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Contractor Mortgage Calculator
Want to know how much you can borrow for a mortgage as a contractor? Use our calculator below to find out.
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Author: Pete Mugleston - Mortgage Advisor, MD
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 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.
Speak to an expert about contractor mortgages
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0808 189 2301 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
Our mortgage repayment calculator can tell you how much your mortgage will cost you each month and overall. Enter the amount you’re borrowing, the term length and interest rate, and our calculator will do the rest.
Monthly Repayments:
Total amount paid at end of term:
Get started with an expert broker to find out how much they could help you save on your mortgage repayments.
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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.
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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.
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