Zero-Hour Contract Mortgages

Can I get a mortgage on a zero hours contract?

More people than ever are working on zero-hour or casual contracts. These are contracts where the business doesn’t guarantee the contractor any hours of work. This can make getting a mortgage more difficult. But it’s certainly not impossible.

Most mortgage lenders, particularly high-street banks, require contractors to be in full-time work. They want a guarantee you’ll have a regular stream of income to meet your monthly repayments. But this viewpoint is changing. With the upward trend in zero-hour contracts there’s now more lenders than ever that specialise in this field - there’s even specialist zero-hour contract mortgages. This means with the right approach, the chances of getting a mortgage are higher than they’ve ever been.

A key part of getting any mortgage is showing lenders you’re ‘low risk’. We know this is harder as a zero-hour contractor, so here are some tips:

• Offer a larger deposit: A bigger deposit means lower risk.

• Show them your detailed employment history: You may have been with the same company or sector for the last few years. This can show lenders your employment is safe and expected to continue.

• Show lenders your earnings: Being on a zero-hour contract doesn't mean you don’t earn good money. You may also have some savings in the bank. This is your opportunity to show lenders you’re a savvy saver and can afford to pay back the loan.

Whatever contract you’re working on, we've got a team who'll take the time to listen and understand your unique situation. Make an enquiry and we can discuss all the options available to you.

What is a zero-hours contract?

Zero-hour contracts are a flexible way of working. It means your employer doesn’t give you any minimum working hours and you’re free to accept or decline as many hours as you want. 

Zero-hours contracts are most common in industries where work isn’t always constant or have casual hours. For example, delivery driving, warehouse and hospitality work, or students who only need work when they’re not studying.

While the flexibility of a zero-hour contract works very well for a lot of people, the fact that you can’t show regular full-time income to a lender for a mortgage can be an issue for some lenders.

How do mortgage lenders view zero-hour contracts?

New legislation in the last few years has made it harder for everyone to get a mortgage, with lenders under more pressure to ensure that you’re going to be able to afford your monthly repayments.

For this reason, lenders are now much more strict and need to more closely scrutinise your earnings before you can get a mortgage.

Obviously, this can be a bit harder in the case of a zero-hour contract, where it can be tricky to provide a consistent track record of employment and earnings over the last twelve months.

If a lender sees that your income fluctuates from month to month, they may not feel confident that you’re going to be financially stable enough to keep up with your repayments on your mortgage.

Do all lenders offer mortgages to people on zero-hour contracts?

Unfortunately, even though more and more mainstream lenders are starting to grant mortgages to people on zero-hour contracts, some will still refuse to offer you a mortgage if you’re employed on a zero-hour contract.

However, this shouldn’t prove to be too big of an obstacle to you, because there is still a large market of lenders available who are more than willing to offer a mortgage to those on zero-hour contracts.

You can read more about how lenders view applications in our guide: What Mortgage Lenders Look For In Applicants.

What deposit do I need to get a mortgage on a zero-hour contract?

Because you’ll still be considered ‘high-risk’ to a lender if you’re on a zero-hour contract, one of the best things that you can do to lower that level of risk and increase your chances of success is to put down a larger deposit.

Technically speaking, you may still be able to secure a mortgage with a 5% deposit, although it’s much more likely that you’ll be required to put down a deposit of 10-15%, but this will vary from lender to lender.

To get a more accurate estimate of what kind of deposit you will need for a mortgage on a zero-hour contract, make an enquiry to speak to a specialist.

Read more in our Guide: How Much Deposit Do I Need to Buy a House?

Can I get a mortgage on a zero-hour contract if I also have bad credit?

Having a bad credit score is another thing that can count against you when applying for a mortgage, but it’s still possible! 

This will ultimately depend upon how severe your credit issues are and how recent they were, but again, there are specialist lenders who can help in these situations and it all depends on your own individual situation.

Read more in our Guide: Getting a Mortgage With Bad Credit.