedented in our sector.
They combine Clydesdale’s flexibility with Halifax’s outlook. One year’s accounts are sufficient for their underwriters to determine your mortgage affordability.
Kensington has also lowered the two above lenders’ insistence on a minimum earning threshold. They are even willing to consider applicants with a less-than-perfect credit history.
If all roads have led to nowhere, the Kensington may just be your destination.
Saffron Building Society
Saffron Building Society is a flexible mortgage lender that welcomes all contractors. In fact, they offer mortgages to self-employed people of most trading structures.
The terms covering the length of time served as a contractor/contracting history are stringent. Their interest rates can be higher than other contractor-friendly lenders, too.
Irrespective of earnings or industry, Saffron’s underwriters will assess your application on its merit. If your industry or day rate is unfavourable elsewhere, Saffron may just be the answer.
The Furness and Newbury Building Societies
Both Furness and Newbury rank among the smaller of the contractor-friendly mortgage lenders. What they lack in size, they make up for in the personal touch.
Both assess applications on a case-by-case basis. They also offer mortgages to contractors who don’t work in the typical ‘safe’ industries. And they’ve removed the lower-earning threshold imposed by many of the larger lenders.
Given their manual appraisal of each application and their size, they’re not the quickest. But if having the personal touch is your bag, talk to us about Furness or Newbury.
Other contractor-friendly and self-employed mortgage lenders
Since we first produced this guide, we have built bridges with many other lenders. Details of the lending criteria for each are filtered through. Once we have the full information for you, we’ll create a bespoke guide for each, as we have done above.
In the meantime, please find the other lenders with whom we deal. Some offer contract-based underwriting, using your day rate to secure a mortgage. Others offer self-employed mortgages using accounts; here’s the list:
Abbey;
Accord Mortgages;
Birmingham Midshires;
BM Solutions;
Coventry Building Society;
Godiva Mortgages;
Kensington Mortgages;
Kent Reliance;
Leeds Building Society;
Metro Bank;
Nationwide Building Society;
NatWest Bank;
Platform;
Santander;
Scottish Widows Bank;
Skipton Building Society;
The Mortgage Works (TMW);
TSB;
Woolwich (Barclays).
If one of these is your preferred source, give us a call, and we can discuss terms on a personal basis for you.
Genuine broker or just a bluffer?
Type “Contractor Mortgages” into Google search. The result? You’ll see plenty of websites promoting “mortgages for contractors”. But are they really the accredited broker or an affiliate thereof?
Seeing is not always believing. Most sites that promise to get you a competitive mortgage through a “Contractor-Friendly” lender are referrers.
In truth, the website owner doesn’t understand how lenders assess contract earnings. They’re not always even authorized by the FCA to give you that advice.
Most of these sites are nothing more than affiliate or lead generation sites. They get a commission for referring contractors like you to others’ websites.
Their links may take you to a bona fide mortgage provider’s website. But who’s guaranteeing that the lender really understands contract income? In our experience, in-branch advisors and call centre operatives are not qualified to interpret day-rate income!
Chances are, non-specialist advisors may default to their self-employed mortgage product. That type of underwriting relies on SA302s, salary and dividends. You may well forfeit your bonuses and retained profit in their affordability calculation.
As a professional contractor, that type of mortgage underwriting won’t reflect what you can afford to borrow!
It’s specialist underwriters who call the shots, even at recognized contractor mortgage lenders. If you haven’t got a direct line to them through an experienced broker, you’re heading for a fall.
You might eventually arrive at a specialist mortgage broker whom the FCA has authorized. But again, the referrer will get a kickback just for adding unnecessary steps to your journey.
Ranking versus banking: why you should care
What these affiliates do know is how to get a website ranking for key search terms. But that’s about it.
If you’re looking for advice, as most contractors are when they’re buying a home, forget it. You’re barking up the wrong tree with these guys.
One problem is that the majority of rates advertised are not from “contractor-friendly” lenders. In fact, these rates may never even have existed, at least not for independent professionals!
More important for you: many lenders whom affiliates advertise don’t even deal with contractors directly!
Why trying to use your salary may have a negative, lasting impact
The plain fact is they’ll use your salary to work out affordability. And maybe the dividends you’ve drawn if their calculation permits. Using those tax-efficient figures, you’re unlikely to get any mortgage, let alone a competitive one.
And your problems won’t end there!
Your credit score is of vital importance to most mortgage underwriters. When it comes to your credit history, if your file shows many recent searches, it has an impact. But not a positive one.
The more failed searches on your file, the less likely you are to get credit. From anywhere, for any type of credit, from an overdraft to a mortgage loan! And it may take years to rid your file of failed applications.
Demand transparency from your contractor mortgage broker
There are other reasons why dealing directly with High Street lenders can be problematic. If they reject you, it then becomes harder for specialist brokers who could have helped to get you a mortgage.
Lenders will turn you down if your broker doesn’t know how to package your application. Most brokers remain unaware of contract-based underwriting, which uses your gross contract rate to get a mortgage.
An article accompanying this guide explains our transparency about the contractor mortgage lenders we use. We hope it will help clients realize we’ve nothing to hide or fear about revealing our partners.
We do work with some of these lenders for ‘self-employed mortgages’. Don’t confuse a self-employed mortgage with a contractor mortgage. They’re not the same; we’ll explain further as we go.
A full list of banks, building societies and mutuals offering contract-based underwriting is at the end of this guide.
Why is it so important to get a mortgage based on my contract rate?
Lenders who default to their self-employed criteria will demand at least two years’ accounts. They’ll then use those accounts to work out how much you can afford to borrow.
They’ll base that figure on a multiple of your salary and dividend drawings. Now, do you begin to see where it’s all going wrong?
As a tax-savvy contractor, you keep your salary and drawings low on purpose. Using these figures is not the way to get a mortgage that optimizes your contract earnings!
Top tip: only partner with genuine brokers who specialize in contractor mortgages.
We, MorgageTek , are such specialists. We secure mortgages for contractors based on their contract rate alone.