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What is an Umbrella Company Mortgage?

What is an Umbrella Company Mortgage?

After leaving full-time employment, you first need to understand the financial nuances before entering the world of contracting and freelancing. For this, you must be bombarded with pieces of advice and suggestions from all over. The most obvious suggestion would be, “Find an umbrella company and understand the benefits of an umbrella company mortgage”.

Now, you must be thinking only about it.

  • What is an umbrella company?
  • How is it going to help me?
  • Is it the best-suited option for me?
  • What is an umbrella company mortgage?
  • What are the advantages of an umbrella contractor mortgage?

The list of questions is endless. So, to quench your quest for knowledge about umbrella company mortgages, we bring step by step information for better understanding.


If you started as a sole trader or contractor, finding a good umbrella company for yourself is advisable. By doing so, the company will be taking care of all the accounting involved in the project. They will raise the invoices and pay you via PAYE. The payment you receive is the amount you get after deductions of taxes and National Insurance Contributions (NIC).

So, your worry about keeping account books updated is sorted. And you have proof of the income generated through projects and assignments done as an independent contractor working through an Umbrella Company or Ltd.


As the name suggests, it is a mortgage company that works primarily for those who work through an umbrella company. The umbrella company mortgage understands the values of income generated by a contractor. Thus, it helps in getting better mortgage terms and conditions.

Some big lenders do not entertain umbrella mortgage customers, as they feel the income is a bit complex to understand.


There are various benefits of umbrella company contractor mortgages. Some of them include:

Evidence of regular income: One of the main advantages is regular income evidence. A person working as a contractor is not taken seriously by big lenders, as they find it challenging to understand earnings and calculate income. So, if you are working through an umbrella company, you get weekly or monthly payslips, which can be helpful for the lender to understand the income.

During the process of completing mortgage underwriting, you are always asked for evidence of your income. Being an umbrella company contractor, you do not have to wait for a year to update accounts books. This adds to your credits when any lender considers you as a mortgage customer.

New contractor preferred by the lender: Being a newly self-employed person, you might be apprehensive before approaching lenders. But then some lenders will consider your application if you are working through an umbrella company. Being an umbrella company contractor allows you to apply for a mortgage just a few months into a contract.

Considering overall contract value: A self-employed person, who gets paid via Umbrella Company, saves himself from the scrutiny of payslips. Some specialist lenders are glad to consider the overall contract value. The contract has to be legally approved, and payments should be made consistently.

Borrowing more mortgage amounts: An umbrella company knows how to treat your gross income for your benefit. And if you manage your expenses well, you can show better net profit. This will help you in convincing lenders to allow you to borrow a larger mortgage amount.


After the closure of 2020, there have been changes to IR35. The updated IR35, as defined by the HMRC, is designed for self-employed, contractors and freelancers. It identifies contractors who are misappropriating taxes. So, make sure to operate ‘Inside’ of IR35 and pay legal taxes.


When a lender is ready to consider your application, he will be assessing you and would want to get informed about a few essential things:

  • Time spent as an umbrella company contractor. The lender prefers those who have at least 12 months of association.
  • If your contract has been renewed with the umbrella company you are working with, there are better chances of approval.
  • Working through multiple umbrella companies is good for earnings, but lenders are keen on considering those who work with one company.
  • You should be above the age of 25 years. Although it is not mandatory, some lenders prefer this age limit.
  • Having adverse-credit scores in your file is always a red flag for your lender. So be careful about it.


A self-employed umbrella company worker has to deal with many assessments before applying for a mortgage. If you are unsure about your mortgage details and the procedure involved, you should find a specialist to help you with the mortgage lender.

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