How Much Can Contractors Borrow for a Mortgage?
How Much Can Contractors Borrow for a Mortgage?
Blog Article
One of the most common questions contractors ask is, “How much can I borrow?” Unlike traditional employees, contractors are assessed differently—often in ways that can increase your borrowing potential.
Here’s what you need to know about how lenders calculate borrowing power for contractors.
1. The Contractor Income Formula
Many contractor-friendly lenders use a simple calculation based on your day rate:
Daily Rate × 5 (days per week) × 48 (weeks per year)
For example, if you earn £350 per day: £350 × 5 × 48 = £84,000 annual income
Lenders may then apply a multiplier, usually between 4 and 5 times your annual income, depending on your credit history, financial profile, and expenses.
So, you could potentially borrow between: £336,000 and £420,000
2. What Affects Your Borrowing Limit?
While your day rate sets the foundation, lenders also look at:
Credit score
Existing debts
Monthly expenses
Dependents and financial commitments
Length of your current contract
Work history as a contractor
Strong finances and a clean credit file can push you toward the higher end of the borrowing range.
3. Limited Company or Umbrella?
Whether you work via a limited company or through an umbrella company, your income can still be assessed using your contract rate with the right lender. Some mainstream lenders, however, may assess based on salary and dividends only—often resulting in a lower borrowing figure.
That’s why it’s vital to use a specialist contractor broker who works with lenders that understand your structure.
4. Getting an Accurate Estimate
The best way to find out what you can borrow is to get a contractor-specific mortgage assessment. At Contractor Mortgage Solutions, we assess your income, review your paperwork, and give you a realistic borrowing figure—before you apply.
Final Tip
Your borrowing potential as a contractor may be higher than you think—but only if you go through the right channels.