Is It Possible To Get A Mortgage On A Zero Hours Contract?

March 3, 2023

If you work on a zero-hour contract and are wondering if you can get a mortgage, the answer is that it may be possible. While the majority of high street lenders will still want to see a standard full-time contract, there are specialist lenders and even tailored mortgage products for zero hour contractors.

Zero hour contracts are also known as casual contracts, and have become increasingly common over the last five years. The employee has no set minimum contracted hours. These types of contracts are often used when the business or organisation has work that fluctuates, such as the hospitality or warehousing industry.

The rights and wrongs of this type of contract have been much debated, but essentially they suit some people because of the flexibility they afford. However, they do not guarantee a steady fixed income, and this makes getting a mortgage deal more complicated.

Lenders have to assess how well placed you are to meet the monthly mortgage repayments, and an income that varies from month to month makes it more difficult for them to do this. For this reason, many mainstream lenders won’t consider an application from anyone on a zero-hours contract, because they are deemed to be too high risk.

However, in recent years, some lenders have taken a more flexible approach to contract workers. They may even have products which are specially designed for zero-hour contract workers. These mortgage assessors will typically look at your annual rather than your monthly income, and how consistent your employment history is.

If you can demonstrate that you have a consistent track record of employment within your sector, this will put you in a better position than if you have frequently changed employers or job roles, or if you have a lot of gaps in your work history. Lenders may look at your application more favourably if you have worked for the same employer for at least a year.

The sector you work in may also be taken into account. Professional occupations such as teaching, nursing, or accountancy which require specialist qualifications are regarded as more favourable, because there is always demand for these skills and the work is relatively well remunerated.

To consider your application, a lender is likely to ask for 12 months of payslips and bank statements in order to assess your suitability. They will also take into account what your outgoings are, such as car loans, bills, childcare fees and so on. The lower your monthly expenditure, the stronger your position will be.

You may also be asked to pay a higher than average deposit because of the extra risk you represent to the lender. This could be as much as 15 or 20%, although a very small number of lenders may ask for less, depending on your individual circumstances. If you have a poor credit history, this will make your situation more difficult.

If you would like to talk to adverse credit mortgage brokers in the UK, please contact us today.

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

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