How contractor income may be assessed
Some lenders use accounts or tax calculations. Others may take a day rate, multiply it by an assumed number of working days or weeks, and use the result as annual income.
The contract route can be helpful where company drawings do not reflect the value of the work, but it is not available in every occupation or structure.
What will the lender want to see?
The underwriter is looking for evidence that the income is established and likely to continue.
- Current signed contract
- Contract rate and hours or days
- Time remaining and renewal expectations
- History of previous contracts
- Relevant industry experience
- Bank statements showing payments
What about gaps between contracts?
Short, explainable gaps are not always a problem. Frequent or lengthy gaps may require more evidence or steer the case toward an accounts-based assessment.
Umbrella and fixed-term workers
Applicants paid through an umbrella company or employed on fixed terms do not all fit the same lender category. Holiday pay, deductions, allowances and contract history may influence usable income.
Frequently asked questions
Can my day rate be used?+
Some lenders use a day-rate calculation, subject to occupation, contract history, remaining term and payment structure.
Do I need two years of contracting?+
Not always. Relevant previous employment or a strong contract can help with certain lenders.
Can IR35 status affect the mortgage?+
It can affect how income is evidenced and which lender route is suitable, although it does not automatically prevent borrowing.