Contractor Mortgage Bad Credit

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Contractor Mortgage Bad Credit - what are the options?

If you’re a contractor and have challenges with your credit rating, you may be concerned about your mortgage prospects. The good news is that in many situations it will still be possible to find a competitive contractor mortgage deal – and it’s our role to navigate that on your behalf. 

Can I get a Contractor Mortgage with bad credit?

Bad credit isn’t generally a barrier to getting a mortgage, although it does depend on the severity of the issues. It doesn’t matter whether you are employed in a traditional way, are self-employed or a contractor – a good broker should be able to find mortgage options to suit you.

How can a Mortgage Broker help?

With any client we will always spend a little time exploring your specific situation – how long you have been contracting, what your property goals are, your income and expenditure and your credit record. 

Generally, credit issues such as missed or late payments, defaults and CCJs are not a barrier to a mortgage – although you may find that interest rates are a little higher. Even more serious credit problems such as Debt Management Plans and Individual Voluntary Arrangements can be accommodated by various lenders. 

As a guide, the longer it has been since your credit incident, provided the debt is now settled, the more likely it is that we can find an appropriate mortgage deal. In addition, for anyone with credit issues, putting down a bigger deposit will always improve your selection of mortgage offers. 

Why is the deposit amount critical if I have bad credit?

The challenge for any lender in taking on a customer with bad credit is the risk that you won’t be able to keep up with mortgage repayments. If you’ve got into debt before, they believe it could happen again.

Putting down a larger deposit is helpful because it both reduces the size of the monthly repayments on your mortgage and demonstrates your commitment to buying and keeping the property. 

It’s unlikely that you will qualify for a 95% mortgage if you have bad credit, so you will need to aim for at least a 10% deposit. But you will have a much wider choice of lenders and potentially better rates if you can pull together 15% or more. 

What if I am declined for a Contractor Mortgage?

Being declined for a mortgage only happens when you don’t fully meet the lender’s criteria. It’s extremely unlikely that you will be declined if you work with a broker – we will never put you forward for a mortgage that you don’t qualify for.

The main challenge, if you’re declined for a mortgage, is that it will slow down your property purchase. It won’t mean other lenders will reject you, and the decline isn’t shown on your credit report. The credit file just shows that you applied for a mortgage, not what the outcome was. 

If you’ve been declined, do seek support from a broker. We can help you find specialist lenders that will let you have a mortgage with a poor credit history. We’ve helped hundreds of clients in this situation.

How can I improve my chances of getting my contractor mortgage application accepted?

Being accepted for a mortgage is all about meeting the lender’s criteria and being able to prove your income. A mortgage broker can quickly research a large panel of lenders on your behalf and find the most appropriate products for you – as a contract worker if you run a limited company or operate under an umbrella company.

We’ll ensure that you have read all the documentation you need, so the mortgage can progress quickly. Items you will need are bank statements, your credit file with details of the adverse credit issues, your current and most recent contract and at least 12 months’ accounts. You may also need tax calculations. 

Having all these documents to hand will greatly improve your chances of acceptance for a contractor mortgage. For more information, just get in touch.

Mortgages by Mcateer Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.


Approved by The Openwork Partnership on 15/01/2024.