What is Contractor Mortgages and how to secure the best mortgage deal?

Contractor mortgages is a very popular term, often used by High Street Lenders and mortgage brokers. This type of mortgage is specifically designed for Contractors and Freelancers.

Mortgage requirements, rates and the eligibility criteria for contractor mortgages is quite different when compared with the mortgage requirements for a permanent employee. The documents which mortgage lenders ask from a contractor to prove their mortgage affordability is different than that of a Permie.

This is purely because, mortgage applications made by contractors are perceived and scrutinised differently, most times, because of lack of knowledge and experience on the side of mortgage lenders. There aren’t many banks who are exactly aware of what ‘contractor mortgages’ mean, and how to evaluate a  mortgage application made by a contractor; and we all know what a refused mortgage application can do to your future applications.

On the other hand, we know of some banks whom we call “contractor friendly mortgage lenders” who offer excellent mortgage deals and rates to UK contractors. These are the banks who are fully aware of how a contractor earns, can correctly evaluate a contractor’s earning potential and mortgage affordability. Such mortgage lenders make life easier for contractors when it comes to securing a contractor mortgage.

Some of the contractor friendly mortgage lenders are Halifax, Barclays (Woolwich), HSBC, Clydesdale, Nationwide, Lloyds, RBS, Saffron BS, Nationwide, Virgin Money, Leeds Building society and more. Find out how much you can borrow.

Those contractor friendly banks require minimum documentation and can offer a wide range of mortgage products like – Buy to Let, Remortgages, Help to Buy and can even help you as a contractor if you are moving home or are a first time buyer.

We believe in the philosophy of “better safe than sorry” – which is why, we advise contractors to seek professional help and advice of a specialist contractor mortgage broker. Also, we highly recommend, using a contractor mortgage calculator to find out exactly how much you can borrow; before speaking with a mortgage broker or before fixing up an appointment with them.

As a contractor, you must remember that, you can apply for a contractor mortgage regardless of your current contracting status – this means, it doesn’t matter if you are new to contracting or a seasoned contractor. Also remember that, you can borrow up to 90% LTV (Loan To Value) if you go with a specialist mortgage broker and apply with a contractor friendly mortgage lender.

For more information, please visit our Contractor mortgages information page.