Calculate Your Contractor Borrowing Power

9th August 2016 / in Contractor Mortgages & Protection Blog / by Mike - Super Engineering Contractor

In my line of work, everything is calculated. When developing, realising then executing engineering projects nothing is left to chance. An infallible eye for the smallest detail and a brain built to assess problems and find solutions are minimum requirements. I don’t mentally calculate everything however. Just as Batman can’t swoop up a building without his grapple hook – I use the right tools for the job.

Step 1 – What’s Your Batcave Budget?

But before my batcave is even a blueprint, I want to know it’s true potential. Building or buying big and bold – what’s your property budget? Smaller and more secretive – what can you secure? The first step to gain finance power?  Access the contractor mortgage calculator. A tried and trusted tool, this device will help you find out how much you can borrow as a contractor in the UK.

Step 2 – Calculate Your Borrowing Power

‘Where Does He Get Those Wonderful Toys’* The Joker, after he was foiled again.

Like saving the world sometimes, engineering can be a complex process. It’s never easy or straightforward, so keep what you’re working with simple to use. Batman’s gadgets do what they say on the tin; smoke bomb, grapple hook, utility belt. The contractor mortgage calculator is similarly descriptive. Could your lending be Luthor like or do you have the Peter Parkers pennies? Just enter your contractor day rate and it will give you a blast of your borrowing power.

Calculate Your Borrowing Power

This calculator provides a guide to monthly payments based on daily rate and does not guarantee eligibility for a mortgage. Speak to us for your personalised Key Facts Illustration.

Step 3 – Understand how the Contractor Mortgage Calculator Works

I always look under the hood. Contractor mortgages are based on your current contract’s daily rate. Lenders use that to assess the affordability of an application through reaching a ‘targetable’ annual income.

A common formula used by lenders to project your day rate to annual earnings is as follows; multiply your daily rate (minus VAT) by 5 to give a weekly rate. When projecting annually, there needs to be some compensation for potential employment gaps, holiday breaks (and in the case of Super Contractor’s – various hero duties) Therefore, that weekly rate is then multiplied between 46 and 48 to give a view of yearly earnings. [1]

The resulting annual income will then be multiplied by 4.5 to give a figure for a mortgage offer. This means a contractor on a day rate of £400 has the potential to raise £432,000 to buy or remortgage his HQ. Go on, swoop over to the contractor mortgage calculator now and harness your day rate power!

Step 4 – Deposit Impact

Borrowing is also powered up by the deposit you’ll have available. While a lender may not cackle like The Joker if you don’t have a deposit, he’ll be about as warm to your application as Mr Freeze. There is false intel doing the rounds regarding this; such as a contractor may need to have at least 30% deposit to secure a mortgage. Contractors however, given they meet criteria, have access to the same competitive rates as permanent employees.[2]

At present, you could secure a mortgage with at least 5% of the property’s value. Of course, the larger the deposit the less of a risk you are to a lender. This means they will generally offer better contractor mortgage deals for those who can provide 10% upwards. If you don’t have the capital, don’t think bank heist however – stay Super, not villian!

Step 5 – Boost Borrowing Power

It is another myth that contractors will always pay more than permanent staff. The rate will be set as for any type of employee. Well paid contractors may even have an advantage here for lower rates as permanent staff, as they may have had more disposable income available to put aside for a deposit.

The higher the deposit, the lower the potential interest rate and monthly payments may be (subject to credit rating.) So get super saving – I held off on a new rocket for the Super Mike Mobile to boost my borrowing power instead.

Step 6 – Signal Super Contractors

Picture the contractor mortgage calculator as your first intel gathering.  While it will shape the vision and scope of your planned HQ (skyline penthouse or underground lair?) it does not guarantee eligibility for a mortgage. Knowledge is power and where contractor mortgage advice is concerned don’t ask a Joker – call the broker.  Super Contractors will give you a personalised Key Facts Illustration.



This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

[1] IPSE, Self-Employed, Contractors and the Mortgage Market Review September 2014, The Telegraph, Finally: lifeline for self-employed on mortgages, October 2014

[2] Gordon Hunter, Pulse Article on LinkedIn, 7 Contractor Mortgage Myths – BUSTED, April 2016

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