Mortgages For IT Contractors

Everything you need to know about getting a mortgage as an IT contractor and how a broker can help you

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Home Income Types Mortgages For IT Contractors
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

In this article, we’ll explain how to get a mortgage if you’re an IT contractor, what you can do to give yourself the best chance of approval and why you should speak to a mortgage broker who works in this niche before applying.

Can an IT contractor get a mortgage?

Yes. There are lots of mortgage lenders willing to approve mortgages for contractors. And as an IT contractor, you’re in an industry that many providers view as secure.

Despite this, some mortgage providers still refuse to offer mortgages to people who are not on PAYE. It’s important you know which lenders to approach and, crucially, how to package your application correctly to match their lending criteria.

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How much can you borrow?

If you’re an established IT contractor with certified yearly accounts, lenders may use these to calculate your average income and work out how much you can borrow. If you don’t have certified accounts, some providers will accept SA302s from HMRC.

Alternatively, there are providers who use your day rate to calculate the maximum amount you can borrow.

Use our mortgage calculator to work out what your borrowing capacity might be.

Note, this is a guide only and you should contact a broker for a more accurate idea of how much you can borrow based on your individual circumstances.

Contractor Mortgage Calculator

Our mortgage calculator will tell you how much you can borrow, whether you work in an employed or self-employed capacity. Select your trading style below, enter the relevant details about your income and our calculator will do the rest.

You’re self-employed if you run your business for yourself and take responsibility for its success or failure

You could borrow up to 

Most lenders would consider letting you borrow

This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a mortgage broker for bespoke calculations if you have been contracting for less than 12 months, your contract is coming to an end, or there is uncertainty around your long-term employment.

This is based on a multiple of 3-4.5 times your income, a standard calculation used by the majority of UK mortgage lenders. You should speak to a broker for bespoke calculations if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.

Some lenders would consider letting you borrow

This is based on 5 times your income, a calculation only some lenders are willing to offer. You may struggle to find a lender who will offer this income multiple to an employed contractor without the help of a broker, and you should seek advice from one regardless if there is any uncertainty around your employment situation.

This is based on 5 times your income, a calculation only some lenders offer. You might need a broker to access this salary multiple and should take advice from one regardless if you’ve been self-employed for less than 2-3 years, have declining profits or fluctuating income.

A minority of lenders would consider letting you borrow

Only a small number of options are available for employed contractors who want to borrow based on this salary multiple. Few UK mortgage lenders offer mortgages based on x6 income under any circumstances, and you’ll almost certainly need the help of a specialist mortgage broker who knows this corner of the market inside out to access them.

Only a small number of options are available for self-employed contractors who want to borrow based on this salary multiple, as few mortgage providers are willing to offer 6 times salary deals. You’ll almost certainly need the help of a mortgage broker to borrow this amount.

Get Started with an expert broker to find out exactly how much you could borrow.

Mortgage lenders will typically calculate the maximum you can borrow by multiplying annual income by three, four or five times your annual income. This is fine for employees, but more difficult for self-employed applicants and contractors.

How a mortgage broker can help an IT contractor get a mortgage

Some IT contractors can get mortgage deals at the best rates on the market – but not necessarily with all lenders. This is because certain lenders prefer not to loan to anybody with fluctuating income, and their rates reflect this.

However, there are also lenders who understand the IT contractor market and are keen to lend money to borrowers who fit their risk profile and eligibility criteria.

For example, some lenders will take the gross value of a contract as evidence of income for IT contractors as they are deemed ‘professional specialists’ with job security.

Likewise, there are lenders who will assess applications from IT contractors working for an umbrella company in the same way as that of an employee.

A whole-of-market broker, like the ones we work with, will quickly assess your situation to determine which lenders match your circumstances. Then they’ll help you tailor your application to meet the provider’s requirements.

What are the eligibility criteria?

In addition to the standard eligibility and affordability criteria, some mortgage lenders also have eligibility criteria specific to contractors, including those in the IT sector.

These include:

  • Minimum trading period – Typically two years. It is possible to get a mortgage with fewer than two years of trading history, but you will have a smaller pool of lenders from which to borrow.
  • Minimum income – £50,000 per year with some lenders, £75,000 per year with others. Not all providers place a minimum income on this type of loan.
  • Contract length – The minimum acceptable contact length can be anywhere between three and twenty-four months. Many lenders will want to see evidence of renewal for contracts with less than six months left to run.
  • Minimum day rate – Typically £250.
  • Income gaps – Some lenders place a maximum number of weeks’ income gaps on the past twelve months (usually between six and twelve weeks).
  • If you operate as a limited company, some providers will insist you own 100% of the company.
  • Maximum loan to value – Varies between lenders but, where included, is usually between 80% – 95%.
  • Maximum loan – Some lenders will loan a maximum of £250,000 to IT contractors.

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Which lenders offer the best deals for IT contractors?

Halifax was one of the first major banks to offer contractor mortgages – available exclusively through intermediaries – and remains a forerunner when it comes to home loans for IT contractors.  

Other high street names offering this type of loan include:

  • Barclays
  • Nationwide
  • Santander (through intermediaries only)

But, in reality, there is no one-size-fits-all answer to this question. For example, if you’re an IT contractor with bad credit, the best lender for you may be different from that for someone earning the same money but with impeccable credit files. A mortgage broker with experience in this area will be able to help identify the right lender for your circumstances. 

How does IR35 affect your chances of getting a mortgage?

Being inside IR35 should not affect your chances of getting a mortgage, but it might determine which lender you should approach. This is because it affects how much tax you pay and how your income is calculated. As such, it will impact the way in which your affordability is calculated.

If you work as an IT consultant with several clients, you will need to consider whether each contract you have is inside or outside IR35.

Get matched with a broker who specialises in mortgages for IT contractors

When it comes to mortgages for IT contractors there are many variables and choosing the right lender can significantly increase your borrowing power. Going with the wrong lender, however, could see you pay over the odds for your mortgage or face rejection.

To avoid those pitfalls, our unique broker matching service will assess your circumstances and then partner you with an expert broker who is experienced in helping IT contractors in your situation get the best possible mortgage.

To arrange a free no-obligation chat with an advisor who specialises in this area, call 0808 189 2301 or enquire online.

Maximise your chance of approval with a specialist

Get Started Phone Icon 0808 189 2301

FAQs

You can, but only a handful of lenders will approve an application. As it is such a specialist product, realistically, you will need to apply via a specialist buy to let broker who has a network of contacts and can act as an advocate for your application. Through our matching service, we could even pair you with an advisor who has a strong track record of arranging these mortgages for IT contractors.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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