TL;DR: Yes, contractors can typically access low-deposit mortgage schemes, although the original Help to Buy Equity Loan has closed to new applications in most of the UK. Lenders may assess your eligibility based on your daily rate or your annual accounts, provided you meet their specific criteria for self-employment or fixed-term contracts.

Can contractors get help-to-buy mortgages?

If you are a contractor in the UK, you might wonder if your employment status makes it harder to get on the property ladder. The short answer is that contractors generally have access to the same types of mortgages and government-backed schemes as permanent employees. However, the way a lender calculates how much you can borrow can be quite different.

While the well-known “Help to Buy: Equity Loan” scheme has ended for new applications in England, the term “help to buy” is still often used to describe various ways for people with small deposits to buy a home. This includes the Mortgage Guarantee Scheme, Shared Ownership, and regional variations. For a contractor, the challenge isn’t usually the scheme itself, but proving to the lender that your income is stable and sufficient.

How the landscape has changed

For many years, the government’s flagship Help to Buy Equity Loan helped thousands of first-time buyers. This specific scheme closed in England in early 2023. If you are looking for support today, you are likely looking for “low deposit” options or specific affordable housing programmes. Contractors may qualify for these as long as they can satisfy the lender’s “affordability” checks.

In the current market, most lenders offer 95% mortgages through the Mortgage Guarantee Scheme. This allows you to buy a property with a 5% deposit. Because contractors often earn a higher gross income than their permanent counterparts, you might find that you can borrow a larger amount, provided you apply to a lender that understands the contractor market.

How lenders assess contractor income

When you ask, “can contractors get help-to-buy mortgages?”, the real question is how your income will be viewed. Lenders typically use one of two methods to decide how much they will lend you:

• Daily Rate Underwriting: Some specialist lenders take your current daily rate, multiply it by five days, and then by 46 or 48 weeks to get an “annualised” salary. This is often the most beneficial for contractors as it reflects your current earning power.
• Average of Accounts: If you operate as a director of a limited company, some lenders will look at your salary and dividends over the last two or three years. This can sometimes result in a lower borrowing limit if you keep profits within the business for tax efficiency.

If you are working through an umbrella company, lenders usually treat you similarly to a permanent employee, though they will still want to see a history of continuous employment. Consistency is key; most lenders prefer to see that you have been contracting for at least 12 months, with at least six months remaining on your current contract.

Eligibility criteria for contractors

To be successful in your application, you will typically need to meet several requirements. While every lender is different, most will look for the following:

• Experience: Usually at least 12 to 24 months of experience in the same industry.
• Contract Length: A minimum amount of time left on your current contract (often 3 to 6 months) or evidence that it has been renewed previously.
• Gap Policy: Most lenders allow for small gaps between contracts (usually up to 6 or 8 weeks), but long periods of inactivity may raise red flags.
• Deposit: While some schemes allow for a 5% deposit, having a larger deposit can often open up better interest rates and more lenders.

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Alternatives to the original Help to Buy scheme

Since the Equity Loan is largely a thing of the past, contractors should look at these current alternatives:

The Mortgage Guarantee Scheme

This is a government-backed scheme that encourages lenders to offer 95% LTV (Loan to Value) mortgages. It is available for properties up to £600,000. For a contractor with a 5% deposit, this is the most common way to get “help to buy.”

Shared Ownership

This allows you to buy a share of a property (usually between 10% and 75%) and pay rent on the remaining share. This is an excellent option for contractors who may not yet have the income history to support a full mortgage on a high-value property. You can find more information on MoneyHelper’s guide on government help-to-buy schemes.

First Homes Scheme

This scheme offers first-time buyers in England a discount of at least 30% on the market value of newly built homes. Local councils may have specific eligibility criteria, such as a maximum household income, which contractors will need to meet.

Risks and considerations

Taking out a mortgage is a significant financial commitment. As a contractor, your income may fluctuate more than a salaried employee’s. It is vital to ensure you have a “buffer” of savings to cover your mortgage payments during gaps between contracts.

Your property may be at risk if repayments are not made. If you fall behind on your mortgage, the lender could take legal action, which may lead to repossession. This could also result in increased interest rates and additional charges. It is important to choose a mortgage that is truly affordable based on your long-term average earnings, rather than just your highest-paying contract.

Improving your chances of approval

To make yourself more attractive to lenders, consider the following steps:

• Keep your CV up to date: Lenders like to see a clear career path and consistent demand for your skills.
• Minimise gaps: If you are planning to buy a home, try to avoid taking long sabbaticals in the year leading up to your application.
• Organise your paperwork: Have your contracts, bank statements, and tax returns (SA302s) ready. If you use an accountant, ensure your accounts are filed on time.
• Save a larger deposit: While 5% is possible, a 10% or 15% deposit significantly reduces the risk for the lender and could lead to a smoother application process.

People also asked

How long do I need to be a contractor to get a mortgage?

Most lenders prefer to see a 12-month track record of contracting within the same industry, though some specialist lenders may consider you with less time if you have a strong history in a similar permanent role.

Can I get a mortgage with only 3 months of contracting?

It is possible but challenging; you would likely need a specialist lender and a history of working in the same sector as a permanent employee before you started contracting.

Do contractors pay higher interest rates?

Not necessarily. If you meet the lender’s criteria and have a good credit score, you should have access to the same competitive rates as any other borrower.

What documents do I need for a contractor mortgage?

You will typically need your current contract (showing your day rate), at least three months of bank statements, and potentially your last two years of accounts or P60s if you work through an umbrella company.

Can I use an umbrella company for a mortgage?

Yes, many lenders are comfortable with umbrella company contractors and will often treat your income similarly to a standard PAYE employee, using your payslips to calculate affordability.

Summary

Contractors can certainly access help-to-buy style mortgages and other low-deposit schemes. The key is to find a lender that understands how to calculate contractor income, rather than one that uses a “one-size-fits-all” approach for self-employed workers. By keeping your contracts organised and maintaining a good credit score, you can navigate the mortgage market successfully and secure a home of your own.