How much can I borrow?

Most contractors are paid day (or even hourly) rates rather than a set monthly salary and they usually work on fixed term contracts. Both of these factors often send traditional lenders into a spin as they try to determine the amount you can borrow.  Traditional lenders often prefer borrowers with a full-time job and a monthly salary and are wary of contractors who work on rolling contracts without payslips. Contractor friendly lenders adopt a different approach.

Contractor friendly lenders will assess the income of contractors on a day rate multiplied by 5 (days) to give a weekly income and, dependent on the lender, this is multiplied by 46 or 48 weeks to come to an annual income figure.

The majority of lenders will lend 4.5 x income, some may lend up to 5 x your annual income.

So, looking at some daily averages for few types of IT contractor:

PHP Developer

Average daily rate is £350 (as quoted by ITJobsWatch.co.uk May 2018)

Income calculation: £350 x 5 days  x 46 weeks  = £80,500 income

Maximum mortgage amount
£80,500 x 4.5 = £362,250
£80,500 x 5 = £402,500

SQL Developer

Average daily rate is £420 (as quoted by ITJobsWatch.co.uk May 2018)

Income calculation: £420 x 5 days  x 46 weeks  = £96,600 income

Maximum mortgage amount
£92,000 x 4.5 = £434,700
£92,000 x 5 = £483,000

Java Developers

Average daily rate is £500 (as quoted by ITJobsWatch.co.uk May 2018)

Income calculation: £465 x 5 days  x 46 weeks  = £115,000 income

Maximum mortgage amount
£106,950 x 4.5 = £517,500
£106,950 x 5 = £575,000

The figures above are just a benchmark as existing credit commitments, your outgoings, childcare costs etc are all taken into consideration and may reduce the amount you can borrow.

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