The UK workforce has changed dramatically over the last decade. Contracting and freelancing are no longer niche career paths but mainstream choices for highly skilled professionals in IT, construction, media, finance, and healthcare. While this flexibility has allowed individuals to maximise income and lifestyle choices, it has also complicated the process of securing a mortgage.

In 2025, lenders continue to apply conservative underwriting rules, and traditional criteria often clash with the irregular income patterns of contractors and freelancers. Added to that, IR35 rules and the rise of umbrella company structures mean many lenders struggle to interpret income accurately.

This article examines how lenders treat contractors in 2025, the pitfalls that trip up borrowers, and how specialist brokers like Willow Private Finance help turn complex income into borrowing power.

Why Contractors Struggle with Mortgages

Contractors and freelancers often earn substantial income, but lenders are not always good at recognising it. A professional working on a £500 per day contract could earn more than a salaried peer, yet be offered a smaller mortgage if the lender discounts their income due to lack of a “traditional” payslip.

The main issues are:

• Inconsistent documentation: Contracts, invoices, and umbrella payslips do not always fit the boxes lenders expect.

• Short work histories: A contractor may have only six months of contract work but decades of experience. Lenders may still ask for two years’ accounts.

• IR35 confusion: If a contractor is inside IR35, lenders may treat them as an employee; if outside, they may be viewed as self-employed. Many lenders are not consistent in how they interpret this.

• Umbrella structures: Using umbrella companies for tax and compliance reasons can reduce clarity, with some lenders reluctant to accept income paid this way.

How Lenders Assess Contractor Income in 2025

In today’s market, lenders generally fall into three camps.

Some continue to treat contractors like the self-employed, demanding two or three years of accounts before considering an application. Others take a more flexible approach, using day-rate calculations—for example, multiplying the daily rate by five working days and by 46 to 48 weeks to arrive at an annualised income. This can dramatically increase borrowing potential.

Private banks and specialist lenders are even more accommodating. For high-value loans, they often consider the strength of the individual’s contract, their industry track record, and overall wealth rather than rigid payslip records. This can be essential for contractors working internationally, in high-demand sectors, or with multiple income streams.

The IR35 Factor

Since IR35 reforms, contractors have faced extra scrutiny. Being “inside IR35” effectively means being treated as an employee for tax purposes, while “outside IR35” allows income to be received more flexibly. The mortgage market mirrors this complexity.

If you are inside IR35 and paid via an umbrella company, some lenders treat you almost identically to a PAYE employee. Others view the same profile as higher risk, limiting loan-to-income multiples or excluding bonus payments. Those outside IR35 can sometimes achieve higher borrowing power, but they may need additional evidence of long-term contracts to prove stability.

Common Pitfalls for Contractors

Contractors and freelancers often underestimate how much preparation is required. Applying for a mortgage with incomplete accounts, short contract histories, or unclear tax treatment can result in declined applications and credit score damage. Another pitfall is failing to plan for the impact of breaks between contracts. Lenders may ask probing questions about gaps in income, even if they were short-lived or intentional.

Finally, many contractors apply directly to high street banks, assuming their day rate will be treated fairly, only to be told they “do not fit criteria.” By the time they reach a specialist broker, time pressures may have mounted.

Why Specialist Advice Is Crucial

Contractor mortgages are one of the clearest examples of why independent, whole-of-market advice matters. At Willow Private Finance, we maintain direct relationships with lenders who actively design products for contractors, freelancers, and umbrella company workers. We know which banks accept day-rate calculations, which require a minimum contract length, and which private banks can tailor arrangements for high earners.

By structuring applications properly—presenting contracts, accounts, and evidence of ongoing work in the right format—we convert what might look like “uncertain income” into strong, mortgageable affordability.

Real-World Example

A freelance IT consultant approached Willow earlier this year with a £600 day rate. Their bank had capped their borrowing at £300,000 because it refused to count day-rate income without three years of accounts. By approaching a specialist lender, we were able to annualise the contract, giving them a provable income of over £130,000. The result was a mortgage offer of £650,000—more than double what the high street would provide.

Looking Ahead

As more of the workforce moves into freelance and contract-based models, lenders will need to adapt further. Some already use open banking and AI-driven affordability tools to assess irregular income more accurately. Others still lag behind, applying outdated models that penalise contractors unfairly. For borrowers, the key lesson is clear: success in 2025 requires preparation, evidence, and the right broker.

How Willow Can Help

Willow Private Finance specialises in complex income profiles. Whether you are a contractor working through an umbrella company, a freelancer with multiple clients, or a high-net-worth consultant earning globally, we can identify the lenders most likely to support your application.

Our team prepares cases carefully, ensuring contracts, invoices, and financial statements are presented in the way underwriters need to see them. We also know when to escalate a case to a private bank that will take a more nuanced view.

If you are a contractor or freelancer looking to buy or refinance in 2025, speak to us first. The right advice can transform your borrowing potential.

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Securing a mortgage as a contractor or freelancer is not about fitting into a template—it’s about structuring your case so lenders recognise your true income.