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If you contract through a limited company or an umbrella, the way your income is assessed can change your maximum mortgage by six figures. Contractor-friendly lenders can work from your gross day rate rather than your tax-efficient accounts, typically annualising it as day rate multiplied by five days, multiplied by 46 weeks. On a £500 day rate that is an assessed income of £115,000, even if your accounts show far less.
Contractor lenders assess income as day rate x 5 x 46 weeks, not your accounts
A £500 day rate can be assessed as £115,000 of annual income
Inside IR35 or umbrella? The right lenders still use your gross day rate
CIS workers can be assessed on gross payslips, some with just 3 months history
Placed correctly, contractors pay standard rates with deposits from 5%
How HTG Mortgages Can Help
We know which lenders use which formula, who accepts umbrella and CIS income, and how to package a contractor case so the underwriter sees your real earning power rather than your tax-efficient accounts. Start on our contractor mortgages page, or get in touch for a free, no-obligation chat. We reply within 2 hours, Monday to Friday.
How the Day Rate Calculation Works
Most contractor-aware lenders annualise your contract value using a formula along the lines of day rate x 5 x 46, with the 46 weeks allowing for holidays and gaps between contracts. Some use 48 weeks instead. A standard affordability multiple of around 4.5 times income (sometimes up to 5.5 times for higher earners) is then applied. For example, a £600 day rate assessed over 46 weeks gives £138,000 of annualised income, which at 4.5 times supports borrowing of over £600,000, subject to affordability and deposit.
Why PAYE-Style Accounts Undersell You
The traditional self-employed route assesses limited company directors on salary plus dividends from two years of accounts. Because most contractors deliberately draw a modest salary and limited dividends for tax efficiency, this route can dramatically understate what you actually earn. It is common to see a contractor whose accounts show under £50,000 of declared income but whose day rate annualises to three times that. Same person, same contract, wildly different mortgage. The day rate route also usually means less paperwork:
- Day rate route: signed contract, 3 to 6 months of bank statements, a CV and ID.
- Accounts route: two years of accounts or SA302s, tax year overviews and more.
Speak to an expert
Whether you’re buying your first home, moving house or remortgaging, HTG Mortgages is here to make the process as simple and stress-free as possible. I’ll compare mortgages from over 120 lenders, guide you every step of the way and help you find the right mortgage for your circumstances.
Inside IR35 or Umbrella? You Still Have Options
If you work inside IR35 through an umbrella company, mainstream lenders often assess your net umbrella payslips as if you were an ordinary employee, which cuts your borrowing after the umbrella margin and employer costs are deducted. Contractor-aware lenders will instead work from your gross contracted day rate, which can add tens of thousands of pounds to your maximum loan. Whether you are inside or outside IR35, the key is applying to the right lender with the right packaging.
CIS Construction Workers
If you are a subcontractor paid under the Construction Industry Scheme, several lenders will assess your gross CIS income from payslips or vouchers rather than your net profit after expenses. Some want as little as three months of CIS history. Assessing gross income typically supports 20 to 30 per cent more borrowing than the net-profit route.
What Criteria Should I Expect?
- Six to twelve months of contracting history, less if you have two or more years of employed experience in the same industry.
- A current signed contract with time remaining, or evidence of renewal.
- A deposit from five per cent upwards.
- Day rate minimums with some lenders for certain sectors.
- Fixed-term and zero-hours workers considered too, usually with twelve months of history and income averaged.
Do Contractors Pay Higher Rates?
Not when the case is placed correctly. Contractor mortgages with mainstream contractor-friendly lenders price at standard residential rates. Premiums only tend to appear where a case needs a specialist lender for other reasons, such as very short history or adverse credit. If you have moved beyond contracting, see our self-employed mortgages service.
Lender criteria and formulas correct as of August 2026 and subject to change. Your home may be repossessed if you do not keep up repayments on your mortgage.
Need Personal Mortgage Advice?
Every buyer’s situation is different. While this guide explains the general rules, the right mortgage for you depends on your income, deposit, credit history and future plans. If you’d like tailored advice, I’m here to help, with whole-of-market coverage.
