Getting a Mortgage on a Zero Hour Contract
Want to know how to get a mortgage even without a guaranteed income? Read on to find out more.
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In this article we’ll explain how you can still get a mortgage if you’re on a zero hour contract, what mortgage lenders will look for on an application and why using an experienced mortgage broker will boost your chances of success.
What is a zero-hour contract mortgage?
A zero-hour contract mortgage is exactly the same as a standard residential mortgage. The term is used to indicate the specific affordability and eligibility criteria that different mortgage lenders will use when assessing an application from someone who is 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 there is evidence 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 month’s worth of regular payslips.
Can you get a mortgage on a zero hour contract?
Yes, you can get a mortgage or remortgage. More than two-thirds of UK lenders consider applications from people on zero hour contracts. However, you’ll need to be aware of a couple of ways a zero hour contract can affect your application.
How much you can borrow
Typically, mortgage lenders will calculate how much you can borrow by multiplying your annual income by a figure between 4.5 and 5.5. If you don’t have a guaranteed annual income, that’s not straightforward.
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 well aware that each of these calculations would result in a different figure. So, which calculation a lender uses will have a direct impact on how much you can borrow. The challenge is to work out 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:
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
How much deposit you’ll need
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.
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Requirements you’ll need to meet
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, others might only allow two weeks or none at all.
- Proof of income. You’ll likely need to provide 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.
How to get a mortgage on a zero hour contract
Getting a mortgage is a not-so-simple matter of finding a lender who:
- Lends to zero hour contract workers
- Offers mortgages at the loan-to-value you need, e.g. 90% or 95%
- Uses an income calculation that will fully recognise your annual earning potential
- Will not rule you out based on your contract length, the time remaining, or any gaps in work
Doing this yourself could be a long process of trial and error. You’d need to apply to your preferred lender, potentially have your mortgage application declined, and continue applying to different lenders until you found the right one.
Not only is this time-consuming and frustrating, but it could also temporarily impact your credit score if you have numerous failed applications for credit in a short time period.
A better approach is to consult a broker who’s an expert in zero hour contract mortgages. They’ll fully understand each lender’s policy on these products and can make an unbiased, personalised recommendation on which one would be best for you. If you’d like to speak to a specialist, get in touch.
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Which mortgage lenders are available?
There are numerous lenders who will potentially consider mortgage applications from zero hour contract workers, including mainstream lenders like NatWest, Halifax, Barclays, and Santander.
Unfortunately, having access to all these options doesn’t guarantee that you can choose from all of them. Certain lenders will exclusively review these applications under particular conditions.
- Specific lenders solely assess zero-hour contract applications for NHS employees or other key workers
- Some lenders only allow zero hour contract income as secondary income, i.e. in addition to a full-time or part-time job
- Other lenders will only consider a zero hour contract applicant if they are making a joint application with someone with a different income type
There are a few which are less specific, but you could still be declined based on affordability, or if you recently started a new job, your contract expires soon, or you’ve had gaps in work. It’s best to speak to a broker about the exact details of your situation so that they can give you personalised advice.
My partner and I were both in temporary agency work with no contract and thought it would be impossible to get a mortgage as we were unable to obtain a mortgage through a 'normal' lender. I am so grateful for Online Mortgage Advisor for providing this service.
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It was quick. Online mortgage advisor were communicative on what to expect next. Someone contacted me quickly. They were very helpful, understood exactly what I needed and processed everything very efficiently.
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They were the only ones out there who seemed to be interested in our particular mortgage need - we're both on short term contracts. Ashley, the advisor assigned to us, was invaluable in finding what we needed and guiding us through the process.
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What are your options if you’re a first-time buyer?
It’s certainly possible to get a mortgage as a first-time buyer on a zero hour contract, but your options will depend on the details, e.g.
- How large your deposit is
- How much you need to borrow
- How long you’ve been on your zero hour contract and how long is left
- If you’ve ever had long gaps in work
We can’t provide information here that applies to every case, so it’s best to ask an expert for personalised advice.
Get matched with a broker experienced in zero hour contract mortgages
Zero hour contract mortgages might sound overwhelmingly complex but, luckily, to experts with a thorough understanding of the details, they can be straightforward. Having one of these experts on your side can make the process quick and simple.
If you’d like to speak to someone about your situation, your chances of getting approved, and which lenders you should approach, feel free to use our broker-matching service. We’ll set up a free, no-obligation chat so you can find out more. Just give us a call on 0808 189 2301 or make an enquiry.
Speak to an expert in zero hour contract mortgages
Maximise your chance of approval with a dedicated specialist mortgage broker
Yes. Many buy-to-let mortgages have no minimum income requirement, which is helpful if your income is not guaranteed. Instead, lenders will judge your application based primarily on the rental income of the property and your experience as a landlord.
Some lenders, including HSBC and Santander, require that at least one applicant has an income of over £25,000. If you can prove that your annual income from a zero hour contract is consistently higher than that, you should be ok. Read more about proving your income for buy-to-let.
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