Securing a contractor mortgage can feel unnecessarily complicated. Whether you’re a paid a day rate, working through an umbrella company, on a fixed-term contract, or operating under CIS (Construction Industry Scheme), it’s common to assume that lenders will expect years of accounts, extensive tax documentation, and a long trading history. For many contractors, this belief becomes a barrier long before the mortgage application even begins.

But the reality is very different. UK lenders don’t assess contractors in the same way they assess traditional self-employed applicants. Instead of relying on declared salary, dividends, or retained profit, many lenders focus on the strength of your current contract alongside your earning potential (based on your day rate or fixed-term engagement), allowing your income to be annualised. This gives a far more accurate reflection of what you actually earn.

This guide breaks down exactly how contractor mortgages work, how lenders calculate your income, and what criteria you’ll need to meet depending on your current contract type. If you’ve been unsure about your eligibility because of your employment structure, you may find you can borrow sooner, and potentially more than you expected.

Defining Contractor Eligibility and Minimum History

Contractors are not in a single group in the eyes of lenders. Instead, they are categorised based how their income is structured and how tax is handled; with each lending category having its own criteria, documentation requirements and income calculation methods. Understanding where you fit makes it far easier to predict which lender will accept your application and what evidence they will expect. There are three main groups:

Day Rate Contractors

These contractors are paid a fixed rate per day or week, usually through their own limited company or via a recruitment agency.

• Principality requires day rate contractors to have a minimum gross annual income of £50,000.

Umbrella Company Contractors

Umbrella contractors are technically employed by an umbrella company, which handles PAYE tax, National Insurance, and any relevant deductions. Some lenders, such as Barclays, view these applicants as standard employees, while others apply contractor-specific rules.

Fixed-Term Contracts

These contracts are common in professional roles such as teaching, healthcare, engineering and consultancy. Although technically temporary, the continuity of employment is often strong enough that lenders treat these applicants as employed.

• The Co-operative Bank accepts fixed-term contracts with a minimum 12-month length, as long as at least 6 months remain.

Minimum History and Contract Requirements

Once a lender identifies your contractor type, the next step is to confirm your work history and remaining contractor term. This is where many applicants assume that barriers don’t actually exist.

Continuous Contracting History

Most contractor-friendly lenders require a minimum of 12 months continuous contracting history in the same profession.

• Aldermore requires a minimum of 12 months history or 24 months in the same line of work.
• Bath Building Society requires 24 months contracting experience for fixed-term contracts.

Remaining Time on Your Current Contract

Lenders want to see that income will continue for a reasonable period. Typically, this requirement is a minimum of 3-6 months remaining on your current contract.

• Accord notes that if fewer than 2 months remain, you must provide evidence of a renewal or a new contract.
• Furness requires at least 6 months remaining if you have moved to a new employer.

Gaps Between Contracts

Contractors are expected to have natural breaks between assignments. Lenders differ in what they view as “normal”.

• Accord views gaps of up to 8 weeks as standard.
• Barclays accepts gaps of up to 6 weeks between contracts.
• If a gap is greater than 6 weeks in the last 12 months, Aldermore requires a full 24-month contract history.

Day 1 Lending

Some lenders will consider applicants on the first day of a new contract, provided the applicant can show experience in the same field.

• Vida Homelands considers Day 1 contractors with a least 1 year of experience in the same profession.
• Beverley Building Society allows Day 1 mortgages for medical and NHS professionals with 12 months relevant experience.

Income Calculation Methodology for a Contractor Mortgage

This is the heart of contractor lending. Instead of using salary, dividends, or retained profit, lenders often annualise your contract income, significantly increasing borrowing power compared to traditional income assessments.

The standard income calculation formula is Day Rate x 5 Working Days x 46-48 Working Weeks. However, different lenders may use different multipliers depending on the associated risk, including where the contract is salaried rather than day rate or where contractors are treated as self-employed.

For example:

• Principality – Day Rate x Number of Days Worked x 48 Weeks.
• Saffron (Day Rate/Short Term Contractors) – Day Rate x 5 Days x 48 Weeks.
• Aldermore (Day Rate/Self-Employed) – Daily/Weekly Rate x 46 Weeks.
• Atom Bank (Professional Contractor) – Uses the lower of Day Rate x 5 x 46 Weeks OR Supplied Annual Income.
• Dudley Building Society (Self-Employed) – Day Rate annualised based on assumed 48 week working year / 5-day working week.
• Bank of Ireland (Affordability) – 80% of gross contract income.
• The Tipton (Fixed-Term PAYE) – Current Day Rate x 240 Working Days.

Specialised Income Types and Restrictions

Not all contractor income is treated equally. Lenders will apply different rules to assess both the stability and the reliability of your earnings, depending on how you are paid. Understanding these distinctions is essential, as the right classification can open up far wider borrowing options.

Constructions Industry Scheme (CIS) Contractors

CIS workers can fall under either PAYE or self-employed criteria depending on how tax is deducted, meaning criteria can differ significantly between lenders.

• Hinckley & Rugby (Income Flex) treats CIS workers as PAYE if tax is deducted at source.
• Atom Bank and Bath Building Society treat CIS applicants as self-employed, requiring 2 years of accounts.
• Saffron Building Society requires at least 12 months experience in the same line of work, even if the current CIS engagement is shorter.

Umbrella Company Contractors

Umbrella income is one of the most inconsistently assessed areas in contractor lending, with some lenders excluding it entirely.

• Bath Building Society explicitly does not accept umbrella income, regardless of applicant profile.
• Bank of Ireland accepts umbrella applicants but applies a significant adjustment, taking 80% of gross income after all deductions.
• Barclays treats umbrella applicants as employed, with income assessed using the last 3 months payslips.

Zero-Hours Contracts

Zero-hours contracts have become more common across several industries, but lenders assess them cautiously due to fluctuating work patterns.

• The Co-operative Bank explicitly does not accept zero-hours income.
• Bath Building Society requires a minimum of 36 months earning history for applicants on zero-hours contracts.
• Dudley Building Society and Foundation Home Loans are m0re flexible and will accept zero-hours workers.
• Aldermore excludes seasonal and temporary work, even if contract based.
• United Trust Bank accepts zero-hours workers with a minimum of 12 months work history.

Contractor Mortgage LTV, Income Multiples, and Evidence

Once your contractor type and income structure are established, lenders turn to the practical elements of affordability; how much you can borrow, how much deposit is needed, and what documentation is required to support your application. Contractor lending is often more flexible than people expect, but it also comes with tighter controls when income is variable or non-standard.

Loan-to-Value Limits

Loan-to-Value (LTV) Limits determine how much you can borrow relative to the property’s value, and these limits vary widely across lenders depending on the type of contracting work and perceived instability.

• Hinckley & Rugby allows lending up to 95% LTV through their Income Flex range, which includes various contractor income types.
• Bank of Ireland supports up to 90% LTV for contractors earning over £50,000 per year.
• Barclays accepts day-rate income and allows borrowing up to 90% LTV provided self-employed contract criteria are met.
• Scottish Building Society restricts fixed-term contractors (non-medical professions) to 80% LTV.
• Beverley Building Society caps all contractor lending at 80% LTV.
• Vernon Building Society requires a minimum income of £75,000 for its professional contractor products, lending up to 80% LTV.
• Furness Building Society caps contractor borrowing at 75% LTV unless classified as self-employed.

Income Multiples

Loan-to-Income (LTI) multiples determine the maximum amount a lender will offer based on your calculated contractor earnings. While standard residential lending often cap this at around 4.49x income, many lenders offer enhanced multiples for strong contractor profiles; especially day-rate contractors and high-income professionals. This is one of the biggest advantages of contractor lending: your borrowing power is based on current earning potential, not historic tax returns.

Examples include:

• Accord Mortgages offers 5x income for applicants earning over £50,000, up to 90% LTV.
• United Trust Bank (UTB) provides income multiples up to 6x income to 85% LTV.
• Saffron Building Society offers its Professional Income Boost product allowing up to 6x LTI for qualifying professional contractors (e.g., investment bankers, accountants) up to 80% LTV.
• Scottish Building Society supports 5x LTI for both sole and joint income applicants in professional roles, up to 95% LTV.

Required Evidence (Packaging)

Contractor mortgages are detail-sensitive. Even when affordability is strong, lenders will not proceed without thorough documentation proving income continuity, contract stability, and payment history. The exact requirements depend on contractor classification, but most lenders ask for:

Contracts

• A copy of the current contract.
• Previous contracts covering the last 12 months.

Payslips and Bank Statements

• Umbrella contractors: typically 3 months’ payslips.
• Day-rate contractors paid via agency: bank statements showing contract income credits.
• Weekly-paid contractors: 4-8 weeks’ payslips depending on the lender.

P60 and CV

• Many lenders request the most recent P60 to verify historic employment or contracting status.
• Some lenders, such as Furness, require a CV covering at least 2 years’ work history, demonstrating consistency and career relevance.

Limited Company Contractors (PSC)

Where a contractor operates through a personal service company: 

• Lenders may request SA302s and Tax Year Overviews, especially if income must be cross-verified.
• If the day rate route is not used, two years’ company accounts may be required.

High Street vs Specialist Lenders

While contractor mortgages are more widely understood than they once were, there is still a clear divide between how high street banks and specialist lenders assess contractor income.

Most high street lenders rely heavily on automated affordability systems and standard employment classifications. Even where contractor policies exist, they often come with firm rules around minimum income levels, contract length, and structure. For example, some banks will only use a day-rate calculation if the applicant is the sole director and shareholder of a limited company, earning above a specific daily or annual threshold. Others will accept umbrella company income, but only assess it using recent payslip, treating the applicant as PAYE rather than a contractor with future earning visibility. This rigidity can create challenges for contractors whose income is strong but doesn’t fit neatly into standard templates.

Specialist lenders and building societies take a different approach. Many rely on manual underwriting rather than automated scoring, allowing them to assess the wider context of a contractor’s employment history. This can include recognising career continuity rather than uninterrupted contracts, accepting Day 1 contracting in the right circumstances, or annualising income based on a realistic working year rather than historic accounts.

Specialist lenders are also more likely to differentiate between contract types, professions, and industries, offering tailored criteria for different professions. This flexibility often comes with trade-offs; such as lower LTV caps or stricter evidence requirements; but it can make the difference between approval and decline where mainstream options fall short.

Matching Your Contract Income to the Right Lender

Contractor mortgages are built around three core principles: how your income is recognised, how consistent your contracting history is, and how your employment structure is classified by lenders.

The challenge is not whether contractors can get a mortgage, it’s that lender criteria vary widely. These differences make a single “yes or no” answer impossible without a full review of your circumstances.

This is where a specialist broker adds real value. At AALTO Mortgages, we assess the full picture and match this to lenders whose criteria genuinely align with your situation, ensuring your contract income is assessed in the most favourable way possible, without unnecessary restrictions.

As contractor lending continues to evolve, having expert guidance ensures your income is maximised, your application is correctly packaged, and your mortgage options remain as flexible as your working life.