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Mortgages for people on zero hour contracts

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By Pete Mugleston   Mortgage Advisor

Last updated: 26th September 2018 *

Can you get a mortgage on zero hour contracts?

Short answer, yes!

Getting a mortgage on a zero hours contract can be tricky depending on your situation, as many lenders require a more stable income source in order to approve your application. The good news is, every lender is different in who they do and don’t approve for a mortgage, and there are lenders happy to lend to people on zero hours contracts.

In this article we'll discuss the following:

What is a zero hour contract?

Zero-hour contracts are working arrangements with no guarantee of a minimum number of hours, with employees only being paid for the hours they work. An employer may call on the employee with little / no notice (often on the day they are required to work) and offer no certainty of regular work.

Where the media and those forced onto zero hour contracts may talk about them negatively, there are some who consider them a positive for many reasons. They’re flexible so if you’re a student, retired or working other jobs you have more flexibility to work as and when you want to or need to, depending on the job and your needs.

How lenders view zero hour contracts:

People who work these contracts may be looked upon less favourably by lenders when compared to someone on a permanent contract, as there’s no guaranteed income. This could mean you’re considered higher risk and potentially more likely to miss mortgage payments in future.

What are the key criteria mortgage lenders will look at?

  • How long you’ve been in your current contract for
    Most lenders require a minimum of 12 months working in the current position for most employment sectors.
  • Your experience prior to your current contract
    If you have been working in your industry for a long time, there may be lenders more willing to consider your application than if you have just started.
  • What sector / role you’re working in
    Those in certain professional positions such as doctors / nurses / barristers etc. may be approved with a shorter history than others.

Some lenders will never consider someone on a zero hour contract, whilst others are happy to accept providing the applicant has a history of working on these contracts. It’s all about finding the best lender for you, which is the job of the specialists we work with.

If you’ve been declined on a Zero hour mortgage application don’t lose hope - Make an enquiry through our website or give us a call on 0800 304 7880 and we’ll put you through to a zero-hour contract mortgage specialist, who will give you the best advice.

How much deposit do I need for a zero hours’ contract mortgage?

It’s possible to be approved with just 5% deposit on a zero hour contract. That said there are more factors than just your income type in deciding which lenders will consider your application, for instance if you also have bad credit (read more about adverse credit here), you may need 15% as a minimum, perhaps more, depending on the severity and how recent the issues are.

Zero hour contract mortgage lenders

There is a whole range of lenders that may consider a 0 hours contract mortgage, all with different lending policy. If you have been declined by high street lenders (e.g. Natwest, Nationwide etc.) then it doesn’t mean there are no other options, as certain specialist lenders can have more flexible policy. To establish the best lender and deals available to you, make an enquiry and we’ll refer you to one of the specialist advisors who handles these applications every day.

Get a mortgage with bad credit history and a zero hour contract

If you have adverse credit then your lending options can be more restricted, but that doesn’t mean there’s no hope at all! There may be lending options depending on the type of issue, when it was registered, and the amount of deposit/equity you have. Generally, the more deposit you have and older the registration date of the credit issue, the more likely it is you’ll be approved.

The type of credit issue can have a big impact also, where a late payment, default, CCJ or Debt Management Plan may be considered less severe than a bankruptcy or repossession, and thus require less deposit with a higher chance of approval.

First off, get your credit report

To establish which lenders would consider your credit history, it’s important to define exactly what the issues are. To do this you can gain access to your credit reports for free using free trials with any of the reference agencies, see here:

Then, make an enquiry!

The information on your report can be used to match you with the best lenders, as the specialists we work with already know what the lenders do and don’t accept. This allows them to approach the best lender first time.

If you’re looking to apply for a mortgage and you’re working on a zero-hour contract please enquire today and one of the specialists will be in contact ASAP!

Buy to let mortgage when on Zero-hours Contract

If you’re on a zero hours contract and are either an experienced landlord or looking to buy your first Buy to Let (BTL) property, it can be tricky.

Some lenders may require a minimum personal income through employment or self-employment, and assess this using a copy of your company accounts / payslips / contract etc.

If this is your first BTL property and you’re on a zero hour contract, the lending policy is likely to be much the same as for a residential mortgage, in that most BTL lenders would want to see a minimum of 12 months’ income before they’re happy to lend. That said, there are some specialist lenders that could consider lending if less than 12 months, so it’s is worth making an enquiry to speak to a specialist to find out.

If you’re an experienced landlord however, its more likely you could be approved, as often lending policy is more flexible and your personal income is less important – some lenders don’t require proof of personal income at all, others have no minimum requirement (more information in our article here).

Updated: 26th September 2018
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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