IT Contractor Buys in Canary Wharf

James, 34, is a software engineer working through his own limited company on a day rate basis. His typical rate is £650 per day and he usually works around 230 days a year, giving annualised gross income of approximately £150,000. His limited company pays him a modest salary of £12,570 (the personal allowance) and he extracts the remainder as dividends.

He had found a £520,000 apartment in E14 and had £104,000 as a deposit. He needed £416,000. When he spoke to his bank, they assessed him on salary plus dividends as shown in his last set of accounts. Because he had taken a six-week break between contracts the previous year, his dividends for that tax year were around £68,000. The bank offered him £288,000 based on this, well below what he needed.

The six-week gap between contracts had created two problems. First, it reduced the previous year's dividend income, which most mainstream lenders use as the basis for income assessment for limited company directors. Second, some lenders treat a recent contract gap as evidence of income instability, particularly in technology where project-based working is completely normal.

James had a current contract in place paying £650 a day for a further eight months, but the high street bank would not take this into account. Their process was backwards-looking: past accounts only, no credit given for current or future contract certainty.

We identified a contractor-specialist lender that assesses IT contractors based on annualised day rate rather than the salary and dividends shown in accounts. This approach takes the current contract day rate, multiplies it by the lender's assumed working year (typically 46 weeks), and treats the result as annual income.

For James, £650 x 5 days x 46 weeks produced a gross income figure of £149,500. The lender applied a 4.5x income multiple to give a maximum loan of approximately £672,750, well above what James needed.

The six-week gap was documented with a letter from James explaining the intentional career break between projects, which the lender accepted as a standard feature of contractor working patterns rather than a warning sign.