Mixed Mortgage Applications: Contractors + Permanent Employees
Combining incomes as a contractor and a permanent employee can strengthen a mortgage application by leveraging the stability of salaried income alongside the higher earnings potential of contracting. Here’s how it works:
Key Benefits
- Combining Day-Rate + Salary
- Lenders assess affordability using both incomes, increasing borrowing power.
- The permanent employee’s salary provides stability, while the contractor’s day-rate boosts total earnings.
- Using Permanent Income for Affordability
- Many lenders prefer salaried income for affordability calculations, as it’s seen as more reliable.
- Contractor income (if recent) may be discounted or averaged, so the permanent income helps secure approval.
- Contractor Income for Deposit Boosting
- Contractors often have higher take-home pay, allowing for larger deposits.
- A bigger deposit reduces the loan-to-value (LTV), improving mortgage rates.
Document Checklist
To support a joint application, lenders typically require:
- Employee’s Documents:
✓ Last 3+ months’ payslips (proving stable income)
✓ Employment contract (confirming permanent status) - Contractor’s Documents:
✓ Current contract (showing day rate and remaining term)
✓ 12+ months’ accounts (or SA302s if self-employed) - Joint Documents:
✓ Bank statements (last 3–6 months, showing savings and income deposits)
✓ Proof of deposit (savings or equity from existing property)
Case Example
A permanent IT manager (£60k salary) and a contractor (£400/day, 12-month contract) apply jointly:
- The lender uses the full salary but may average the contractor’s income (e.g., 4–5x annualized earnings).
- The contractor’s higher earnings help with a 20%+ deposit, securing better rates.
- Joint bank statements prove shared financial responsibility.
Result: The mixed application increases borrowing power while mitigating lender concerns over contractor income volatility.
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