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IT contractor mortgages

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 6, 2023

Fact Checked By:
David Nicholson - Finance Editor

IT contractor mortgages

You’re here because you are an IT contractor searching for a mortgage and this guide will help you understand how to get an IT contractor mortgage whilst explaining what lenders look for in your mortgage application.

You may have used an online contractor mortgage calculator to estimate how much you can borrow, but still, you would rather speak with a specialist contractor mortgage broker who offers this mortgage advice daily.

You are in the right place when you click the link below and we will introduce you to a mortgage lender who provides contractor mortgages.

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Is it easy to get a mortgage for an IT contractor?

An IT contractor mortgage loan, the same as all mortgages for contractors, is now easier than ever to obtain if you are self-employed. In recent years, many mortgage lenders have relaxed their lending criteria to allow self-employed people to meet affordability or eligibility criteria therefore finding the right contractor-friendly lender is key to getting the best mortgages for contractors.

Some mortgage lenders have more lending criteria than others. It will help you get the loan you want. You could use a self-employed mortgage calculator online to estimate how much you can borrow and then go to a specialist broker who specialises in arranging mortgages for self-employed contractors. This is the best way to get a mortgage at competitive terms. You will be able to find out which lenders are most likely to approve your application.

Contact us to find out how we can match you up with an expert who specialises in mortgages for contractors.

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Do contractors have access to specialist mortgages?

Yes, some lenders offer mortgage products for contractors and self-employed people and some even have products designed specifically for certain professions, such as IT professionals. Contractor lenders will only consider your contract rate when determining how much you can borrow which will be considered and calculated fairly if you have a weekly or daily contract rate.

If your credit score is good and you aren’t a risk to the company, you will be able to borrow money at the same interest rate as a PAYE worker.

How can I get an IT contract mortgage?

Although getting a mortgage as an IT contractor can be more complicated than if you were a permanent employee or a PAYE earner, it is possible to take steps to ensure you get the best competitive mortgage deal.

  • You should provide as much proof of earnings as possible. Bank statements, tax returns, and invoices can all be used to prove your income and help a lender determine your eligibility and affordability.
  • You will need your complete business accounts and financial statements to obtain a mortgage as a limited company director.
  • You can provide complete documentation of all your contracts, including certificates of IT qualifications and examples from previous experience.
  • If necessary, improve your credit score before applying. Pay off any outstanding debts that you can afford to settle. And, if possible, reduce your spending during the three months preceding your application for your mortgage.
  • You can save for a higher loan. The more you deposit, the better your chances of getting favourable rates.
  • A joint mortgage or application with a guarantor will help you obtain your desired mortgage.
  • Our specialist brokers will be able to identify lenders specialising in IT contractors mortgages. We will save you time, hassle, and money throughout your mortgage lending process.

We’ll be happy to introduce you to the experts suitable for you as our mortgage brokers are experts in all market aspects and have access to lenders throughout the UK. They will assist you in finding the right lender and will work with you to prepare the application and any supporting documents to receive the best rate possible.

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What happens if my company is a limited one?

Some lenders may not approve your application if you are an IT contractor with a limited company as most lenders will consider only salary and dividends when determining how much money you can borrow, by assessing a company. If your company is financially strong, but your salary is low, it may be worth looking for a lender to examine your full business accounts to determine your financial viability.

When presenting bank statements or financial records, you must distinguish between your own and your company’s money. You won’t be able to count any funds you have saved for costs like taxes and VAT towards the assets you own.

What documents do I need to submit my application?

Many lenders today are more conscious of less traditional working methods and will only require a photo ID, proof of address and a copy of your current contract. They also need three months’ bank statements.

However, if you apply with a less forward-thinking lender, you might need additional documentation, such as:

  • Photo ID – Your passport or driving licence
  • Evidence of address – A utility bill, council tax bill, or bank statement can be used as proof.
  • Limited company accounts – If you are a director of a limited business, you will need two years of accounts. However, some lenders will allow self-employed mortgages based on one year of accounts.
  • Personal tax returns – A three-year SA302 and HMRC tax overview are ideal. However, if you only have been contracting for one year, you might be able to find a lender who will accept only one year’s SA302
  • You should have signed contracts covering the past 12 months. These contracts should include your start date, along with the rate you were paid, and include the expiry date. Rolling contracts are also acceptable.
  • Bank statements are available in a download version but should only cover the last three months’ salary. Also, you will need to provide evidence of bank statements for the business.
  • The proof of deposit is a statement about your investment or savings account. You would need a signed letter from a family member if your deposit were a gift from them.
  • Life insurance and other protection policies – If you have life insurance or income protection insurance, lenders may want to see proof of that. A copy of the policy summary is sufficient.

Mortgage brokers can help you create a strong application and advise you on how to best document the lender for which you are applying. Begin your journey here today:

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What rates are possible?

Rates you can receive as an IT contractor will vary depending on which mortgage provider you choose and the risk you may pose in lending.

These are the factors that will affect your final rate:

  • Credit rating – If you have poor credit, you may still be eligible for mortgages. However, the interest rates you can obtain will be higher to help the lender compensate for their risk.
  • The amount of deposit you have – The more money you deposit, the less you will need to borrow. This will reduce the risk that the lender may take by approving your application.
  • You can secure the best rates by having three years’ worth of financial records. Although you may be eligible for a mortgage with less than three years of financial records, rates will be more competitive if you have the correct accounts to support your affordability.

As we have already mentioned, if you have a strong credit score, good deposits, and business accounts, it should be possible to obtain rates comparable to what an employed borrower could get. A specialist broker is a great way to ensure you get the best rates.

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Which are the best lenders?

It all comes down to the lender that has the best lending criteria for you. You will get the best rates if you find a lender to assess your income and make the best possible affordability assessment.

Halifax mortgage available for IT contractors

Halifax was the first lender to ease its lending policy to evaluate affordability via salary and dividends. Their lending policy is flexible. Even if you’ve only been contracting for a brief period and don’t have any prior accounts, it won’t stop you from applying.

They offer mortgage underwriting for all types of contract workers.

Contractors will find this all very encouraging, but… You must have worked in the same field for at least two years before you began contracting.

Talk to an expert mortgage broker to ensure you get the best rates for your situation. We can help you connect to one of our experts free of charge.

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Is there a mortgage calculator that I can use?

Many mortgage calculators are available online, but no self-employed mortgage calculator will provide accurate information about how much you can borrow or what your mortgage payment is likely to be. These sums will depend on your mortgage terms, provider, and the rates that you can get.

Ask an expert broker for advice.

You can contact our mortgage brokers, regulated by the financial conduct authority, when you click the link below. Whether you have a contractor income or are a sole trader, we can match you with a suitable loan provider.

Contact us now to get started with your application

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