Mortgages for Tradespeople

However, with the right approach, documentation, and lender, you can still obtain the mortgage you need. This guide will walk you through the best mortgage options for tradespeople, including those on price work, CIS contractors, and self-employed business owners.

Understanding Mortgages for Tradespeople

Lenders assess mortgage applications based on stability and predictability of income. Since tradespeople often have irregular earnings, this presents challenges, but it’s not impossible.

Factors that can impact a mortgage application include:

• Payment structure – Whether you are paid on a day rate, contract, or price work basis.
• Seasonal work fluctuations – Some trades experience slow periods, which may impact income consistency.
• Self-employment or CIS status – Whether you are a sole trader, limited company owner, or working under the Construction Industry Scheme (CIS).

Price Work and Its Impact on Mortgage Applications

Price work means you’re paid based on productivity rather than a fixed salary. This is common among tradespeople, but it can pose issues for lenders who prefer steady, predictable income.

How to Improve Your Chances of Getting a Mortgage on Price Work

• Show consistent earnings – Lenders will look at your income over time, typically six months to two years.
• Avoid gaps in income – Try to maintain steady work leading up to a mortgage application.
• Have clear records – Keep bank statements and tax returns up to date to prove your income.
• Consider specialist lenders – Some lenders are more open to price work income and will take a broader view of your earnings.

CIS Contractor Mortgages

CIS contractors work under the Construction Industry Scheme, where tax is deducted at the source before they receive payment. Some lenders will consider CIS contractors as employed, which can increase borrowing power.

How to Get a Mortgage as a CIS Contractor

• Use your CIS payslips – Instead of needing two years of accounts, some lenders will use your CIS statements to calculate income.
• Work with a mortgage broker – A broker can connect you with lenders specialising in CIS contractor mortgages.
• Demonstrate industry stability – Lenders prefer CIS contractors who have been in the same trade for 12+ months.

Self-Employed Tradespeople and Business Owners

Due to varying income levels and tax deductions, self-employed tradespeople often face more hurdles when applying for a mortgage.

What Lenders Look for in Self-Employed Applicants

• Two years of SA302s and tax year overviews – Most lenders require two years of self-assessment tax returns.
• Net profit and retained earnings – If you run a limited company, some lenders will consider retained profit, not just salary and dividends.
• Accountant reference – A signed accountant’s certificate can help confirm income stability.

Tips for Self-Employed Mortgage Approval

• Increase declared income – While minimising tax liability is tempting, a higher declared income improves borrowing power.
• Avoid significant expenses before applying – Big deductions can lower net income on tax returns.
• Use an accountant – Having a professional prepare your accounts makes them more credible to lenders.

Apprentices and First-Time Buyers

If you’re an apprentice, getting a mortgage may seem out of reach due to your lower income. However, the Government Lift Scheme (in Scotland) and Lifetime ISA can help.

How Apprentices Can Improve Mortgage Eligibility

• Save for a larger deposit – A bigger deposit reduces lender risk.
• Explore government assistance – First-time buyer schemes can make homeownership more accessible.
• Maintain sound financial habits – Avoid excessive spending and pay bills on time.

Overcoming Common Mortgage Challenges for Tradespeople

Tradespeople face unique challenges, but there are ways to improve approval chances:

• Demonstrate consistent income – The more stable your income appears, the better.
• Keep personal and business finances separate – This makes income easier to track.
• Improve your credit score – Pay debts on time and avoid unnecessary borrowing.
• Consider a mortgage broker – Brokers can access specialist lenders who understand tradespeople’s income structures.

Alternative Mortgage Options

If standard mortgage routes don’t work, consider:

• Guarantor mortgages – A family member guarantees the loan if you have a low deposit or fluctuating income.
• Joint mortgages – Applying with a partner or family member can increase borrowing power.
• Specialist lenders – Some lenders cater specifically to self-employed individuals and contractors.

FAQs

Can I get a mortgage if my income fluctuates?
Yes, as long as you can show consistent earnings over time. Some lenders specialize in applicants with variable income.

Do I need two years of accounts to get a mortgage as a self-employed tradesperson?
Not always. Some lenders accept one year of accounts, and CIS contractors may qualify based on payslips alone.

Will using an accountant help my mortgage application?
Yes, having professionally prepared accounts makes your application more credible.

Can apprentices get a mortgage?
Yes, provided they have a stable income and can meet affordability requirements. Government assistance schemes may help.

What if my bank rejects my mortgage application?
Consider using a mortgage broker who has access to specialist lenders.

Conclusion