Umbrella Company Mortgages

If you work under an umbrella company, getting a mortgage can be more complex than for a standard applicant. Because your income structure differs from permanent employees, the affordability assessment works differently. Here, we’ll cover whether you can still get a mortgage, what lenders look for, and where to get expert support.

Can umbrella company contractors get a mortgage?

Yes, you can, although you’ll likely have a smaller pool of lenders to choose from. Some mortgage lenders accept contractors from umbrella companies; however, their approach to assessing income and affordability may vary. Certain lenders treat you similarly to a PAYE employee, while others assess you more like a contractor.

Because your employment is technically through the umbrella company, with taxes and National Insurance (NI) deducted before you’re paid, your income is considered stable by some lenders. However, others may be more cautious, particularly if you're relatively new to contracting.

How do these mortgages work?

Mortgages for umbrella company workers typically involve an assessment of your gross income based on your contract rate or payslips. Since umbrella contractors don’t own a limited company, lenders won’t use retained profit or dividends. Instead, your payslips and contract terms are key documents in the application process.

Some lenders will assess you in the same way as an employed applicant using your payslips, while others will base affordability on your day rate, similar to limited company contractors. You’ll likely be asked to provide evidence of how long you’ve been contracting or working in the same industry to show consistency.

Eligibility criteria for umbrella mortgages

Here are some of the key factors lenders will look at when assessing your eligibility for a mortgage as an umbrella company contractor in the UK:

• Contracting history: Most lenders want to see that you’ve been working under an umbrella company for at least 6-12 months. A consistent track record of contract work, particularly in the same industry, can help prove stability. Gaps in employment may raise red flags, especially if they’re recent or frequent.

• Length of current contract: The length of your existing assignment is important. Some lenders prefer to see at least 3 to 6 months remaining on your current contract, while others may accept rolling contracts or evidence of extensions. The stronger the continuity, the more confident a lender will feel.

• Payslips and documents: You’ll need to provide a recent run of umbrella company payslips, usually at least 3 months, as well as corresponding bank statements. Some lenders may also ask to see your current contract to confirm your rate, working hours, and contract conditions.

• Deposit: Umbrella contractors are typically expected to use at least 10%, meaning a 90% loan-to-value (LTV) ratio. However, some specialist lenders may be more flexible, allowing a 95% LTV. Larger deposits can sometimes improve your chances of approval or access to better interest rates.

• Credit history: Your credit profile plays an important role in your eligibility. A clean credit file makes things easier, but if you have bad credit due to issues like missed payments or defaults, some specialist bad credit lenders may still consider you.

• Industry and earnings stability: If you’ve been in the same sector for a while, particularly in areas like IT, finance, or healthcare, lenders may take a more favourable view. Even if you’ve only recently switched to umbrella contracting, a proven history of employment in the same industry can help.

How your affordability is calculated

Affordability calculations for umbrella company workers can differ depending on the lender; these are the most common methods:

1. PAYE-style approach: Some lenders will look at your net or gross income based on your umbrella company payslips (monthly or weekly). Then, this will be calculated over 12 months to get an idea of your effective yearly salary.

2. Contractor-style approach: Other lenders will assess your day rate. For example, they might take your average day rate and multiply it by 5 (days per week) and then by 46 to 48 weeks to calculate your annual income.

How much you could borrow

After calculating your annual income, most lenders will use a multiple, typically around 4.5 times your salary. Sometimes this can be stretched higher (up to 5 times, 5.5 times, or even 6 times your salary) with certain lenders or if your application is strong (good credit, lower debt-to-income ratio, long contracting history, etc.).

Your actual affordability will also depend on your debt commitments, monthly outgoings, dependents, and the term of your mortgage. Some specialist lenders can stretch affordability a little further if your application is solid.

Use our mortgage affordability calculator below to get a rough idea of your maximum borrowing:

Benefits and drawbacks of umbrella company mortgages

Here’s a quick rundown of the main advantages and disadvantages when trying to get a mortgage if you work for an umbrella company:

Benefits

• Some lenders view umbrella income as stable and treat it like regular employment.

• You can avoid needing company accounts or SA302s.

• You can potentially borrow more using a contract-based income calculation.

Drawbacks

• Not all lenders accept umbrella workers or understand how your income works.

• You might face extra request for additional documents.

• Mortgage rates and terms may be less favourable without specialist support.

Are there mortgage brokers for umbrella contractors?

Yes, and using a specialist broker is often your best move. As an umbrella company worker, you might find that mainstream lenders don’t fully comprehend your income, or apply rigid rules that don’t reflect your actual earnings potential.

Luckily, a broker who specialises in umbrella company mortgages can:

• Identify the lenders who best suit your umbrella employment structure.

• Help you present your income correctly in the most attractive format.

• Enhance your chances of approval with the most favourable terms.

• Introduce you to lenders who exclusively work through brokers and regularly deal with complex income scenarios, such as those of umbrella contractors.

Get advice from an umbrella company mortgage expert

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Best UK lenders for umbrella company mortgages

If you’re wondering who might provide an umbrella company mortgage, here are some examples of popular mainstream lenders in the UK who might be open to offering a mortgage:

• Halifax: Typically, you must have at least 12 months of continuous employment and at least 6 months remaining on your current contract. Income used by Halifax will be the lower of the gross value of the contract or income calculated from your payslip or bank statement.

• Aldermore: Known for specialist lending, Aldermore is flexible with contractors and umbrella workers and is one of the rare options that may offer a 95% LTV. They are also one of the few lenders open to certain adverse credit issues for umbrella contractors.

• Barclays: If employed on a PAYE basis via an umbrella company, Barclays calculates income using 3 months’ payslips (taking an average where necessary). However, you can’t have more than a 6 month gap between contracts, need at 12 month contract history, and 3 months remaining.

The best way to explore all your options for an umbrella company mortgage is to speak with an adviser who can show you what’s realistic based on your individual circumstances and finances.

Why choose Teito for your umbrella company mortgage?

Because your income can be more complex, many high street lenders might not understand how to assess it correctly, but the right broker can make all the difference. Our brokers specialise in securing mortgages for contractors working under umbrella companies.

We can introduce you to advisers with plenty of experience helping umbrella company contractors, and they know which lenders are most flexible, what documents you’ll need, and how to present your income in the best light to maximise your affordability.

Here are some more of the reasons people choose us to help get them a mortgage through an umbrella company:

• We specialise in mortgages for contractors and umbrella companies

• Your first chat is free with no obligation to proceed

• Our brokers have 5-star reviews on leading review sites

• Get an introduction to flexible lenders with competitive rates

Ready to take advantage of a free, no-obligation chat with a broker who specialises in umbrella company mortgages? Get started here.