First Time Buyer Contractor

Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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First Time Buyer Contractor, Vantage Mortgages

First Time Buyer Contractor

Adam Messer tells us how the mortgage process works if you are a First Time Buyer and a contractor.

Is it harder to get a mortgage as a contractor if you’re a First Time Buyer?

It’s not necessarily harder, but there are certainly more things to consider. It’s all about income, which is quite easily demonstrated as a contractor if you’ve been doing it a little while.

It’s no different really to getting a mortgage as an employee or anything else. We’re just going to use different figures and different information. We’ll approach broadly similar lenders and borrow similar figures. It’s not harder, necessarily, it’s just different.

How long do you have to be a contractor to get a mortgage?

There’s no definitive timescale, because we’ve got lots of lenders to go to with various different criteria. However, less than six months might be an issue.

Even so, if you’re on a long contract for at least 12 months, I can think of a lender where that might be okay. Generally speaking, the longer you’ve been a contractor, the better. If it’s been 12 months, that’s great. There are lots of lenders we can go to.

One of the key questions is how much time you’ve got left on the contract. If it’s about to finish and you haven’t got anything else lined up, that’s going to make it tricky. Even if you’ve been a contractor for the last two years but your contract is finishing and you’ve not got another project lined up, it will be challenging.

Ideally, we want three months left on a contract. So that’s a factor, along with how long you’ve been doing it.

How much can I borrow for a mortgage?

We get this question on all the podcasts we do, and it probably can be slightly different for a contractor. We’re always going to take your income, give it to the lender and they’ll multiply it by certain amounts. They always factor in your outgoings and your situation, such as whether you have children, your debts and commitments. Then they’ll come up with an answer.

Even if you’re employed on a standard, basic salary, if you went to 10 lenders and asked them how much you could borrow, you’d get 9 or 10 different answers. Being a contractor is no different.

How much you can borrow really does depend on the lenders we go to because some are much more generous than others. They’re all going to annualise your contract income, whether you get paid hourly, daily or weekly.

Some lenders will take 48 weeks of that income, allowing for a few weeks holiday. If you earn over certain figures, you’ll get more generous lenders. They might take those figures and multiply them by five or even 5.5. Less generous lenders might calculate your income over 42 weeks and might lend you four to 4.5 times your income. So the amount can vary greatly.

How is a mortgage calculated for a contractor that is a First Time Buyer?

Generally lenders will multiply your contract amount up to get an annual figure. Most will use a certain number of weeks, perhaps 46 or 48, to get that number.

Potentially some will take the annual figure and then take a percentage of that. It varies from lender to lender. So the best thing to do is speak to someone like us, who can look at lots of different lenders to get the best answer for you.

What documents do I need to apply for a mortgage as a contractor and a First Time Buyer? How do I prove my income?

Whatever you’re doing, we’re going to need similar documents. We’re always going to need your personal bank statements, proof of deposit, and ID etc. If you’re buying with a partner or someone who’s employed, we will need their pay slips and things as well.

Some lenders will just consider you as self-employed. If you’ve been doing it long enough, you might be able to borrow as much as you need by using your income as a sole trader or limited company, where you payself a salary and dividend.

But generally speaking, the benefit of being a contractor is that we can use the value of your contract, not just what you pay yourself. So we will always ask for your current contract and depending how long you’ve been working on that, we might want your previous one as well. We might go back further to give ourselves the best choice of lenders.

If your contract is about to finish and you have another one lined up, we might want that too. Your contracts show your income, your employer and how long the project is. If you go through an umbrella company to manage IR35, you’ll usually get pay statements from them weekly or monthly – we might want the last few of those as well.

We’ll usually want bank statements for the account that money goes into, to match it all up for the lender. So there are a few extra things over and above the standard application, but nothing you won’t have.

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What if I have bad credit as a contractor looking at my first mortgage?

We have a lot of information about bad credit on the site already, so I won’t go into too much detail. Generally, it depends how bad it is. There are minor blips that you might get away with on high street lenders, and beyond that we can go to more specialist lenders that will also do contractor income.

We can generally find a lender for most people, and some lenders specifically go looking for this kind of business. You might have to pay for it, because the rate is going to be higher, but unless you were bankrupt six months or a year ago we can usually help. The odd missed payment or late payment, a CCJ or a default a few years ago won’t cause us too much of a headache.

The longer ago it was, the better. Time heals all wounds when it comes to credit. More recent things are trickier, but you won’t be limited more than anyone else just because you’re a contractor.

Can I get a Buy to Let mortgage as a First Time Buyer contractor?

Yes, you can, although Buy to Let mortgages for First Time Buyers are trickier to get at the best of times. Lenders do like you to buy a house to live in first. It’s not impossible – there are lenders we can go to for a contractor as a First Time Landlord.

It’s quite rare for First Time Buyers to look for Buy to Let, although I’ve seen more of it lately. People may not necessarily be able to afford to buy where they live and work, so they buy an investment property. Or they might live at home or live at work – there are all sorts of reasons why you might do that.

How can I improve my chances of getting a mortgage as a contractor and a First Time Buyer?

We need a little bit of history. What would be difficult is if you went from being an employed electrician, for example, to being an IT contractor, and then a month later you came to get a mortgage.

If you’re working in a completely different field and it’s early days of contracting, that’s going to be tricky. Once you’ve got a bit of history behind you then it shouldn’t really be anything to be concerned about.

The most challenging cases are the short term contracts. Let’s say you’ve done three months and now you’re on another three months. That’s probably not really long enough. We need a bit longer than that – either a bit more time passed, or a bit more left on the contract. Timing is a big one for contracting.

How do I apply for a mortgage as a contractor and a First Time Buyer? How can a mortgage broker help?

Just come and talk to me – I’ll do it all for you. It’s about knowing which lenders to go to – because there are some good high street lenders that do contractor mortgages, but not all of them will.

You might naturally think that a certain lender will help – or maybe you bank with a big lender, but they don’t actually do specific contractor mortgages. A broker will know who to go to and who not to.

We know what they’re going to want, the kind of business they like and what they don’t like. That’s the key reason to use a mortgage broker.



The information contained within was correct at the time of publication but is subject to change. Podcast recorded in May 2024.

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