What is an umbrella company mortgage?

Umbrella Company mortgages are a type of home loan aimed at contractors of the agency staff or other professionals who are working in an umbrella company. Most of the lenders may reject your application if you are working for an umbrella company because of the complicated umbrella company income structures. As many umbrella company workers are paid a statutory minimum wage for the hours they work and earn commission income or bonuses based on generated funds. Apart from this, there are always some mortgage lenders who can offer you a mortgage based on your income, but for that, you need to contact a specialist broker to start your application.  A specialist contractor mortgage broker like ourselves could help you by connecting you with a suitable lender for your application.

What is a contractor umbrella company?

A contractor umbrella company is different from a limited company as workers are paid on statutory minimum wages. An umbrella company mortgage is where you work for an umbrella company instead of being self-employed. You can apply for an umbrella company mortgage through a mortgage broker. If you don’t want to use a mortgage broker, then you can go direct to

The main difference between a traditional contract and an umbrella contract is that the latter allows the employer to pay the employees through their own umbrella company rather than directly.

This means that the umbrella company acts as an intermediary between the employer and the employee.

What are the drawbacks of an umbrella scheme mortgage?

As discussed above these schemes are based on the variable income of the employee which is not taken seriously by every lender. Lenders want to see the gross contract rate instead of post-tax accounts, which makes it a little complicated.

How do I apply for an umbrella contract mortgage?

If you would like to apply for an umbrella contract then you should first speak to your existing bank or building society to discuss how they handle umbrella contracts. They will probably tell you that they don’t accept umbrella contracts as evidence of income.

If you decide to go ahead anyway, you will have to fill out a form provided by your chosen umbrella company. You should make sure that you give all the information requested.

You will also need to provide copies of:

Your current tax return (if applicable)

Your latest payslip

A copy of your latest P60

You will also need to provide details of your previous employers including contact numbers and addresses.

Why is it difficult getting an umbrella company mortgage?

Some mortgage lenders are reluctant to disentangle the more complicated income stream of a contractor employed by an umbrella company. A typical arrangement is for the umbrella company to pay the contractor a minimum wage for hours worked and top this up with bonuses and commissions on the income generated. You might also have other income streams which are more difficult to disentangle from your basic salary as an employee.

For all these reasons and the fact that some lenders will, therefore, decline a mortgage to employees of umbrella companies, you may need to apply for a specialist umbrella firm mortgage.

What are the eligibility criteria for an umbrella mortgage?

Different mortgage providers naturally have separate policies. But some of the more general criteria for eligibility include:

  • a history of at least 12 months working for an umbrella company – preferably with at least one renewal of your contract with the company;
  • the lender may also have a preference either way for your working for a single umbrella company or multiple companies;
  • some lenders have a lower age qualification of at least 25;
  • concerning your income, some lenders may consider any bonuses and commissions, but others may not – as with any mortgage application, the higher your income, the better; and
  • the healthier your credit history, of course, the better any lender is going to like it.

How do I prove my income for an umbrella company mortgage?

There are various ways to prove your annual income, working in such organisation. The good news is that you are likely to borrow more on an umbrella company mortgage than if you are self-employed. That is because your umbrella company can provide the mortgage lender with written proof of your regular earnings – based on records likely to be complete and reliable than any you kept yourself.

Furthermore, an umbrella company loan may also consider the value of contracts you have undertaken as an employee of the company and not just the basic salary you have earned as your annual income.

Are there any drawbacks to an umbrella scheme mortgage?

We have already touched on some of the potential drawbacks. The initial drawback in turning to an umbrella company for your employment as a contractor is that many prominent mortgage lenders will not consider your earnings as proof of the necessary regular income.

As we have also mentioned, you may need to choose carefully between those specialist umbrella company mortgage providers who favour your working for just a single company and those that might welcome your employment by multiple umbrella companies.