The Client
A contractor working across multiple contracts simultaneously, with good credit. Multiple income streams tend to complicate underwriting and cut down which lenders are worth approaching, but the client was looking to buy a residential property.
The Objective
To secure a mortgage that properly accounted for income from more than one contract, rather than a lender assessing him on a single contract alone and understating what he could actually afford.
The Situation
Some lenders advertise that they’ll consider multiple contracts, but in practice underwriters often balk once they see the combined hours involved, even where the work itself isn’t physically demanding. The same lenders will happily count overtime for an employed applicant working comparable hours on a single contract with extra hours on top – inconsistent treatment that turns up repeatedly in sectors like healthcare.
The Challenge
The client’s initial application ran well past the lender’s advertised 10-day turnaround, and after eight weeks in underwriting, the lender said it would only count the main contract. Their reasoning was that working 40 hours on the primary contract plus 20 on a retainer wasn’t feasible, despite the client already managing exactly that.
What We Did
Rather than continue with a lender applying that kind of blanket judgement, we moved the case to a specialist contractor lender that takes a more sensible view of contractor income, willing to consider up to three separate income sources where the case supports it.
The Solution
The new lender assessed both contracts together, using a day rate multiple on the more conservative side (day rate x 5 x 41, rather than the 46 some lenders use), but the resulting income figure still worked comfortably in the client’s favour.
The Outcome
The application went through with both contracts properly accounted for, after the original application had stalled for eight weeks over a lender’s refusal to count anything beyond the primary contract.
Conclusion
Contractor income assessment varies a lot more than most applicants expect, and not every lender that claims to consider multiple contracts actually follows through once underwriting starts. Most high street lenders treat contractors as self-employed unless IR35 status says otherwise, and the income multiple used, day rate direct or a multiple of it, makes a real difference to what’s achievable. As a whole-of-market broker, getting the right lender matched to the client’s actual working pattern from the outset avoided months of a case going nowhere.
Frequently Asked Questions
Can I get a mortgage with income from multiple contracts?
Yes, though not every lender that advertises this will follow through once underwriting looks closely at the combined hours. Some lenders will consider up to three separate income sources, provided the case is presented clearly from the start.
How do lenders calculate contractor income for a mortgage?
Approaches vary. Some use the day rate directly if it’s over a certain threshold, others apply a multiple of the day rate, commonly day rate x 5 x a working-weeks figure that differs by lender. The multiple used can significantly change what a contractor can borrow.
Why would a lender decline to count a second contract even after initially agreeing to consider it?
It usually comes down to the underwriter’s comfort with the combined working hours, even where the work itself isn’t physically demanding. This inconsistency is common and is one of the reasons lender selection matters so much for contractor applications.
Are contractors treated the same as self-employed applicants by mortgage lenders?
Mostly, yes, unless the contractor falls under IR35, which changes how some lenders assess the income. Most high street lenders default to treating contractors as self-employed regardless of the underlying contract structure.
Final Thoughts
UK Mortgage Broker is a whole-of-market broker helping clients throughout the UK and globally to secure funding on UK property. We are directly authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: 01628 969 500
Email: info@uk-mortgagebroker.co.uk
Related Pages
- Contractor Mortgages UK – whole-of-market advice on securing a mortgage using contract or day rate income.
- Can I Get a Mortgage in the UK? – how deposit, income and credit profile determine eligibility.
- How Lenders Actually Check Your Income – how contractor, self-employed and variable income get assessed differently by lender.
- Self-Employed Mortgages – accounts, SA302s and projected income for company directors, sole traders and contractors.
- Residential Mortgages – whole-of-market advice for main home purchases across the UK.