If you’re a zero-hour contract worker, the thought of getting a mortgage might seem like an impossible dream.
After all, most lenders are hesitant to loan money to someone who doesn’t have a steady income.
But it’s not totally out of reach—this guide will explain what a zero-hour contract mortgage is and how can you get a mortgage on a zero hour contract.
What is a Zero-Hour Contract Mortgage?
Zero-hour contracts, known for their flexibility, provide workers with irregular hours and no fixed employment guarantee.
A zero-hour contract mortgage is designed to accommodate the unique financial circumstances of individuals working under these terms.
It works exactly like a regular mortgage, with the same terms and conditions—except that you can apply even if you’re on an unpredictable or variable income.
Can You Get a Mortgage on a Zero Hour Contract?
Yes, it is possible to get a mortgage if you’re on a zero-hour contract.
However, the process may require some extra effort due to the fact that lenders are naturally more cautious when it comes to lending money to someone with an unpredictable income.
But with the right preparation and paperwork, you can make a convincing case for yourself. The key lies in proving that you have a steady and reliable source of income despite the variable hours.
Lenders will assess your application based on factors like your employment history, payment consistency, and credit score. If you’ve been on a zero-hour contract for a while and can demonstrate financial stability, lenders are more likely to consider you for a mortgage.
How Much Can You Borrow?
How much you can borrow with a zero-hour contract will depend on your financial situation and credit score.
Generally speaking, lenders are more likely to approve a mortgage on a case-by-case basis rather than offering set loan amounts.
The standard borrowing amount for a zero-hour contract is usually 3.5 to 4.5x of your yearly income.
For example, if your income is £60,000 per year, you could be approved for a loan of up to £240,000 – £270,000.
However, the exact amount will depend on other factors such as your credit history and employment status.
How To Get A Mortgage When You’re on a Zero Hour Contract
Getting a mortgage on a zero-hour contract requires careful preparation and the right paperwork. Here are some tips:
Using Your Employment History
If you’ve been on a zero-hour contract for some time in the same field or with same employer, you can use this to your advantage. The lender will consider that as a form of job security. This gives you an advantage over someone who is just starting out on a zero-hour contract.
It’s important to demonstrate that you have regular employment, even if it is with multiple employers. If you have gaps in your employment history, make sure to explain them in detail.
You should be able to demonstrate evidence of your employment history and payment consistency.
Gather evidence of your earnings, such as payslips or bank statements, to show your income over the last few years, this will help paint a positive picture of your financial situation.
Your Profession and Role
When applying for a mortgage, you’ll need to show evidence of your profession and role. Your profession plays a major role in determining your eligibility for the loan.
If you’re working in an industry with high demand or have specialised skills, you may be able to use this to strengthen your case.
As getting a new job will be relatively easy for you if you have professional qualifications or specific skills, the lender may see you as a viable option for a loan.
Showcase Your Earnings
When you apply for a mortgage, the lender will need to assess your affordability. To do this, you’ll need to demonstrate that your income is stable and sufficient. The better your earnings are, the more likely you are to be approved for the loan.
Make sure to highlight any regular overtime or bonuses you receive from your employer. You can also demonstrate this by providing bank statements showing regular payments into your account from your employer.
Which Lenders Offer Zero-Hour Mortgages?
There are several lenders who offer mortgages to those on zero-hour contracts. Some of the most popular ones include:
- Halifax
- Barclays
- Santander
- NatWest
However, it’s important to note that the criteria they use can vary from lender to lender. Some lenders only consider zero-hour contract applications from those who have been in the role for at least 12 months.
Some lenders only consider applications from NHS employees or those who are applying for a joint mortgage with a partner or another person.
Conclusion
Obtaining a mortgage on a zero-hour contract may come with its challenges, but with the right approach and expert assistance, homeownership is within reach.
By understanding your unique circumstances, working with a specialized broker, and exploring lenders open to your situation, you can navigate the path to securing a mortgage and achieving your homeownership goals.