Pepper Money has introduced day rate calculations to assess affordability for contractors.

For contractors who are paid a daily rate, whether they are self employed, working via a limited company or umbrella company, Pepper will look at income based on their daily rate. The lender believes this will particularly benefit contractors whose chargeable rate has risen in the last year, where the latest set of accounts does not reflect that increase.

In calculating contractor income, Pepper will use either the 12-month average day rate x 5 days per week x 46 weeks, or the current day rate x 5 days per week x 46 weeks, whichever is the lower amount.

For example, a contractor has been earning £350 a day for the last six months but was on a contract for £250 a day for the previous six months, would be assessed on an average day rate of £300.

Contractor mortgages are available across Pepper’s entire range and the lender will accept applicants who can demonstrate a minimum of 12 months history of being a day rate contractor. Their track record does not need to be in the same line of business, but they must be in a contract when making the application.

Rob Barnard (pictured), sales director at Pepper Money, said: “The employment landscape is changing and an increasing number of people are turning their backs on life as an employee to work on a contract basis, which can give them more freedom and potentially be more lucrative. It can also be uncertain and it is not uncommon for contractors to experience periods of cash flow strain that can make their financial circumstances more interesting.

“Fortunately, at Pepper, we thrive on interesting cases, and with the introduction of day rate calculations, we are able to offer a solution that recognises the current earning potential of your contractor clients even if they have experienced credit problems in the past.”