What is an IT Contractor mortgage?

An IT Contractor mortgage is a specialised product designed for those working on a freelance or contract basis in IT. These mortgages cater to the distinctions of contracting, allowing lenders to understand that while your income may appear unpredictable, it is often steady and reliable due to long-term contracts, retainer agreements, or established relationships with clients.

If you’re an IT contractor, you’re more likely to apply for a mortgage within this specialised range of products, which are tailored to your unique financial situation. The lenders who offer these mortgages understand that income earned through contracting can still provide a stable foundation for purchasing or remortgaging.

A Step-by-Step Guide to Applying for a Mortgage as an IT Contractor

If you’re new to the mortgage application process, don’t worry – we’ve made it easy for you to navigate:

How lenders view your income

As an IT contractor, your income may vary depending on the length of your contracts or the clients you work with. However, many lenders understand that your income is not as unpredictable as it may seem. They will consider the nature of your work, the duration of your contracts, and your relationships with clients.

• You must be working under a single contract.
• You should not be running a limited company that employs other contractors.

This tailored approach highlights the value these specialist lenders bring to IT contractors, recognising the unique nature of their work and income patterns.

What documents do I need?

Since IT contractors don’t always have the typical payslips and tax forms that salaried employees do, you’ll need to provide alternative documentation. Here’s what you might need:

• Business Accounts: Most lenders will ask for up to three years of business accounts, prepared or certified by a chartered accountant.
• SA302 Forms: If you submit a tax return as a self-employed individual, lenders may ask for SA302 forms (year-end tax calculations) to verify your income.
• Contracts or Invoices: If you’re currently working on a contract, lenders may ask to see your current contract or any invoices you’ve issued to clients as proof of ongoing work.

Additionally, we have access to lenders that specifically cater to IT contractors, treating them as employed rather than self-employed—even if they operate as sole traders or through limited companies. This unique feature is a major advantage for IT professionals, as it simplifies the mortgage process and opens access to better rates.

However, this flexibility is subject to certain criteria, such as:

• You must be working under a single contract.
• You should not be running a limited company that employs other contractors.

This tailored approach highlights the value these specialist lenders bring to IT contractors, recognising the unique nature of their work and income patterns.

Can IT contractors get a mortgage?

Yes! Many IT contractors are now able to secure mortgages, and in some cases, they may even qualify for higher loan amounts compared to similarly experienced PAYE employees ^[1]. The key is to work with lenders who understand the nature of your work and can offer products specifically designed for contractors.

Lenders now have more flexible underwriting, meaning they can assess your income and work history even if you don’t have standard payslips. Many contractors also operate as limited companies, which can further demonstrate their financial stability and ability to repay a mortgage.

How do I prove my IT contractor income?

Lenders use different methods to verify your income based on your working structure ^[2]. Here are some examples:

• Limited Company: If you run your IT contracting business through a limited company, lenders will typically base their calculations on the salary and dividends you draw from the company. Some more specialist lenders may assess your share of net profits instead, which could affect the amount you can borrow.
• Umbrella Company: If you’re working through an umbrella company, lenders will generally consider your salary or payslip from the umbrella company to assess affordability.
• Self-Employed: If you’re a sole trader or working in a partnership, lenders will typically ask for your business accounts and/or SA302 forms from HMRC.