How to Prove Your Income as a Contractor for a Mortgage
How to Prove Your Income as a Contractor for a Mortgage
Blog Article
One of the biggest hurdles contractors face when applying for a mortgage is proving their income. Unlike salaried employees with regular payslips, contractors often have varying income, which can make lenders hesitant. However, with the right documentation and approach, proving your income as a contractor can be straightforward.
What Do Lenders Typically Look For?
Lenders want to ensure that you can afford the mortgage payments. While traditional employees can show consistent income via payslips, contractors need to provide a clearer picture of their financial stability. Here’s what lenders typically require:
Your current contract: Lenders want to see that you’re actively working and have secure earnings for the foreseeable future. A contract showing your day rate, hours worked, and contract duration will provide them with a solid foundation for assessing your affordability.
Bank statements: Lenders will often request 3–6 months of bank statements to see how your income flows. They’ll be looking for regular payments, so make sure to highlight any substantial deposits.
Tax documents: For those who’ve been contracting for a while, lenders may request your SA302 (a form from HMRC showing your taxable income) or tax returns for the last 1–2 years.
Invoices: If you’re a sole trader, providing a record of invoices can help show your average monthly or annual income.
What Happens If You’re New to Contracting?
New contractors or those who have switched from permanent work may not have a long track record of contracting income. Don’t worry — there are lenders who specialise in assessing new contractors and will consider other factors like:
Your industry experience
Your previous salary in permanent roles
The length of your current contract
This means that even if you’ve only been contracting for a few months, you may still be eligible for a mortgage, as long as you can show your day rate and contract stability.
Why Using a Mortgage Broker Helps
Proving your income as a contractor can sometimes be tricky, especially if you have irregular earnings. That’s why using a specialist mortgage broker like Contractor Mortgage Solutions can make all the difference. We understand the nuances of contract-based income and know which lenders will take a flexible approach to assessing your earnings.
Gather the Right Documents for a Smoother Process
Ensure you have:
Your contract and day rate
3–6 months of bank statements
Tax documents (if applicable)
Invoices (if you're a sole trader)
This will give you the best chance of being approved and can help speed up the process.
Contact Contractor Mortgage Solutions today to get expert help in proving your income and securing the best mortgage deal for your situation.
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