For contractors earning on a day-rate or hourly basis, securing a mortgage can be challenging—especially from the start of a contract. This case study highlights how Mortgage Knight helped a contractor secure a mortgage by finding a lender who understands contract-based income.
Case Study Overview
Contractors in various fields—whether in IT, healthcare, construction, management, or analysis—often face hurdles when applying for a mortgage due to the variable nature of contract work. Mortgage Knight helped this contractor overcome these barriers by securing a lender willing to assess their income from day one of their contract, resulting in a successful mortgage approval.
Contractor Success: Mortgage Approval from Day One of Day-Rate Contract
Client Background
Employment and Income Situation: Our client, an IT contractor, recently started a new day-rate contract with a top firm. With a significant day rate, they were ready to purchase a home but faced challenges due to limited contract history. They needed a lender who could assess their day-rate income from the start of their contract, without requiring a lengthy employment history or multiple years of income records.
Challenges
Standard Lender Requirements for Contractors: Most lenders require a minimum contract history of six to twelve months, which made it difficult for this client to find a suitable mortgage product. They were seeking a lender who would recognise their professional background and the consistency of their day-rate income, regardless of the contract’s short history.
Solution
Tailored Mortgage Solution with Day-Rate Assessment: Mortgage Knight connected the client with a lender that specialises in contract-based income assessments. This lender was open to assessing the client’s income based on their current day rate, annualised to reflect a full year’s earnings. They accepted evidence from the client’s signed contract along with bank statements showing early payments, providing a fair and realistic assessment of the client’s financial standing.
Outcome
Approved Mortgage with Day-Rate Income from Day One: Thanks to this tailored approach, the client secured a mortgage with a competitive rate based on their day rate, starting from day one of their contract. This allowed the client to purchase their desired property without waiting months to build up an income history, demonstrating Mortgage Knight’s ability to meet the needs of contractors with unique income profiles.
Benefits of Day-Rate Contractor Mortgages
Immediate Access to Mortgage Products: Allows contractors to qualify for a mortgage as soon as their contract begins, bypassing standard waiting periods.
Higher Borrowing Potential Based on Annualised Day Rate: By calculating income based on the day rate, contractors often qualify for a higher loan than traditional salaried assessments might offer.
Flexible Lender Criteria for Contract-Based Professionals: Some lenders are experienced in evaluating income from signed contracts, making the process easier and more transparent.
Competitive Rates for Short-Term Contractors: Contractors working on shorter contracts can still access competitive mortgage rates that reflect their earning potential.
How Mortgage Knight Supports Contractors
Mortgage Knight specialises in helping contractors across industries find mortgage solutions that reflect their income structure. Whether you’re in IT, healthcare, construction, or management, we connect you with lenders who appreciate your unique earning potential. Contact us today to discuss mortgage options designed for contractors.
Frequently Asked Questions
Q: Can I apply for a mortgage as a contractor from day one of my contract?
A: Yes, some lenders are willing to work with day-rate contractors from day one of their contract. Mortgage Knight partners with lenders who understand the unique income structures of contractors.
Q: How do lenders calculate income for day-rate contractors?
A: Many lenders will annualise your day rate (e.g., day rate x number of working days in a year) to calculate your income. This can often lead to a higher borrowing potential compared to salary-only assessments.
Q: What documents are required to verify my income as a day-rate contractor?
A: Typically, you’ll need a signed contract showing your day rate, along with recent bank statements verifying contract payments.
Q: Are there specific mortgage products for contractors?
A: Yes, many specialist lenders offer tailored products for contractors, taking contract-based earnings into account and often providing competitive rates.
Professional Contractor Mortgage Guidance
If you’re a contractor looking for professional mortgage guidance, we’re here to help. Our specialist knowledge and lender relationships enable us to provide expert advice tailored to your situation.
Schedule your consultation today. We’ll discuss your circumstances, explain your options, and provide honest advice about the best approach for your contractor mortgage application.
