Head of Content
Mortgage Advisor & Director
What is a zero-hours contract?
As the popularity of flexible working has increased over the past few years, so has the zero-hours contract. In the UK, we've seen an upward trend in the number of people on zero-hour contracts, sometimes attracting media attention.
A zero-hour contract is a contract used when there are irregular hours and varying requirements.
There is no obligation from the employer to provide a set amount of hours, and there is no requirement from the employee to accept hours that are offered. Examples of when these contracts are used include:
- Work with casual hours
- Care work
- Delivery driving
- Hospitality work
- Warehouse work
As a zero-hours employee, you still benefit from legal rights from your employer such as :
- National minimum and living wage
- Paid holiday
- Pay for work-related travel
You may have other benefits depending on your contract.
Why can it be a challenge to get a mortgage on a zero-hours contract?
As there is no obligation from the employer to provide you with work or associated income under a zero-hour arrangement, the lender will be concerned that your income is not stable. Therefore you may not be able to meet monthly mortgage repayments.
Fear not, there are specialist lenders that accept applicants on zero-hour contracts, and at Teito our team of experienced advisors have helped many people like you to get the best deal possible on their new mortgage.
Complete our simple online form today to get started, or carry on reading to learn more.
How to get a mortgage on a zero-hour contract
There are a few things you can do to demonstrate to the lender that you are a credible borrower and improve your chances of being accepted for a mortgage.
- Check your credit history - understand the factors that are affecting your credit score and make improvements if needed. You may find that there are a few easy-fixes or even errors that are affecting your score.
- Save a bigger deposit - Not only will this give you access to better rates, offering up a larger deposit gives you access to a wider pool of lenders and deals available.
- Maintain an information pack to demonstrate your income and work history. If you can show you have a consistent work pattern over a number of years, this should help to convince the lender that you can keep up with monthly repayments.
What about my role?
The actual function of your role can make a difference to the lender.
If you have been working in a role consistently for a number of years, even for different employers, this can help to show the mortgage provider that you are a safe bet, particularly if you are in a fairly common role.
Although it may be more difficult if your role is niche if you can show you have a consistent track record and can meet affordability and eligibility criteria you may still qualify.
How much deposit will I need?
While it is possible to get a mortgage with a small deposit, larger deposits mean less risk for lenders.
As a zero-hour contract applicant, you are already considered a higher risk, so having a larger deposit will work to reduce this risk for mortgage providers.
On top of this, you will find that some rates are only accessible with certain Loan to Value (LTV) ratios, so having a higher deposit will improve your chances of getting the best deal.
What if I have bad credit?
It might make it more challenging to get a mortgage with bad credit, but not impossible.
Make sure you understand the factors that are affecting your credit rating and try to improve if necessary. While there is no 'acceptable score' for lenders, they will be more concerned with the severity and age of the bad credit.
If you have any concerns, complete our simple online form today, and one of our advisors will be in touch to discuss your options.
There are a few steps you can take to improve your credit rating - read our full guide to bad credit mortgages to learn more.
Buy to let mortgages with a zero-hour contract
It may be easier than you think to get a mortgage on a buy-to-let property as a zero-hours worker.
This is because, in comparison to a residential mortgage, a buy-to-let property will provide you with a stable monthly income - which is preferential to lenders.
Please read our guide to buy to let mortgages to learn more or complete our simple online form today to get started.
How can I learn more?
As a whole-of-market broker, at Teito our team of experienced advisors, we have helped many zero-hours workers to get the best deal on their new mortgage.
As a non-standard mortgage application, we would recommend that you use an experienced broker to give you the best chance of being accepted. Complete our simple online form today to get started.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
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Last updated 28 February 2024