January 28th, 2026
If you’re a contractor applying for a mortgage, you’ve probably asked yourself a fairly simple question with a somewhat unclear answer: will lenders look at my salary, or my day rate?
The reality is that different lenders view contractor income very differently, and choosing the right one can have a major impact on how much you can borrow and how straightforward the process feels.
Why Contractor Income Raises Questions
Most contractors don’t earn in neat, predictable monthly salaries. Income often comes through a limited company, split between salary, dividends and retained profit. While this is tax-efficient, it doesn’t always line up with how traditional lenders like to assess affordability.
That’s where the divide between day rate and salary begins.
When Lenders Focus on Your Day Rate
Many contractor-friendly lenders take a more practical view and prioritise your day rate, rather than what you pay yourself.
They typically calculate income by multiplying your day rate by the number of working weeks in a year. If you’re on a strong contract, this can paint a far more accurate picture of your earning power, especially if your salary is deliberately kept low.
This approach usually works best if you have:
- A solid day rate (often £300+)
- A current contract with time left to run
- A consistent contracting history
For many contractors, this method results in a higher borrowing figure and a smoother application.
When Salary and Dividends Take Centre Stage
Some lenders, particularly on the high street, still prefer a more traditional assessment. They’ll focus on your PAYE salary and dividends taken over the last year or two.
That can be limiting if you leave profits in the business or vary your income year to year. However, it can work well if your dividends are consistent and your accounts show steady growth.
Why This Makes Such a Big Difference
Two lenders can look at the same contractor and come to completely different conclusions.
One may assess affordability on a modest salary and dividends. Another may base it on a £600 day rate. The gap between the two can be tens – sometimes hundreds – of thousands of pounds in borrowing.
This is why contractor mortgages aren’t just about eligibility, but about lender fit.
What Lenders Really Want to See
Behind the calculations, lenders are simply looking for reassurance. They want to know your work is sustainable, your income is reliable, and your skills are in demand.
Clear contracts, a stable work history and good documentation often matter just as much as the numbers themselves.
Getting It Right From the Start
Understanding how lenders view day rate versus salary before you apply can save time, stress and disappointment. The right advice early on can make all the difference.
At CMME, we specialise in contractor mortgages and know exactly which lenders favour day-rate income – and when a salary-and-dividend approach makes more sense.
If you’re thinking about buying or remortgaging, book a free, no-obligation mortgage review with CMME and find out how lenders will really view your income: