How do contractors get a mortgage when they're paid through a limited company?
Direct Answer
Getting a mortgage as a UK contractor is entirely achievable — but you must approach it correctly. High-street lenders typically assess income using your salary + dividends shown on SA302 tax returns, which often dramatically understates a contractor's real earning power. Specialist contractor mortgage lenders instead use your annualised day rate (daily rate × 5 days × 46–48 weeks) to calculate affordability. On a £500/day rate, this gives an assessable income of £120,000–£125,000 — far more than a typical salary + small dividend combination.
Why high-street lenders get it wrong for contractors
Most high-street bank mortgage advisors assess affordability using payslips and P60 for employed applicants — and 2–3 years of SA302 tax returns for self-employed/contractors. This dramatically understates contractor income.
The SA302 problem — same person, massively different outcome
High-street bank (SA302 only)
Contractor taking £12,570 salary + £40,000 dividends = £52,570 on SA302
Income multiple 4.5× → Max £236,000
Specialist contractor lender (day rate)
Same contractor on £500/day = £120,000 assessable income
Income multiple 4.5× → Max £540,000
Gap: £304,000 difference — same person, same income, different lender
How contractor-specialist lenders assess income
The day rate method
Daily rate × 5 days × 46 weeks (some lenders use 48 weeks)
Example: £450/day × 5 × 46 = £103,500 assessable income
Income multiple of 4.5× = £465,750 maximum borrowing
No SA302 required as primary income evidence — current contract and business/personal bank statements suffice.
Requirements for day rate assessment
Current contract (usually at least 3 months remaining; some lenders accept less)
Minimum 12–24 months of continuous contracting history (varies by lender)
At least 2 years of Ltd company trading (required by some lenders)
Clean credit history
What documents contractors need for a mortgage
For day rate assessment
Current contract (start date, end date, daily rate, client name)
3–6 months of business bank statements
3–6 months of personal bank statements
Proof of previous contract history (prior contracts or accountant's letter)
Payslips or dividend records
For SA302 / traditional assessment
2–3 years of SA302 tax calculation documents (download from HMRC online account)
2–3 years of tax year overviews
3–6 months of personal bank statements
3–6 months of business bank statements
Latest set of company accounts
Always required: Proof of ID and address + evidence of deposit source
Lenders who understand contractors
The landscape changes — always verify current criteria with a broker before applying.
| Lender type | Income assessment | Min. history | Notes |
|---|---|---|---|
| Contractor-specialist lenders | Day rate × 5 × 46 | 12 months | Various lenders offer contractor policies |
| Building societies (specialist) | Day rate or SA302 | 12–24 months | Often more flexible on gaps between contracts |
| High-street banks (standard) | SA302 only | 2–3 years | Most restrictive for contractors |
| Specialist mortgage lenders | Day rate, flexible | 6–12 months | Access via broker only — not direct |
Contract gaps — does time between contracts hurt?
Under 4–6 weeks: Most specialist lenders overlook this entirely
1–3 months: Acceptable to many specialist lenders with a letter of explanation
3–6 months: More restrictive — some lenders require 12 months of renewed contracting before applying
Currently between contracts: Most lenders require an active contract before proceeding
Timing your mortgage application while you have an active contract — ideally with 6+ months remaining — significantly improves your options.
The role of your accountant and why broker + accountant matters
A specialist contractor mortgage broker works alongside your accountant to navigate your application correctly from the start.
What the broker does
Structures the evidence pack correctly (contract history letter, accounts certification)
Accesses lenders whose contractor policies are not available direct to public
Matches your profile to the right lender before applying (protecting your credit score)
What the accountant does
Provides certified accountant's letter confirming income, company health, and trading history
Advises on whether to extract more salary/dividends to improve SA302 (useful 12–18 months before applying)
Confirms retained profits and company financial health for lenders who check
The accountant–broker connection that can save you thousands
Some accountancy firms have established relationships with specialist contractor mortgage brokers — meaning you can get a warm referral to a broker who already understands Ltd company income structure, without paying a fee.
Fee-free mortgage brokers are paid by the lender, not the client. When comparing accountants, it is worth asking whether they have a broker relationship — this can save significant time and stress when you come to buy or remortgage.
Cost to you for broker advice: £0 (broker paid by lender)
IR35 and mortgages — an important interaction
If your recent contracts have been inside IR35 (PAYE via umbrella), lenders treat this as employed income — straightforward assessment but potentially lower than your day rate.
Outside IR35 income
Assessed via day rate or Ltd company accounts — maximises borrowing potential
Inside IR35 (umbrella) income
Assessed via payslips/P60 — easier for lenders to understand but often lower assessable income
Contractors with a mix of inside and outside IR35 income should use a specialist broker to structure the application to show total income accurately.
Tips for contractors planning to get a mortgage
Start 12–24 months before you need the mortgage — give your accountant time to structure income in a way that improves your SA302 if needed
Do not take unusually low salary + dividends the year before applying — it artificially reduces your SA302 income
Keep your Ltd company accounts up to date — a lender seeing accounts filed 6 months late raises red flags about business management
Maintain a clean credit file — check with Experian, Equifax, and TransUnion at least 6 months before applying
Use a specialist contractor mortgage broker — not a generalist or a high-street bank directly
Ask your accountant if they have a broker relationship — a warm referral to a contractor-specialist broker can be the most valuable introduction your accountant ever makes
Time your application — an active contract with maximum remaining time is your strongest position
Some accountants have specialist contractor mortgage broker relationships.
Autobooks can connect you with a contractor-specialist broker at no fee. From £89+VAT/month.