Why contractors get the wrong answer from the wrong lender
If a lender treats you like a small business and averages two years of (tax-efficient) accounts, your assessable income can look small. The best contractor mortgages instead use your day rate annualised — and the difference is dramatic. A £400/day contractor assessed on day rate might be credited with roughly £92,000 (£400 × 5 × 46), versus a far lower figure from limited-company accounts.
1. Day-rate (contract-based) mortgages
The gold standard. The lender annualises your day rate, ignoring how you structure your company for tax. Best for IT, engineering, management consultancy, oil & gas and other professional contractors on clear day or hourly rates.
Pros: usually the highest borrowing; high-street rates. Cons: lenders want a track record and current contract; gaps are scrutinised.
2. Mortgages for contractors new to contracting
Some lenders accept as little as 3–6 months in your current contract, or a signed contract with a start date, given relevant prior experience. Best for newly independent professionals who left employment for contracting in the same field.
3. Umbrella company and PAYE contractor mortgages
If you contract through an umbrella on PAYE, you'll have payslips but variable income. The best lenders understand umbrella structures and assess your gross contract value rather than just net pay. A broker is essential to avoid lenders treating you as a precarious temp.
4. CIS (Construction Industry Scheme) mortgages
Subcontractors paid under CIS can often be assessed on gross income from payment and deduction statements rather than net profit after expenses — typically boosting borrowing. Best for tradespeople and construction subcontractors.
What contractor lenders want to see
- A current contract showing your day/hourly rate and term
- A track record in your field (often 12 months, sometimes less)
- CV or evidence of continuous work with minimal gaps
- Bank statements showing contract income landing regularly
How to borrow the most as a contractor
The whole game is being assessed on your day rate, not your accounts — and only a subset of lenders do this well. A contractor-specialist broker knows exactly which lenders use day-rate calculations and how recent you can be in contracting. Find a contractor mortgage specialist through Nesto — free, no obligation.
Frequently asked questions
Can I get a mortgage on a day rate rather than my accounts?
Yes — contractor-friendly lenders annualise your day rate, usually meaning you can borrow more than if they used limited-company accounts.
How long do I need to have been contracting?
Many lenders want 12 months, but some accept 3–6 months in your current contract, particularly with relevant employed experience in the same field.
What if I have a gap between contracts?
Short, normal gaps are fine. Lenders look for an overall pattern of continuous work; a broker can present your history well.
Do I need two years of accounts?
Not with a day-rate assessment — the current contract and track record matter more.
Are contractor mortgage rates higher?
No — matched to the right lender you access the same mainstream rates as an employed borrower.