Zero hour contract mortgages
People always wonder if it is possible to get a zero-hour contract mortgage. The simple answer is yes but each mortgage lender will look at a zero-hour contract mortgage applicant on a case by case basis. Zero hour contract mortgages are available on the market but you may need to meet the eligibility requirements for them.
Can you get Zero-hour contract mortgage?
For you to get a zero-hour contract mortgage you will need to show the mortgage lender that you have a stable income.
Mortgage lenders, of course, don’t look so favourably on zero-hour contract workers as they will prefer workers who have a stable and guaranteed income. This means mortgage lenders will usually consider zero-hour contract mortgage borrowers as high risk and those who are more likely to miss out on their monthly mortgage repayments.
What are Zero hour contracts?
Zero-hour contracts are working contracts where you don’t have any guarantee of a minimum number of working hours with the employer. You will usually just be notified when work is available and be expected to accept the time given or not.
There is usually little notice before a timeslot is offered to you and no guarantee of any minimum working hours,
Zero-hour working contracts can be very good if you want the flexibility to work when you want or if you have other commitments such as childcare, education etc.
How much mortgage depsoit do you need for a zero-hour contract mortgage?
The mortgage deposit requirement for a zero-hour contract mortgage may differ from one mortgage lender to another. Some zero-hour contract mortgage lenders may accept a mortgage deposit as low as 5% whilst others may demand as much as 20%.
The amount of mortgage deposit you may need will depend on your mortgage affordability. If you have bad credit then you may be required to pay a bigger mortgage deposit.
What are the eligibility requirements for a zero-hour contract mortgage?
- Most zero-hour contract mortgage lenders will expect to see 12 months of you being on a zero-hour contract so they can analyse your income.
- Some zero-hour contract mortgage lenders will want to see your CV and get a better understanding of your experience for the role.
- If you have more experience as you have been working in the industry for a long period of time then you may find that there are more zero-hour contract mortgage lenders willing to lend to you than if you have just started.
- Some zero-hour contract mortgage lenders will want to know what sector you work in and how this may affect the stability of your income.
- How long you’ve been in your current contract for
The eligibility requirements here are just basic, in fact, most zero-hour contract mortgage lenders will consider every case by its merits.
Can you get a zero-hour contract mortgage with bad credit?
Bad credit]() usually makes it hard to get a mortgage as zero-hour contract mortgage lenders may request a bigger mortgage deposit or be much more strict in what they will count towards your regular income which may then affect your mortgage affordability.
Getting a zero-hour contract mortgage with bad credit is certainly possible and you may want to speak with a bad credit mortgage broker who may be able to find zero-hour contract mortgage lenders who may be willing to lend to you.
A zero-hour contract mortgage lender will consider applicants with bad credit on a case by case basis and so they may be able to lend to you given your particular circumstances.
Example: if it was a CCJ then a zero-hour contract mortgage lender may look to see if you satisfied the CCJ and how long ago you satisfied the CCJ. Some other zero-hour contract mortgage lenders may be more interested in the size of the CCJ and how many CCJs you had.
Bad credit may include:
A debt management plan
A home reposession
Can you get a zero-hour contract mortgage with a home buying scheme?
Most government scheme providers do not place a restriction on the type of mortgage you can get except for stating that it has to be a residential mortgage. As zero-hour contract mortgages can be residential mortgages you should be able to get a government scheme for first-time buyers or home movers.
The Government schemes you may be able to get with a zero-hour contract mortgage include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Buy to let mortgage when on Zero-hour Contract
If you’re on a zero-hour contract and looking to get a buy to let mortgage then this may be difficult as most buy to let mortgage lenders will require you have some personal income in case the property is unoccupied for a given period of time.
As zero-hour contracts may be unreliable you can expect that some buy to let mortgage lenders will be hesitant to lend.
You may need to be an experienced landlord with a current portfolio and even some collateral in some cases. If you are experienced landlord then you may find it much easier to get a buy to let mortgage with a zero-hour contract. Some buy to let mortgage lenders may even offer you a mortgage]() without carrying out any personal income checks aside from checks on the income of your BTL portfolio.
If you can show some regular income through your BTL portfolio or through your zero-hour contract then you may be able to get a buy to let mortgage.
If you are a first-time buyer buy to let mortgage borrower then you could expect to show at least 12months of accounts whilst being a zero-hour contract worker to demonstrate to the mortgage lender that you are indeed receiving a stable and reliable income.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.