Contractor and day-rate mortgage
A contractor mortgage lets you borrow based on your day rate rather than company accounts. Contractor-friendly lenders annualise the rate (day rate times days per week times weeks per year, often 46 to 48) to set your income. That usually gives a much higher, fairer figure than being assessed as self-employed on net profit or as a director on dividends. You normally need a current contract and a short track record in the same field.
Why the day-rate method exists
A contractor working through a limited company often pays themselves a low salary and modest dividends, leaving profit in the company. Assessed as a director on salary plus dividends, they look low-income. Assessed as a sole trader on net profit, the same. But their actual earning power is the day rate. Contractor lenders cut through this by annualising the rate directly, which is usually the most generous and the most accurate reading.
A worked example
A £400 day rate, five days a week, at 48 weeks a year, is assessed as about £96,000 of income, even if the accounts or tax return show far less because profit was retained or the year was part-complete. The lender lends against the £96,000. The same applicant on a dividends basis might be offered a fraction of that.
What lenders want to see
- A current contract stating your day rate, with some time still to run.
- A track record in the same field, commonly around 12 months.
- Recent bank statements showing the contract income arriving.
- A clean credit history and a normal deposit.
Common questions
How is a day rate turned into an income?
A common approach is to multiply your daily rate by the number of days you work in a typical week, then by a set number of weeks a year (often 46 to 48, to allow for holiday and gaps). So a £400 day rate at five days a week and 48 weeks is assessed as roughly £96,000. The exact multiplier varies by lender.
Do I need years of accounts as a contractor?
Often not. Contractor-friendly lenders assess you on the strength of your current contract and day rate rather than on company accounts or net profit, which usually understate a contractor's real earnings. Some will lend with only a short time left on the contract.
How long do I need to have been contracting?
Many lenders want to see a track record in the same line of work, commonly around 12 months, though some accept less if you moved straight from employment in the same field. A short, explainable gap between contracts is usually fine.
Does it matter if I contract through my own limited company?
No. Contractor assessment looks at the day rate, not how you are paid. That is often better than being assessed as a company director on salary plus dividends, which can badly understate a contractor's income.
Founder, MortgageExplained, MortgageExplained
Adam spent nearly a decade as a mortgage adviser at Just Mortgages, with further experience in commercial finance. He is CeMAP and CF qualified. He built MortgageExplained to do one thing well: explain mortgages in plain English, then introduce you to a regulated broker when you are ready. Every page is written and reviewed by Adam.
Last reviewed: 29 June 2026