Contractor mortgages

Contractors can often borrow as much as a salaried employee on the same income — the difficulty is that not every lender knows how to read a contract rather than a payslip.

Last checked 13 September 2026.

Six sections. Each anchored to a first-party source, checked 13 September 2026.

1. How lenders assess contractor income

A contractor paid through a limited company or umbrella company doesn't have payslips that map directly onto a lender's standard income model. Different lenders use three different approaches: taxable profit shown on self-assessment returns (SA302); salary plus dividends for limited company directors; or the gross day rate converted to an annual figure. The day rate method, where available, usually produces the highest income figure because it doesn't deduct holidays, company overheads or retained profit. The FCA's affordability rules require lenders to assess income responsibly but leave the method to each lender (MCOB 11.6).

2. The day rate calculation

Where a lender uses the day rate method, the standard conversion is: day rate × 5 days × 46 or 48 weeks. Which weeks figure applies varies by lender. A daily rate of £400 gives £92,000 at 46 weeks or £96,000 at 48. Some lenders require the current contract to have at least three months to run; others accept contractors between contracts if they have a strong track record.

3. IR35 and your mortgage application

Your IR35 status affects your tax treatment, not which mortgage products you can apply for. Inside-IR35 contractors receive net payments after income tax and National Insurance are deducted at source, like an employee; outside-IR35 contractors draw income through their company. For lenders, the key question is what income you can evidence. Inside-IR35 contractors may be assessed more like employees (useful if you have payslips); outside-IR35 limited company directors are assessed under self-employed income rules. HMRC's Check Employment Status for Tax (CEST) tool on GOV.UK gives a formal determination of your IR35 status for any given engagement.

4. Umbrella company workers

If you work through an umbrella company and receive a net salary, you'll usually have payslips showing PAYE income. Most lenders treat three months of umbrella payslips like any other employed income. The uncertainty is the contract nature: lenders may treat fixed-term contracts as less secure than permanent positions and ask for a larger deposit or longer track record.

5. Evidence checklist

• Current contract including start date, end date and day rate.
• Three to six months of business bank statements (limited company account if applicable).
• Two years of SA302 tax calculations and matching tax year overviews from your Personal Tax Account on GOV.UK.
• Signed limited company accounts if borrowing above 60–70% loan-to-value.
• Three months of payslips if working through an umbrella company.

6. Finding a broker who works with contractors

Not every broker knows which lenders currently use the day rate method or which accept contractors between contracts. Ask how many contractor cases they arranged in the past twelve months and which lenders they typically use. The broker must tell you at the start whether it covers the whole market or a panel of lenders, and what fee it charges (MCOB 4.4A.1R and 4.4A.8R).

Brokers whose website mentions self-employed mortgages

554 firms in our directory mention self-employed mortgages on their own website. That's what they say about themselves, not an assessment by us, so check that a firm handles your situation and look it up on the FCA Register before taking advice.

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General information, not advice. Mortgage Brokers List is a directory and a set of free tools. Only an FCA-authorised adviser can recommend a mortgage for your circumstances. See our editorial standards.