What Deposit Do Contractors Need for a Mortgage?

What Deposit Do Contractors Need for a Mortgage?

Blog Article

When it comes to getting a mortgage, one of the first questions contractors ask is:
“How much deposit do I need?”

The answer depends on your circumstances, but the good news is—contractors don’t need a huge deposit to get approved. Let’s break down your options.

The Minimum Deposit for Contractors
In general, most lenders require a minimum deposit of 5–10%. That means:

On a £250,000 home, you’d need £12,500 to £25,000

However, the exact figure depends on:

Your credit score

Your income structure

The lender’s criteria

If you’re new to contracting or have a less-than-perfect credit history, a larger deposit (around 15–20%) can open more doors.

Why a Bigger Deposit Helps
The more you put down:

The lower your loan-to-value (LTV) ratio

The more competitive interest rates you can access

The more likely lenders are to approve your application

For example, moving from a 90% to 85% LTV can significantly reduce your interest rate and monthly payments.

Deposit Sources: What Counts?
Lenders usually accept deposits from:

Personal savings

Help from family (gifted deposit)

Proceeds from another property sale

⚠️ Most lenders don’t allow deposits from personal loans or borrowed funds, so transparency is key.

Can You Use a Gifted Deposit?
Yes! Many contractors use a gifted deposit from parents or relatives. Most lenders accept this, provided:

It’s a true gift, not a loan

The giver provides a signed letter confirming it’s non-repayable

Final Thoughts
As a contractor, you’re not required to provide a bigger deposit than anyone else—but having one can give you more flexibility and better deals. Whether you’ve saved 5% or 25%, the key is to work with a broker who understands contractor income.

At Contractor Mortgage Solutions, we’ll help you find the best mortgage based on your deposit size and contract earnings.