Case Study: Day‑Rate Contractor Mortgage: Using Day‑Rate To Maximise Affordability

David Walsh

DIRECTOR AND MORTGAGE ADVISER

Specialist broker for high-earning professionals and complex income cases.

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Overview

An experienced IT contractor moving between projects wanted a mortgage that reflected real earnings rather than just the most recent payslips. With contract renewals, a couple of short gaps between roles, and agency‑paid invoices, the case called for day‑rate assessment. We focused on continuity, clear documentation, and a simple explanation of how the day‑rate translates into annual income.

Client Snapshot

• Profession: IT contractor (Ltd company)

• Income Basis: Day‑rate with agency invoices; mix of onsite and remote projects

• History: Recent renewals + short gaps; strong track record over multiple contracts

• Goal: Maximise affordability using a lender that may consider day‑rate methodology

• Concerns: How gaps and changing end‑clients would be viewed by underwriting

The Challenge

• Non‑standard payslips: Income driven by invoices/assignments rather than salary.

• Contract changes: New statements of work/end‑clients every few months.

• Gaps between roles: Short breaks needed context (end‑of‑contract, pre‑booked holiday, onboarding delay).

• Policy variation: Lenders differ on how they annualise a day‑rate and what history/remaining term they expect.

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What We Did

• Picked The Right Shortlist: Targeted lenders that may consider contractors on day‑rate rather than company accounts or PAYE alone.

• Explained The Day‑Rate Clearly: Set out the agreed day‑rate, typical days per week, and how the lender’s annualisation would work (noting that some lenders may use c. 46–48 working weeks; methods vary).

• Evidenced Continuity: Provided a 12‑month view of contracts, showing renewals and end‑client changes with minimal income volatility. Included CV, references where helpful, and agency confirmations.

• Handled Gaps Sensibly: Logged the reason and length for each gap and showed cash reserves to bridge them.

• IR35 & Structure: Clarified engagement model (Ltd/umbrella), IR35 status, and how invoices flow to the personal account.

• Complete Pack, First Time: Current contract, extension email, last 3–6 months’ business/personal bank statements, invoices/remittances, proof of deposit and ID.

Day‑Rate Methodology (Plain English)

• What it is: The lender takes your day‑rate and converts it to an annual figure (e.g., day‑rate × days per week × a set number of working weeks).

• Why it helps: It can reflect your current earning capacity better than older company accounts.

• What varies: Some lenders may require a minimum remaining term on your current contract and a minimum contracting history. The number of working weeks used in the calculation varies by lender.

The Outcome

• Approval With A Day‑Rate Lender that recognised the client’s contracting pattern.

• Affordability Based On Annualised Day‑Rate, aligned to realistic earnings rather than a single month of invoices.

• Manageable Payments with scope to overpay when project milestones paid out.

• Timeline met for exchange and completion.

What Our Clients Say

Trustpilot

Why It Worked

• Right Policy Fit: A lender familiar with contractor profiles.

• Continuity Over Perfection: Short gaps explained, renewals evidenced.

• Transparent Numbers: A clear bridge from day‑rate to annual affordability.

Documents We Provided (Typical For Day‑Rate Contractors)

• Current contract and extension/renewal evidence

• CV showing contracting history and skills

• Invoices & remittance advice (recent months)

• Business and personal bank statements (3 months)

• Umbrella/Ltd details and IR35 status confirmation (where applicable)

• Proof of deposit and ID & address verification

Thinking Of Doing Similar?

If you’re an IT contractor, we can package your day‑rate and history so the right lender can make a clear decision—without over‑promising.

Request your fee free mortgage consultation today. No obligation, just sound advice.

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Quick FAQs

• How Do Lenders Calculate Day Rate Income?

  Approaches differ. Some lenders may multiply the day‑rate by days per week and 46–48 working weeks. Exact methods vary.

• Do I Need A Minimum Time Left On My Contract?

  Often, yes. Some lenders may require a minimum remaining term or evidence of imminent renewal.

• Will Gaps Between Contracts Be A Problem?

  Short, well‑explained gaps with cash reserves are often acceptable. Consistency over time matters.

• Do I Need Company Accounts?

  Not always. Some lenders may assess on day‑rate with the right documentation, even without full company accounts.

• Does IR35 Status Matter?

  It can. Lenders look for clarity on how you’re paid and any deductions. We include this in the pack.

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APPROVED BY THE OPENWORK PARTNERSHIP ON 24/09/2025