HOW MUCH CAN A CONTRACTOR BORROW FOR A MORTGAGE?

How Much Can a Contractor Borrow for a Mortgage?

How Much Can a Contractor Borrow for a Mortgage?

Blog Article

One of the most common questions contractors ask is: “How much can I borrow?” The answer depends on your income, contract type, and how lenders calculate affordability.

Here’s what you need to know.

How Lenders Calculate Contractor Income

Specialist contractor-friendly lenders often don’t rely on traditional accounts. Instead, they calculate your income using a contract-based approach, like this:

Daily rate × 5 days × 46–48 weeks = Gross annual income

For example:
£400/day × 5 days × 48 weeks = £96,000

This can lead to a higher borrowing limit than if you were assessed based on salary and dividends alone.

Typical Borrowing Multiples

Most lenders will lend around 4 to 5 times your annual income (based on their affordability checks). Some high-street lenders cap at 4.5x, while specialist lenders may stretch to 5x or more.

Using the £96,000 example:
£96,000 × 4.5 = £432,000 borrowing potential

However, this amount can be affected by:

  • Credit history

  • Monthly outgoings

  • Existing debts or dependents

  • Type and length of your contract

What Reduces Borrowing Potential?

  • A short-term contract or recent career switch

  • Gaps in your contract history

  • High personal expenses or outstanding loans

  • Poor or limited credit history

Being well-prepared with documents and using a broker who understands the contractor landscape can help counterbalance these concerns.

Improve Your Borrowing Power

  • Secure a longer or renewed contract

  • Keep your credit score healthy

  • Limit other financial commitments

  • Use a specialist contractor mortgage adviser to present your case properly

Final Thoughts

As a contractor, you can often borrow just as much—or even more—than a permanent employee, provided your income is assessed correctly.

At Contractor Mortgage Solutions, we specialise in helping contractors unlock their full borrowing potential with lenders that understand how you work.

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