How Contractors Can Increase Their Mortgage Borrowing Power
How Contractors Can Increase Their Mortgage Borrowing Power
Blog Article
As a contractor, you might be surprised to learn that you can sometimes borrow more than a traditional employee—if your income is presented correctly. Here's how to boost your mortgage borrowing power and improve your chances of securing a higher loan amount.
1. Use Your Gross Contract Rate
One of the biggest advantages contractors have is being able to use their daily or hourly contract rate for mortgage affordability calculations.
Most contractor-friendly lenders use this formula:
Daily Rate × 5 (days/week) × 46–48 (weeks/year)
Example: £450/day × 5 × 46 = £103,500 annual income
This often results in a higher borrowing figure than using salary and dividends alone.
2. Maintain Consistent Work History
Lenders prefer stability, so showing 12 months or more of uninterrupted contracts strengthens your application. If you have gaps, be ready to explain them—especially if they were planned (e.g. holidays or between roles).
3. Reduce Outstanding Debts
Mortgage lenders assess your affordability by looking at your outgoings as well as your income. By:
Paying off credit cards
Closing unused accounts
Settling personal loans
You can improve your debt-to-income ratio, which could allow you to borrow more.
4. Maximise Your Credit Score
Your credit score impacts not just approval, but also how much you can borrow. To improve your score:
Make timely payments
Stay below 30% credit usage
Avoid unnecessary credit applications before applying
5. Work With a Specialist Broker
A contractor mortgage broker knows how to present your income accurately and favourably to the right lenders. They’ll ensure you’re matched with lenders who understand contracting and won’t penalise you for not having a “typical” job.
Final Thoughts
Contractors can absolutely increase their mortgage borrowing power—it just takes the right preparation and expert guidance. At Contractor Mortgage Solutions, we help you maximise what you can borrow while finding the most competitive deals.