How long does it take to get a contractor mortgage?

Securing a mortgage when you are a self-employed contractor in the UK can feel more complex than for a traditionally employed individual. Lenders need to assess income stability differently, which often adds time to the application timeline. If you are wondering how long does it take to get a contractor mortgage? The answer varies widely, but understanding the steps and potential delays will help you prepare effectively.

How Long Does It Take to Get a Contractor Mortgage? Breaking Down the Timeline

The time taken to secure a contractor mortgage can range anywhere from six weeks in the simplest cases, up to three or four months for complex applications requiring specialist underwriting. On average, most contractors should budget for a process lasting between 8 and 12 weeks from submitting the full application to receiving the keys to your new property.

The contractor mortgage timeline generally follows the same fundamental stages as any mortgage, but the early assessment and underwriting stages are where most of the additional time is spent.

The Stages of a Typical Contractor Mortgage Application

To understand the timeline, it helps to break the process down into its five main stages:

Stage 1: Preparation and Agreement in Principle (AIP) (1–5 Days)

This initial stage involves gathering your financial documents (contracts, CV, bank statements) and discussing your needs with a mortgage advisor or broker. The broker will then identify suitable specialist lenders.

• Role of the Broker: A specialist broker is crucial here. They understand which lenders use daily contract rate calculations rather than requiring two years of certified accounts, saving immense time.
• Agreement in Principle (AIP): Once the basic criteria are met and a soft credit check is usually performed, the lender issues an AIP. This confirms, in principle, how much they might lend you. This stage is usually very quick if you have all documentation ready.

Stage 2: Full Application and Submission (1–2 Weeks)

Once you have found a property and secured the AIP, the full application is submitted. This requires the formal package of all supporting documents. For contractors, this package is often scrutinised immediately by specialist underwriters.

• Underwriting Scrutiny: Lenders focus intensely on confirming your contract status (inside or outside IR35), the remaining time on your current contract, and your history of continuous contracting work. If the documents are unclear or incomplete, the application will be paused, causing immediate delays.

Stage 3: Valuation and Assessment (2–3 Weeks)

Once the lender is satisfied with your personal and financial documentation, they instruct a valuation of the property. This confirms the property’s market value, ensuring the loan-to-value (LTV) ratio is appropriate.

• Valuation Wait Time: The speed depends on the surveyor’s availability and location.
• Further Queries: Occasionally, the underwriter may come back with additional queries even after the valuation, potentially asking for bank statements covering a longer period or detailed explanations for gaps in employment history.

Stage 4: Formal Mortgage Offer (1–2 Weeks)

If the valuation is acceptable and all underwriting queries have been resolved, the lender issues the formal mortgage offer. This legally binding document outlines the terms and conditions of the loan.

• Acceptance: You and your solicitor review and formally accept the offer.

Stage 5: Legal Conveyancing and Completion (4–8 Weeks)

This is the longest variable stage and involves the legal transfer of the property, managed by your solicitor. The speed depends heavily on the complexity of the sale, the length of the property chain, and the efficiency of the solicitors involved.

• Searches: Solicitors carry out local searches (e.g., environmental, drainage), which often dictate the minimum timescale for completion.
• Exchange and Completion: Once contracts are exchanged, a completion date is set, and the funds are transferred from the lender to the seller.

Why Contractor Applications Often Take Longer

Contractor income verification differs significantly from standard PAYE applications, adding complexity and time:

• Non-Standard Income: Many lenders struggle to assess income that is paid daily or hourly rather than a fixed annual salary. Traditional high street banks often require two to three years of audited accounts or SA302 forms, which may not accurately reflect a contractor’s current earning potential, leading to slow processing times or outright rejection.
• Specialist Underwriting: Contractor mortgages often bypass automated underwriting systems and are manually reviewed by specialist teams who understand contract terms and IR35 implications. This manual review is more time-consuming.
• Proof of Continuity: Lenders want assurance that your contracting career is stable. They often require a history (typically 12 months) of contract work and proof that a new contract is already lined up if your current one is nearing its end.

You can find useful, unbiased guidance on contractor and self-employed mortgages on the UK government’s official MoneyHelper website, which explains how lenders approach different income structures.

Factors That Can Speed Up or Slow Down the Process

While 8 to 12 weeks is standard, several factors can push the timeline significantly in either direction.

Factors That Speed Up the Application:

• Using a Specialist Broker: A broker who regularly deals with contractors knows the specific documentation requirements of specialist lenders, ensuring the application is “right first time.”
• Perfect Documentation: Providing clean, easily verifiable copies of your current contract, CV, and bank statements immediately avoids weeks of back-and-forth queries.
• Clean Credit History: A strong credit score and a clear financial history simplify the lender’s assessment of your reliability.
• Direct Lender Access: Some specialist lenders deal directly with contractor applications and have streamlined processes.

Factors That Slow Down the Application:

• Complex Property Chains: If you are part of a long chain of buyers and sellers, you are reliant on the speed of everyone involved.
• Uncommon Property Type: Non-standard construction or properties with unusual elements (e.g., large acreage, commercial tie-ins) can require extensive, slower specialist valuations.
• Poor Credit History: If the lender finds adverse credit events (defaults or County Court Judgements), they will conduct deeper investigation or may reject the application entirely.

The Importance of Credit Health

Your credit report plays a fundamental role in the mortgage speed. A lender will always perform an assessment of your credit history. If your report contains errors or unexpected debt, it will cause significant delays while the lender investigates or requires clarification.

It is highly recommended that you review your credit file well before applying for a contractor mortgage. Identifying and rectifying errors proactively will save weeks of processing time down the line. Get your free credit search here. It’s free for 30 days and costs £14.99 per month thereafter if you don’t cancel it. You can cancel at anytime. (Ad)

People also asked

How far in advance should a contractor apply for a mortgage?

You should ideally begin discussions with a broker and prepare your documentation at least three to six months before you hope to complete the purchase. This gives you ample time to check your credit file, gather your contract history, and obtain an AIP, allowing you to move quickly once you find a suitable property.

Do I need two years of accounts to get a contractor mortgage?

Not necessarily. While traditional high street lenders often require two or three years of certified accounts (which can show fluctuating income), many specialist contractor lenders focus instead on your current daily contract rate and continuous work history. If you are earning £400 per day, they may use an annualised income calculation based on that rate, significantly simplifying the process.

What specific documents will a lender ask for from a contractor?

Lenders typically require your current contract (showing the daily rate and term), a comprehensive CV detailing your contracting history over the last 12–24 months, three to six months of personal and business bank statements, proof of ID and address, and sometimes an SA302 form or tax year overview if operating through a limited company.

Does IR35 status affect the speed of the mortgage application?

Yes, IR35 status can affect the complexity of the underwriting, potentially slowing the process slightly. If you are contracting outside IR35, lenders often assess your income based on dividends and salary (which requires more detailed company accounts). If you are inside IR35 and paid through an umbrella company, your application is often closer to a standard employed application but still requires the lender to assess the stability of your contractual relationship.

Can I get a contractor mortgage with less than six months left on my contract?

Yes, it is often possible, but it requires careful handling. Lenders will be looking for strong evidence of a contract extension or a confirmed offer of a new contract immediately following the current one. If you are close to the end of your contract, working with a specialist lender who is flexible on short contract durations is essential to avoid delays or rejection.

Conclusion

While the standard answer to how long does it take to get a contractor mortgage? is approximately 8–12 weeks, the biggest variable is the initial documentation and assessment period. Contractors must be prepared for a deeper dive into their finances compared to permanent employees. By engaging a specialist broker and having all your financial documentation, contracts, and employment history meticulously organised from day one, you stand the best chance of navigating the process efficiently and achieving a timely completion.

Remember that while speed is important, accuracy is paramount. Rushing the process or providing incorrect information could lead to significant setbacks later on. Always seek independent legal and financial advice tailored to your specific contracting arrangements before proceeding with a mortgage application.