Getting a Mortgage on a Zero Hour Contract

A zero-hour contract mortgage is the same as a standard residential mortgage. The term indicates the specific affordability and eligibility criteria that different mortgage lenders will use when assessing an application from someone employed on this type of contract.

So, for example, NatWest and Santander will potentially consider zero-hour contracts as an income type on an application as long as evidence is provided of the last twelve months’ consistent earnings. HSBC’s criteria are similar, but they would specifically want to see the applicant’s latest P60 document along with the last three months’ worth of regular payslips.

Yes, securing a mortgage with a zero-hour contract is possible. Lenders look for a stable income history, often reviewing your average earnings over the past 1-2 years. Showing consistent income and evidence of potential future employment stability may significantly enhance your approval chances.

While it’s common, these days, for lenders to offer mortgages of up to 95% of the property value, they can be more conservative if you’re on a zero hour contract. Some will only lend up to 80% of the property value and others up to 75%. This would mean you need a much larger deposit.

It’s not impossible to get a mortgage if you have a 5% or 10% deposit. You’ll just need to work harder to identify the right lender. Read more in our guide to low deposit mortgages.

As a zero-hour contract worker, you’ll need to meet a few specific requirements in addition to a lender’s usual mortgage criteria.

Each lender will have a policy on:

• Contract length. You might need to prove that you have been in a continuous contract with your current employer for anything from six months to two years.
• Time remaining.  You might need to prove you have either a rolling contract or that you have up to six months remaining on your contract.
• Gaps in work. Some lenders will allow gaps in work of up to six weeks, and others might only allow two weeks or none at all.
• Proof of income. You’ll likely need proof of your total income in the last two or three years (e.g. a P60 or tax return for each year) and the past three months’ payslips.

Typically, mortgage lenders calculate your borrowing limit by applying income multipliers, such as up to 4.5 times your annual income for standard borrowing scenarios or potentially up to 5.5 times under more flexible lending criteria.

Different lenders have different approaches to calculating your income; for example, they could use any of the following criteria:

• Use the figure in your latest P60 as your annual income
• Use the total of your payslips from the past 12 calendar months
• Take the average of your last six months’ pay and multiply that by 12
• Use the average of your last two years or three years’ income (based on a P60 or tax return)

If your income changes from month to month, you’re probably aware that each of these calculations would result in a different figure. So, which calculation a lender uses will directly impact how much you can borrow. The challenge is determining which calculation allows you to borrow the most and which lenders use that method.

If you already have your income information to hand, you can use our calculator below for an idea of how much you may be able to borrow: