Contractor Mortgage Calculator

Want to know how much you can borrow for a mortgage as a contractor? Use our calculator below to find out.

Home Mortgage Calculators Contractor Mortgage Calculator
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 18, 2024

Getting a mortgage as a contractor can be slightly complex as the amount you can borrow may differ depending on whether you’re classed as employed or self-employed.

Our contractor mortgage affordability calculator will help simplify things for you and provide more clarity as to what size mortgage you could qualify for.

Contractor Mortgage Affordability Calculator

Our contractor 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.

How contractor mortgage affordability is calculated

Some mortgage lenders may simply use an average of your last three years’ earnings if you’re a self-employed contractor. However, these days a lot of lenders will look at using your ‘day rate’ and number of days per week this applies and then multiplied by 48 weeks in the year (to take account of holidays etc).

For employed contractors you can use your monthly pay-as-you-earn income (plus any bonus’ and commission) as an annualised figure. Mortgage lenders will then apply their standard affordability criteria using a multiple of your income, based on your annualised day rate calculation or employed earnings.

Most lenders use an income multiple of 4-4.5 times your annual earnings, but some may go as high as 5 times earnings or possibly even 6 times  if you’re regarded as a professional contractor such as a barrister or a locum doctor.

So, for example, if you’re a self-employed contractor on a day rate of £200 across 5 days a week then this translates to an annual figure of £48,000. Based on the typical income multiple of 4.5 times you could borrow up to a maximum of £216,000 with most mortgage lenders.

If you’re a relatively new contractor – don’t panic! If you get in touch with us we can introduce you to mortgage brokers who have experience arranging mortgages for people who have just started trading this way.

Maximise your chance of approval with specialist advice from a mortgage expert.

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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

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How our contractor mortgage calculator works

Our contractor mortgage affordability calculator is really simple and straightforward to use.

No personal details are required, all you need to input is:

  • Whether you’re classed as employed or self-employed
  • If employed – input your monthly income
  • If self-employed – input your day rate and number of days per week this rate applies

And that’s it! Now hit the ‘calculate’ button and you’ll see three different income multiple examples illustrating the amounts you may be able to borrow for a mortgage.

Calculate your monthly repayments

Now you can use these different amounts to work out what your monthly mortgage repayments could be by using our calculator here. Simply input the mortgage amount you’re looking to borrow along with an interest rate and loan term.

Mortgage Repayment Calculator

This calculator can tell you the monthly and overall cost of your mortgage, based on the loan amount, interest rate, and term length.

Enter the amount you're borrowing
£
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms
years

Your Results:

The monthly repayments on a mortgage would be

The total amount paid at the end of your mortgage term would be

Get started with an expert broker to find out how much they could help you save on your mortgage repayments.

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We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

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Will the calculations be any different for limited companies?

Yes, if you’re contracting through a limited company you’ll be able to use any salary and dividends when evidencing your annual salary for the purpose of calculating how much you can borrow.

If your income mainly consists of retained profits it would be advisable to speak with a mortgage broker before applying with a lender as very few would accept this for affordability purposes.

A broker can identify those lenders who will in advance, saving you time and potentially avoiding a situation where your application is declined.

What you should do next

Now you’ve used our contractor mortgage calculator you should now have a clearer idea of how much you may be able to borrow and are ready to take the next steps towards getting the mortgage you need.

Rather than approaching lenders directly the shrewd move now is to speak with a mortgage broker who has experience arranging mortgages for contractors. They’ll be able to identify the right lenders who tend to offer mortgages in these circumstances on your behalf.

So, get in touch or give us a call on 0808 189 2301 and we’ll arrange for a specialist advisor to contact you straight away.

FAQs

For buy-to-let mortgages your personal income isn’t a key factor (although most lenders may not accept applications from someone with annual income less than £25,000).

The main factor would be the amount of rental income the buy-to-let property can generate over and above the mortgage repayment. Most lenders would expect the rent premium to exceed the mortgage repayment by between 125% and 145%.

Ask a quick question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Contractor Mortgages

Ask us a question and we'll get the best expert to help.

Our Brokers

Get in touch today

Make an enquiry and we'll arrange for an experienced mortgage broker we work with to contact you straight away.

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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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