Contractor Mortgages: How Your Day Rate Becomes a Borrowing Figure
Lenders cannot read a contractor's income off a payslip, so many of them annualise the day rate instead. This guide shows how that figure is built and what it supports.
What is the Contractor Mortgage Calculator?
Contractors are often assessed on an annualised day rate rather than on company accounts: day rate times days per week times weeks per year. Weeks are usually set below 52 to allow for holidays and gaps between contracts, and lenders commonly use 46 to 48 weeks. This calculator annualises your day rate on that basis, applies the income multiple you choose to give maximum borrowing, adds your deposit for the maximum property price, and prices the repayment payment at your rate and term. Each lender has its own method and some will use a lower figure or average your actual earnings, so this is an estimate, not a lending decision.
How to use it
- Enter your day rate, how many days a week you work, and how many weeks a year you realistically work.
- Enter your deposit, interest rate, term and an income multiple.
- Click Calculate Contractor Borrowing to see your annualised income, maximum borrowing, maximum price and monthly payment.
Worked example
A £500 day rate, 5 days a week, 46 weeks a year gives £115,000 of annualised income. At 4.5x that supports £517,500 of borrowing, or a £567,500 property with a £50,000 deposit, with a repayment payment of about £2,700 a month at 4.75% over 30 years.
How is contractor income annualised?
Day rate times days per week times weeks per year. £500 times 5 days times 46 weeks is £115,000. The weeks figure is deliberately below 52 because holidays and gaps between contracts mean a contractor rarely bills every week of the year.
Frequently asked questions
Do I need a long contracting history?
Some lenders ask for 6 to 12 months of contracting history, while others will consider a new contract with evidence of experience in the same field.
Is the annualised figure guaranteed to be accepted?
No. Each lender has its own method, and some will use a lower figure, or salary plus dividends, or an average of recent contracts instead.