Subcontractors, fixed/short term contracts and agency workers
- The applicant has 12 months contract history, evidencing no gaps exceeding 6 weeks with at least 3 months remaining (if less than 3 months remaining a future contract showing a minimum of 3 months future employment will be required)
Construction Industry Scheme (CIS) Contractors
- Treat as a fixed term contractor where employer deducts full PAYE tax and National Insurance contributions. The applicant must have 12 months contract history, evidencing no gaps exceeding 6 weeks with at least 3 months remaining (if less than 3 months remaining a future contract showing a minimum of 3 months future employment will be required)
- Treat as self employed where employer does not deduct full PAYE tax and National Insurance contributions.
- If the applicant has started employment within 3 months and is on a probationary contract, select yes to the radio button that populates asking if the customer is in a probation period.
Applicants who have an initial probationary period at the start of their permanent contract are not included in the above and can be treated as permanent.
Zero hours contracts
Subject to underwriter referral. Each case must be considered on an individual basis and the customer must have a minimum of 12 month contract history, evidencing no gaps exceeding 6 weeks. Income should be verified by way of the latest P60, the last 3 months payslips (6 if fortnightly, 12 if weekly) and 12 months contract history to show a consistent and sustainable level of income.
Day Rate Contractors
- Customers must have a minimum income of £50,000 from their average day rate, no other income will count towards the minimum requirement. Bonus, overtime, commission and location/car allowance will not be considered for affordability.
- Customers must have 12 months contract history, evidencing no gaps exceeding 6 weeks with at least 3 months remaining (if less than 3 months remaining a future contract showing a minimum of 3 months future employment will be required). If on a rolling contract the current employer or agency must provide evidence that the contract is still valid.
- To calculate day rate income, multiply average day rate for the last 12 months by 5 (days) and then by 46 (weeks) (including any future contracts if applicable). If applicant has had 2 contracts in the last 12 months, 1 at £400 per day and 1 at £300 per day then the average day rate would be £350 (£400 + £300 / 2 = £350). Annual income based on average day rate with this example would be £350 x 5 x 46 which is £80,500.
- You will also need to capture a basic salary which should match the day rate x 5 x 46 unless the customer works anything other than 5 days per week The lower of the basic salary or day rate captured will be used for affordability.
- If a contract specifies a basic salary / income this should be captured, and if it specifies a set number of days this should be used to calculate the basic salary. If for example the contract states the customer works 4 days per week and the average day rate is £350 you would multiply £350 x 4 x 46 which is £64,400 per annum.
- Where the customer works a shift pattern the basic salary will need to be calculated manually. This can be done by dividing the days worked by the sum of days worked minus rest days, then multiplying by 7, multiplying by day rate and then by 46. Example 12 days on 12 days off would be: 12 / (12+12) = 0.5, then 0.5 x 7 x £350 (as per previous example) x 46 = £56,350. If you need help working out a basic salary please contact your BDM or our office based BDM team.
- Any additional living costs and travel costs incurred by the customer should be captured as a commitment and keyed as 'other' in household expenditure.
- Where day rate contractor income has been captured the maximum loan to value will be 90%.