Using a Contractor Mortgage Calculator: What You Need to Know

Using a Contractor Mortgage Calculator: What You Need to Know

Blog Article

If you're a contractor considering a mortgage, one of the first tools you might turn to is a mortgage calculator. But when it comes to contractor income, standard calculators may not give you an accurate estimate. That’s where contractor-specific mortgage calculators come in.

Here’s what you need to know before using one.

Why Standard Calculators Can Fall Short
Most generic mortgage calculators are designed for PAYE employees. They usually ask for:

Annual salary

Monthly income

Fixed employment contracts

As a contractor, your income is calculated differently—often based on your daily or hourly rate and contract length. If you input only your PAYE umbrella payslip or last tax return, you may be underestimating your actual borrowing power.

How Contractor Mortgage Calculators Work
Specialist contractor calculators use a formula tailored to your contract income. A common method looks like this:

Daily Rate × 5 (days) × 48 (weeks) = Annualised Income

For example, a contractor earning £400/day would be assessed as: £400 × 5 × 48 = £96,000 annual income

This figure is then used to calculate how much you could potentially borrow—often up to 4.5 to 5 times your annualised income.

What You’ll Need to Use One
Before using a contractor calculator, have the following ready:

Your current daily or hourly rate

Length of your current contract

Any upcoming renewals or new contracts

Basic details about your expenses, credit commitments, and deposit size

These help give you a more accurate picture of your affordability.

Final Thoughts
A contractor mortgage calculator is a great starting point, but it’s not the full picture. For the most accurate assessment, speak to a mortgage broker who understands contracting. They can review your full financial situation and help you access lenders who assess your income fairly.

At Contractor Mortgage Solutions, we combine the right tools with expert advice to guide you every step of the way.