First-Time Buyer Day-Rate Contractor Secures 95% Mortgage for £600k Property
A software developer eight months into day-rate contracting had been told by two brokers to wait until he had two years of accounts. He wanted to buy a £600,000 house with a 5% deposit and keep his savings for renovation work. A high street lender with a day-rate contractor policy assessed him as employed, annualised his £575 day rate to £132,250, and lent £570,000 at 95% loan to value (LTV), roughly 4.3 times the assessed income.
Client Snapshot
£600,000
Purchase price
£570,000
Mortgage at 95% Loan to Value (LTV)
£132,250
Assessed income (day rate annualised)
Software developer contracting to a bank through his own limited company on a £575 day rate · Two-bedroom Victorian terrace, Walthamstow, East London · 5% deposit (£30,000) from savings · Capital and interest, two-year fixed rate, no arrangement fee, 38-year term
Key constraint
On standard self-employed criteria he had no usable income at all, and the few routes open to a new contractor had to work at 95% LTV on a £570,000 loan, near the top of the loan-size bands most lenders may apply at that LTV
Context
The rent on his Walthamstow flat share was the prompt. At 28, with six years as a permanent developer behind him, the client had moved to day-rate contracting for a bank eight months earlier, and the jump in income made buying look realistic for the first time. A dated two-bedroom terrace a few streets away came up at £600,000. He had £30,000 saved, wanted to keep the rest of his cash for the renovation, and planned to do the work gradually while living there.
Two brokers had already told him the same thing: newly self-employed, no accounts, come back in two years. He came to us to test whether that was actually true.
The Challenge
On most lenders' standard criteria, the brokers were right. A limited company contractor is usually assessed as self-employed, and self-employed criteria generally ask for two years of accounts or tax calculations (SA302s), with some lenders considering one year. He had neither. On that route his assessable income was nil, whatever his invoices showed.
The shape of the purchase made the field narrower still. At 95% LTV, lending criteria tighten across the board: loan to income (LTI) multiples are generally capped around 4.49 at this LTV, and many lenders also cap the maximum loan size on their 95% products, with bands that can stop at £500,000 or just above. A £570,000 loan needed a lender whose 95% band ran at least that high, whose contractor policy did not require accounts, and whose LTI cap still left room for the borrowing. Each rule on its own is workable. The case needed all three to line up in one place.
Mortgage & Protection Adviser
Specialist mortgage broker for City professionals. Simon works with technology professionals and contractors whose income does not fit standard employment categories, structuring mortgages around day rates, limited company income and the criteria routes that often go untested.
Lender Strategy
The route that worked treats a day-rate contractor as employed rather than self-employed. A number of high street lenders operate this policy: instead of waiting for accounts, they may annualise the day rate itself, most commonly as day rate × 5 days × 46 or 48 weeks, provided the contract and rate can be evidenced. Qualifying rules differ, and can include minimum day rates, minimum contracting history, or a track record in similar permanent work. His profile fitted: a £575 day rate, a six-month rolling contract with time remaining, and six years of permanent experience in the same field before contracting. The mechanics of this assessment are covered on our day-rate contractor mortgage page → and in our guide to complex and self-employed income →
We placed the case with a major high street lender whose contractor policy annualises at × 46 and whose 95% band extended to the loan he needed. The arithmetic: £575 × 5 × 46 = £132,250 of assessed income. At the 4.49 LTI cap that generally applies at this LTV, that income can support up to around £593,800. The £570,000 loan sat inside it, at roughly 4.3 times.
Worked example, on the same contract
Day-rate contractor, £575 a day, eight months' contracting history
The same working pattern, assessed two ways.
- Day rate
- £575
- Annualisation
- £575 × 5 days × 46 weeks
- Assessed income (day-rate route)
- £132,250
- Purchase
- £600,000 at 95% Loan to Value (LTV)
With no completed accounts there is no assessable income at all; even after a first full year, a part-year taxable profit of, say, £68,000 at 4.49 times supports around £305,300.
£575 × 5 × 46 = £132,250 of assessed income. At the 4.49 LTI cap that generally applies at this LTV, that supports up to around £593,800; the £570,000 loan sat inside it, at roughly 4.3 times.
The same contract throughout. The day-rate policy moves assessed income from nil to £132,250, and the borrowing from a two-year wait to £570,000 now.
Please note: These figures are for illustrative purposes only. The actual amount you can borrow will depend upon your personal circumstances, credit profile, LTV, the lender's individual criteria and full affordability assessment.
The product choice followed the renovation plan. A two-year fixed rate with no arrangement fee kept his upfront costs down and left every spare pound for the works. The term was set at 38 years, which his age allowed, to hold the monthly payment down while the renovation absorbs his surplus income. Once the works are done, the intention is to remortgage at the end of the fix against a higher valuation and a lower LTV, where pricing generally improves. Term length can be revisited then. For how deposit size interacts with self-employment, see our article on whether self-employed borrowers need a bigger deposit →
The application was packaged for the contractor policy rather than adapted from a standard one: the signed contract showing rate and duration, his CV evidencing the permanent track record, three months of business and personal bank statements showing invoices paid, and proof of the deposit. A short covering note set out the day-rate arithmetic so the underwriter saw the income the way the policy calculates it.
The Result
The Result
A £570,000 mortgage agreed at 95% LTV, with the day rate assessed as employed income
£570,000
Loan
95%
LTV
£132,250
Assessed income (day rate annualised)
~4.3×
Income multiple
First call
Day 0
Decision in Principle (DIP)
3 working days
Full mortgage offer
Just under 4 weeks
Completion
7 weeks after offer
A £570,000 mortgage was agreed at 95% LTV on a two-year fixed rate with no arrangement fee, over a 38-year term, at roughly 4.3 times the £132,250 of assessed income, priced within the normal range for 95% lending. A Decision in Principle (DIP) came back in three working days; first call to offer took just under four weeks, and completion followed seven weeks later. He moved in with his savings intact and the first room stripped back the same month.
Why This Matters for Similar Clients
Contractors are often told the two-year accounts rule as if it were universal. For standard self-employed assessment it is common, but day-rate contractors are a separate category at several lenders, and on those policies the contract itself may be the income evidence. The difference is not marginal: assessed income can move from nil to six figures on the same working pattern. Whether a given lender's contractor route fits, at your day rate, LTV and loan size, is criteria knowledge, and it is worth testing before accepting a two-year wait. Our article on whether you need two years of self-employed history → covers the wider picture, and our guide for tech and product leaders → sets out how we work with technology careers more broadly.
What We Can Do for You
- Establish before any application whether your contract, rate and history fit a lender's day-rate policy before anyone defaults to self-employed criteria
- Identify the lenders on our panel whose high-LTV bands and loan-size limits accommodate the purchase you actually want
- Structure the term, product and fees around what the property needs next, not just the purchase itself
- Package the contract, bank statements and work history so the underwriter can follow the day-rate arithmetic line by line
FAQs
Potentially. Some lenders assess day-rate contractors as employed and work from the contract itself rather than accounts, subject to conditions such as minimum rates, contract length or prior experience in similar work. Criteria differ significantly from lender to lender.
The common approach is to annualise: day rate × 5 days × 46 or 48 weeks, depending on the lender. A £575 day rate at × 46 produces £132,250 of assessable income. Some lenders use different multipliers or deduct for umbrella costs.
Some lenders may lend to 95% LTV for contractors who fit their day-rate policy, though loan-size caps at that LTV vary and income multiples are generally tighter than at lower LTVs. Affordability is assessed in full in every case.
Not always. The two-year expectation applies to standard self-employed assessment. Day-rate contractors may qualify through contract-based policies much earlier, in some cases within months of starting, depending on the lender and the wider profile.
The company structure usually determines which criteria apply, but under a day-rate policy lenders may look through the company to the contract. Dividend and salary figures matter less on that route than the rate, the contract term and the working history behind it.
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