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It’s trickier to get a zero hour contract mortgage but it is possible. Here is everything you need to know, from the information you'll be asked to provide, to tips on boosting your chances of your mortgage application being approved.
A zero hour contract mortgage is designed for people who don’t have a permanent employment contract with fixed hours but do have a zero hour contract. These are different to traditional mortgages because the borrower doesn’t typically have any guaranteed work or number of working hours.
Getting a zero hour contract mortgage can be difficult because many lenders will require you to prove you have a stable income.
However, zero hour contracts have become more common in recent years; according to the latest ONS Labour Force Survey there are an estimated 917,000 people in the UK working on zero hour contracts.
Some lenders are adapting to this trend and now offer zero hour contract mortgages. Although you are likely to have to jump through hoops to show evidence of income built up over 1-2 years in order for them to consider lending.
It’s also worth noting that zero hour contract mortgage deals can be hard to find. So it’s a good idea to get expert mortgage advice.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau. Compare deals or speak to an adviser today.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
If you’re on a zero hour contract, you’ll be considered higher risk compared to someone with a permanent job. So lenders will typically want to look at the detail of your contract when they’re assessing your application. There are various factors they’ll consider such as:
With this type of mortgage, most lenders will require that you’ve been employed by the same company for at least a year. However, others may agree to lend to you if you’ve started more recently.
If you use a mortgage broker, as well as knowing which lenders are most likely to accept you and finding the right mortgage for you, a broker will also manage your mortgage application for you. This means they can put together the application on your behalf to present to the lender.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
If you’re employed on a zero hour contract, some lenders may require a larger deposit from you, such as a minimum of 10%. You may be offered a higher interest rate too, meaning your mortgage will be more expensive.
However, this varies by lender and on your individual circumstances. It may be possible to get a mortgage with a 5% deposit if you’re on a zero hour contract if your application is very strong otherwise. The easiest way to find out what may be available to you is by speaking to a mortgage broker.
While there may be specialist lenders who offer tailored mortgages for people on zero hour contracts, you may be able to get a mortgage from a mainstream lender, depending on your circumstances.
Halifax, Lloyds, HSBC, Nationwide and TSB are just some of the big lenders considering zero hour contract applications.
This is another reason to get expert advice. Mortgage brokers will have detailed knowledge of different lenders’ lending criteria and can find the right mortgage for you.
When you make a mortgage application there are things you can do to give your application a boost when it comes to how lenders may view your finances. They’ll want to know you’re capable of managing your money well. So in the months running up to applying, slash your spending and save as much as possible. This will help demonstrate to the lender how well you can manage your money.
If you’ve got adverse credit and you’re on a zero hour contract, you will typically find it harder to secure a mortgage. But while it may be more difficult, that’s not to say it’s not possible.
It all depends on your personal circumstances, such as the severity of your credit issues and how recent they were. It’s a good idea to get expert advice from a mortgage broker to find out what your options are. If your credit history is a sticking factor in getting a mortgage right now, take action to improve what’s in your credit file to boost your chances for next time.
Read our guide on how to improve your credit rating before getting a mortgage
It may be tricky to get a Buy-to-Let mortgage if you’re on a zero hour contract, but it’s not impossible – it depends on your circumstances. With Buy-to-Let mortgages, the amount you can borrow is based on how much rent the property can generate versus the cost of the mortgage. Typically, lenders will want your expected rental income to meet at least 125% of the monthly payments on the loan.
However, some lenders will require you to have a minimum salary too, typically £20,000-£25,000. And as a first time landlord on a zero hour contract, you may need to have been with your current employer for at least 12 months. Also, Buy-to-Let mortgages typically require at least a 20% deposit too.
If you’re considering getting a Buy to Let mortgage and you’re on a zero hour contract it’s a good idea to get expert advice from a mortgage broker, tailored to your circumstances.
Just like with zero hour contracts, having a fixed term contract does not preclude you from getting a mortgage – it will depend on your circumstances. But lenders will typically want to see that there is some track record of earning on this basis.
As with self-employed borrowers it’s about proving the level of income, so that the mortgage will be affordable now and going forward.
Mortgage lenders will usually want to see a history of contracting, usually with at least a 12 month history and 6 months remaining on the current contract. Alternatively, some lenders may be able to consider a continuous history of working in that field over a couple of years, which may be helpful if the borrower has switched from full time to contracting but remains in the same industry.
Some lenders may be more flexible about how they look at the income, particularly where the contractor is a higher earner or in an industry where contracting is commonplace.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
HomeOwners Alliance Ltd is an Introducer Appointed Representative of Mortgage Advice Bureau (Derby) Limited which is authorised and regulated by the Financial Conduct Authority.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
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Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.
