Mortgages for zero-hour contract workers
Are you on a zero-hour contract and looking to secure a mortgage?
Find out how we could help you achieve your property goals where other mortgage brokers have failed.
What is a zero-hour contract worker?
More people than ever are working on zero-hour contracts, which was initially introduced in the late 1980s. Recent estimates showed nearly two million people in the UK are working under this kind of arrangement.
These contracts are flexible in nature, which means businesses/employers don’t have to guarantee minimum working hours. This can be problematic when applying for a mortgage, but it’s certainly not impossible.
Who are zero-hour contract workers?
Employers often use zero-hours contracts where work isn’t always constant or have casual hours. This includes industry sectors like:
- NHS staff and GPs
- Delivery work
- Hourly paid casual work (e.g. student holiday workers)
- Care work
- Hospitality
- Warehousing
- Retail
Why is it difficult for zero-hours contract workers to get a mortgage?
In recent years, the tightening up of mortgage lending criteria has made it more difficult for zero hours contract workers to secure a mortgage.
Can't express my gratitude enough for getting our mortgage approved! We had dealt with two other brokerages that found our situation too complex to get the mortgage we needed.
Andrew McCahey
Lenders have been under a lot of pressure from the regulator (FCA) to ensure borrowers are able to afford their monthly repayments. This has proved tricky in the case of workers on zero hours contracts who struggle with earnings fluctuations, and providing a consistent track record of earnings over a period of time.
Luckily, more mortgage lenders are moving with the times and are becoming more flexible with their affordability criteria. Provided you approach the right one, there are plenty of favourable mortgage deals available for borrowers on zero hours work.
Over the years, we’ve worked hard to educate lenders and their underwriters on the nuances of contract work. This has enabled us to negotiate fairer lending criteria for zero-hours contract workers. With the right approach, the chances of getting a mortgage are higher than they’ve ever been.
If you’re working on a zero hours contract, the specialist broking team at Freelancer Financials are here to help you prepare for your mortgage application, to give you the best chance of being accepted.
Here's how to get a mortgage on a zero-hours contract
The key to successfully applying for a mortgage is proof of income and affordability. Mortgage lenders will require you to demonstrate a reasonable track record, normally the minimum of 12 months, which shows a consistent level of working hours and earned income. If you can provide this, then you should be able to get the same offer as any other self-employed person or permanent employee.
A typically lender, for which we’ve agreed terms for zero-hours contract workers, will request the following:
- A minimum of 2 years’ experience in their chosen profession
- A copy of current contract (where available)
- A copy of latest month’s bank statement
- The last 3 months’ payslips or invoices
To calculate income, they will use an average of the last 3 months’ payments. There is no minimum income requirement. However, if the nature of the work is seasonal then evidence of at least 12 months’ income may be requested to prove sustainability for affordability purposes.
While it may be possible to find a provider who will offer you a 90% or even 95% loan-to-value (LTV) mortgage, a bigger deposit will nearly always work in your favour. This is true regardless of your job type. In putting down a larger deposit, you’re reducing the investment risk for lenders. A lower LTV usually means a wider range of providers and better rates.
Your credit rating must also back up your income, deposit and other credentials you provide. The better your credit score, the higher the probability of you securing a mortgage, especially if you have only a 5% deposit to put down. Poor credit history could see you declined for a mortgage, which can seriously impede your options. It’s best you know up front before doing further damage, if that’s the case.
Applying through a specialist mortgage broker such as Freelancer Financials can make getting a mortgage with a zero-hours contract a lot simpler. You need a broker with the expertise to help you navigate the mortgage market, identify suitable lenders and assist you with submitting a strong application.
Each lender has its own criteria and policies, so the outcome can vary depending on the specific lender and your circumstances, which is why seeking professional advice and exploring multiple options can make such a difference.
Start your mortgage application today
Types of mortgage available
Our flexible, competitive solutions are designed to make your mortgage journey easier. We offer a range of mortgage products designed for zero-hours contract workers, including:
First-time buyer mortgages
Home mover mortgages
Remortgages
Affordable housing schemes
How much can I borrow?
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