Divorce, Deposits and Contractor Mortgages – A Case Study

Divorce is a major life event—and when it involves selling the marital home, it often comes with big financial decisions. For many, this is the point where mortgage planning and future housing goals need to be carefully aligned.

In this case study, we explore how a client in their mid-fifties, working as a contractor, was able to understand borrowing capacity, structure a realistic plan, and prepare for a new home purchase.

Step 1 – Releasing Equity from the Marital Home

The client was in the process of selling a former marital home valued at around £1.2 million with a remaining mortgage of £180,000. Based on a 50/50 split of the equity, they expected to receive approximately £500,000 toward the next purchase.

This deposit provided a strong foundation for buying a four-bedroom home in the preferred local area, where prices typically range between £800,000 and £1 million.

Step 2 – Borrowing Capacity as a Contractor

As a contractor working under an umbrella company on a day rate of £700, affordability was not straightforward.

Some contractor-friendly lenders calculate income using the formula:

Day rate × 5 (working days) × 46 weeks

This gave an indicative borrowing capacity of around £670,000.

At age 55, the mortgage term was modelled to end before their planned retirement date (75th birthday), meaning a 19-year term. This balanced affordability with future flexibility. The plan was to maximise borrowing while still working, then potentially downsize in five to ten years.

Step 3 – Affordability Across Different Scenarios

Several property price points were modelled:

• £800,000 purchase – borrowing £300,000
  
• £900,000 purchase – borrowing £400,000
  
• £1,000,000 purchase – borrowing £500,000

The client’s comfort zone was £3,000–£4,000 per month and all scenarios remained manageable.

Step 4 – Other Affordability Factors

Affordability was supported by:

• No financially dependent children
  
• One car payment of £600 per month, ending shortly

These short-term commitments were factored into the lender assessment.

Step 5 – Managing Overpayments and Inheritance

We also discussed how to handle potential inheritance lump sums. Most lenders allow up to 10% overpayment per year during a fixed rate without penalty. Larger repayments above this can attract early repayment charges (around 1 – 5%, depending on the lender and product).

By staggering lump sums (for example, around £50,000 per year), the mortgage balance could be reduced while holding any remainder in savings until the fixed period ended.

A repayment mortgage was preferred to steadily build equity and ensure the loan was repaid in full at the end of the term, rather than interest-only, unless there was a definite plan to sell at the end of the term.

Final Thoughts

This case highlights how life changes, such as divorce, don’t have to derail home-buying plans. By combining contractor-friendly mortgage criteria with a strong deposit, clear affordability checks, and a strategy for future flexibility, it’s possible to move forward with confidence.

The right advice ensures not just that you can borrow—but that your mortgage fits your long-term plans.

Important Information

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.

Symmonds de Lacey is a trading style of Easy Street Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Company number 6430453. Registered address: Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL.

We are not tax advisers. For tax advice, please speak to your accountant or a qualified tax adviser.

Information correct at time of writing – October 2025.