Mortgage on a Zero Hour Contract

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Mortgage on a Zero Hour Contract, Yellow Brick Mortgages
Mortgage on a Zero Hour Contract, Yellow Brick Mortgages

Mortgage on a Zero Hour Contract

(Part 1)

Alex and Carley Ramsay explain the process of getting a mortgage on a zero hour contract.

Approved by The Openwork Partnership on 19/02/2024.

What is a zero hour contract mortgage?

There isn’t a typical type of mortgage for people employed on a zero hour contract. It’s more about how lenders consider zero hour contracts and your income within the mortgage assessment.

Is it possible to get a mortgage if I work on a zero hour contract?

Depending on your history and experience of working in that way, there are quite a few lenders that will consider it, subject to criteria. They will look into things in a bit more detail.

How much deposit do I need for a mortgage on a zero hour contract?

It’s similar to what you’d normally need. There are lenders that can lend with no deposit, but not many of them. Typically most lenders will come on board with a 5% deposit or greater. As with any application, the more deposit you have, the better. You’ll generally get more options.

Can self-employed workers on zero hour contracts get a mortgage?

People that work on zero hour contracts wouldn’t normally fall under self-employed. They’d still be classed as employed. Obviously if they’ve got the contracts there, we can look at that. If they’re paying their own tax, we just need to look into it in a bit more detail. But depending on the lender, something can usually be considered.

How do lenders assess income for zero hour contracts?

Typically zero hours contracts mean you have no guaranteed income. They’ll look for a track record, instead. Most lenders will want a track record for a minimum of 12 months, although there are some exceptions to that. If you have another form of employment that’s permanent and your zero hour contract is a second job, the track record is not so important. It’s similar if one party to the mortgage has permanent employment and the money from a zero hour contract can be treated as a secondary income.

What documents do you need to gather to be considered for a mortgage on a zero hour contract?

It’s a case of your history, really. So you will need details of the contract work you have done previously. You will need pay slips and details of the actual contracts. Generally 12 months of payslips are ideal to work out the history.

How much can I borrow when working on a zero hour contract or temporary contract?

The answer is the same for both. It is based on the actual level of income you gain over a 12 month period. It will depend on your other commitments as well. In truth, there’s no set answer on this. It’s down to lenders’ affordability calculations. A broker will understand your situation and work out which lenders to look at in terms of getting the maximum lending figure for you. You can then go out and find the property that you want.

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Can I use benefits as income when applying for a zero hour contract mortgage?

That’s all going to be dependent upon the lender we’re looking at and the type of benefit being paid. Some lenders will consider some benefit income alongside a zero hour contract, obviously subject to meeting criteria.

How does my age impact my eligibility when applying for a mortgage as a zero hour contractor?

Age is a factor. You’re generally going to be able to borrow up to the age at which you intend to retire. It is possible to go longer than that depending on pension contributions and the type of work you do.

But there’s no difference in terms of the age requirements for a zero hour contract over permanent employment. It would be the same for anyone.

What is the maximum Loan to Value ratio ratio for somebody looking to get a mortgage on a zero hour contract?

The maximum Loan to Value for most lenders, to give yourself a choice, would be a 95% mortgage. So you will need a 5% deposit.

The more deposit you put down, the more options you’ll have and possibly better rates. There are some lenders that even do no deposit – 100% mortgages – subject to meeting other criteria.

Will I have to pay more on my mortgage as a zero hour contractor?

The product you get would be the same whether you’re a permanent employee, a zero hours contract worker or even if you’re self-employed. It’s just down to a lender’s criteria as to whether you qualify for that mortgage or not.

How likely is it that I will get a mortgage while having a zero hours contract job? Is it possible to see whether you will be accepted for a mortgage before applying?

Speaking to a broker like ourselves is the best option. We will look at all the documentation and the facts and figures to give you accurate advice on what’s acceptable for a lender before you actually put an application in.

We can then give you a guideline on rates and do a soft credit check with the lender. That will then tell you whether you’re going to meet their criteria. We will get you an Agreement in Principle to move forwards with.

A few lenders still do hard footprint credit checks and that might be a route that we have to take if there are limited options. But a broker can give you advice on what’s possible before you actually put the full application in.

What factors should I consider when applying for a mortgage on a zero hour contract?

It’s really just down to having the documents or – payslips, potentially bank statements and contracts. Having a deposit and working to improve your credit if needed will all help.

How can I improve my chances of getting a mortgage on a zero hour contract?

It’s all about the history and making sure that you’ve got the right documentation and experience. Obviously getting a consistent level of income is important.

The more deposit you’ve got, the lower the risk to the lender and the more choices you’ll have.

What is your experience with zero hour contract mortgages? What role does an expert broker play in applying and getting a mortgage on a zero hour contract?

Personally, I’ve worked in mortgages for over 20 years and have come across plenty of zero hour contract situations. They have become more popular for employers recently, so we have plenty of experience in dealing with them.

A broker will help you narrow down the options, establish your budget and give you all the information you need before you look at buying or remortgaging.

How can a broker like Yellow Brick Mortgages help with zero hour contract mortgages?

The best place to start is always to speak to a broker. We know the lenders’ criteria inside out. A zero hour contract is not a straightforward case, so it’s our job to decide who’s going to be the lender to go to. A broker will give you tailored advice.

How can I speak to an expert for advice on getting a mortgage on zero hour contracts?

Have a look on our contact page – we have a call back function. You can also call and speak to an adviser directly on the phone number shown.


Approved by The Openwork Partnership on 19/02/2024.