How Deposit Size Affects Contractor Mortgage Options
How Deposit Size Affects Contractor Mortgage Options
Blog Article
As a contractor, one of the biggest factors that can impact your mortgage options is your deposit size. The more you can put down, the better your chances of approval—and the more attractive the deal you’re likely to get.
Let’s break down how deposit size plays a role in contractor mortgages.
Why Deposit Size Matters
Your deposit directly influences:
The loan-to-value (LTV) ratio
The interest rate you’re offered
How much risk the lender takes on
For example:
A 5% deposit = 95% LTV (higher risk, fewer lenders)
A 15% deposit = 85% LTV (better rates, more choices)
A 25%+ deposit = 75% LTV or lower (access to top-tier deals)
Lenders reward lower-risk borrowers with better rates and more flexibility.
Contractor-Specific Considerations
As a contractor, your income may already be seen as “non-standard,” so offering a larger deposit can offset perceived risk. It shows:
Financial stability
Savings discipline
Lower risk for the lender if repossession occurs
This is particularly helpful if you have:
Limited contracting history
Bad credit
Gaps between contracts
What If You Have a Small Deposit?
If you only have a 5–10% deposit:
Focus on specialist contractor lenders
Consider Help to Buy or shared ownership schemes (if eligible)
Strengthen your application with solid income records and good credit
Your borrowing capacity may be more limited, but it’s still possible to secure a mortgage.
How to Boost Your Deposit
Save aggressively or cut unnecessary expenses
Use a Lifetime ISA for a government bonus (if eligible)
Consider family help or gifted deposits
Final Thoughts
Your deposit size can open or close doors when applying for a contractor mortgage. A larger deposit not only improves your chances—it helps unlock better rates and wider lender options.
At Contractor Mortgage Solutions, we help you make the most of your deposit and secure the mortgage that fits your financial goals.