Can you get a mortgage on zero hour contracts?

The short answer is yes! Getting a mortgage on a zero hours contract can be tricky depending on your situation, as many lenders require a more stable income source in order to approve your application. The good news is, every lender is different in who they do and don’t approve for a mortgage, and there are lenders happy to lend to people on zero hours contracts.

What is a zero hour contract?

Zero-hour contracts are working arrangements with no guarantee of a minimum number of hours, with employees only being paid for the hours they work. An employer may call on the employee with little / no notice (often on the day they are required to work) and offer no certainty of regular work.

Where the media and those forced onto zero hour contracts may talk about them negatively, there are some who consider them a positive for many reasons. They’re flexible so if you’re a student, retired or working other jobs you have more flexibility to work as and when you want to or need to, depending on the job and your needs.

How lenders view zero hour contracts:

People who work these contracts may be looked upon less favourably by lenders when compared to someone on a permanent contract, as there’s no guaranteed income. This could mean you’re considered higher risk and potentially more likely to miss mortgage payments in future.

What are the key criteria mortgage lenders will look at?

How long you’ve been in your current contract for

Most lenders require a minimum of 12 months working in the current position for most employment sectors.

Your experience prior to your current contract 

If you have been working in your industry for a long time, there may be lenders more willing to consider your application than if you have just started.

What sector / role you’re working in

Those in certain professional positions such as doctors / nurses / barristers etc. may be approved with a shorter history than others.

Some lenders will never consider someone on a zero hour contract, whilst others are happy to accept providing the applicant has a history of working on these contracts. It’s all about finding the best lender for you, which is the job of the specialists we work with.

How much deposit do I need for a zero hours’ contract mortgage?

It’s possible to be approved with just 5% deposit on a zero hour contract.

That said there are more factors than just your income type in deciding which lenders will consider your application, for instance if you also have bad credit (read more about adverse credit here), you may need 15% as a minimum, perhaps more, depending on the severity and how recent the issues are.

Zero hour contract mortgage lenders

There is a whole range of lenders that may consider a 0 hours contract mortgage, all with different lending policy. If you have been declined by high street lenders (e.g. Natwest, Nationwide etc.) then it doesn’t mean there are no other options, as certain specialist lenders can have more flexible policy.

To establish the best lender and deals available to you, make an enquiry and we’ll refer you to one of the specialist advisors who handles these applications every day.

Get a mortgage with bad credit history and a zero hour contract

If you have adverse credit then your lending options can be more restricted, but that doesn’t mean there’s no hope at all! There may be lending options depending on the type of issue, when it was registered, and the amount of deposit/equity you have. Generally, the more deposit you have and older the registration date of the credit issue, the more likely it is you’ll be approved.

The type of credit issue can have a big impact also, where a late payment, default, CCJ or Debt Management Plan may be considered less severe than a bankruptcy or repossession, and thus require less deposit with a higher chance of approval.

Buy to let mortgage when on Zero-hours Contract

If you’re on a zero hours contract and are either an experienced landlord or looking to buy your first Buy to Let (BTL) property, it can be tricky. Some lenders may require a minimum personal income through employment or self-employment, and assess this using a copy of your company accounts / payslips / contract etc.

If this is your first BTL property and you’re on a zero hour contract, the lending policy is likely to be much the same as for a residential mortgage, in that most BTL lenders would want to see a minimum of 12 months’ income before they’re happy to lend. That said, there are some specialist lenders that could consider lending if less than 12 months, so it’s is worth making an enquiry to speak to a specialist to find out.

If you’re an experienced landlord however, its more likely you could be approved, as often lending policy is more flexible and your personal income is less important – some lenders don’t require proof of personal income at all, others have no minimum requirement.