Pete: A practical approach to contractor income assessment

Who did we help?

Pete is a 60-year-old contractor working in a specialist technical field in Merseyside. After many years as an employed professional in the same industry, he recently moved into contracting and is paid through an umbrella company under a rolling contract.

Alongside his working income, Pete receives a pension and has built a successful property portfolio over many years, with six buy-to-let properties that are all self-financing. 

What did they need?

Pete was looking to purchase a new residential property closer to his partner and required an interest only mortgage with a 15-year term. With a loan-to-value of 54%, he also had a clear long-term repayment strategy, intending to downsize at the end of the mortgage term.

Why were they facing challenges?

Although Pete had a secure contract and a long-established career, his recent move into contracting created difficulties with many mainstream lenders. His payment via an umbrella company meant his Self Assessment (SA302) and recent payslips did not fully reflect his earning potential. The timing of bank holidays had also affected the level of income shown on his latest payments, making it difficult to demonstrate affordability using traditional methods.

A lot of lenders were reluctant to look beyond the documentary evidence or were simply reducing the income available for assessment because of his relatively recent move into contracting.

How did we help?

Our human-led underwriting meant we could take a more practical view of Pete’s circumstances. Rather than relying solely on historic income documents, we assessed the strength of the rolling contract itself and calculated income based on the agreed contract rate and expected working pattern. Using an hourly rate of £48, a 37-hour working week and 46 working weeks per year, we were able to establish a sustainable level of earnings that better reflected the applicant's true position. We also considered the applicant's pension income which provided additional support for affordability.

Pete’s wider financial profile further strengthened his application. He had extensive experience in the property industry combined with a well-managed buy-to-let portfolio, each property self-supporting. This gave us confidence in the overall application.

As a result, we were pleased to offer Pete a 54% loan-to-value interest only mortgage over a 15-year term, helping the applicant secure his new home while supporting his longer-term retirement plans.

Do you have a contractor client whose income doesn't fit standard lending models? Our Furness Intermediaries team may be able to help. Call us on 0800 988 1561 or speak to one of our Business Development Managers.