Mortgages for zero-hours contract workers

As a temporary, agency or zero-hour contract worker, getting a mortgage can be challenging. But as more people turn to flexible working hours, lenders have had to take note.

We’ve positioned ourselves to meet that growing demand with relevant mortgage products. If you’re one of that flexible labour workforce, we can help you buy a home using your average gross income.

A lender will assess your affordability on your gross average earnings. Types of workers this method suits are:

• Temporary agency workers
• Zero-hour contract workers
• Short-term contract workers

If that’s you, either carry on reading to learn more or call us on 020 8421 7998. Or, submit your enquiry here to see how much you can borrow using your zero-hour contract.

Getting a mortgage on a temporary or a zero-hour contract

You might think that you’re alone in lenders persecuting the way you work. You’re not. The boffins estimate that there are now over 1,000,000 workers in the UK on zero-hour contracts.

The ONS suggests that those numbers are growing every year, too. In 2008, just 143,000 people were on zero-hours contracts.

But mortgage providers are yet to get behind this trend with any conviction. That’s because zero-hours contractors are only paid for the hours they work.

There’s nothing wrong with that on its own. But zero-hour employers tend to give no guaranteed minimum number of hours of work at any given time. This can lead to fluctuations in monthly income, making it harder to prove regular income to a lender.

It’s this uncertainty that makes getting a mortgage on temp or zero hours challenging.

Specialist mortgage lenders and risk factors

Lenders have to evidence regular, stable and steady income to satisfy their risk criteria. To an extent, they set their own criteria based on FSA guidelines.

Not all lenders are equal; their level of risk is down to that interpretation. A few have bucked the trend and will lend to zero-hours contractors and temp/agency workers.

So if a bank or building society has turned you down or declined your application, it’s not the end. There are other options, as some specialist lenders have more flexible underwriting policies.

Which lenders provide mortgages to zero-hour contract workers?

Smaller building societies tend to struggle to compete with the larger high street lenders. So, more recently, they’ve been remodelling their lending criteria to cater for specialist niches.

As such, building societies are particularly strong at common sense underwriting. They’ll assess you on merit when working out if you can afford the mortgage you’re after.

That means these specialist mortgage providers assess applications on a case-by-case basis. They’re prepared to use bespoke underwriting for every client.

The specialist mortgage provider edge

Mainstream lenders use automated processes and algorithms. It’s their computer-based scoring systems that assess mortgage applicants and affordability.

In contrast, specialist lenders use highly trained underwriters to make individual lending decisions. This allows more flexibility and isn’t such a clinical black-and-white outcome.

Most specialists aren’t household names or big brands. Plus, many are ‘intermediary only’. That means borrowers can only access them through approved specialist mortgage brokers, like us.

Most specialist lenders are just that: 100% focused on helping specific people. In this case, it’s borrowers with unconventional or challenging income characteristics. Examples of this type of lender includes:

• Kensington Mortgages
• Bank of Ireland
• One Savings Bank
• Ipswich Building Society
• Aldermore
• Precise Mortgages

Mortgage tips for zero-hour contract Workers

Try to avoid High Street mainstream lenders. Most won’t consider anyone on a zero-hour contract.

Your income makes you a specialist borrower. So go for a specialist niche lender instead. It just makes sense.

Remember, it’s all about finding the best lender for you. Providing you have a proven history of working zero-hour contracts, they can help.

And that is the key to success. Show that you have a track record of working on this basis for at least 12 months. This will prove that you’re serious and that your income is consistent.

There are other factors besides work history. Your job role, profession and experience before your current zero contract will count, too.

If you have questions and want to speak to an advisor, call Mortgage Quest today on 0208 421 7998 or enquire here.

Using all the inherent knowledge we’ve gained since 2004, we’ve created this unique “contractor mortgage search engine”.

It will only compare mortgage deals from lenders that our experienced broking team has defined “as “contractor-friendly”.

If you’re well-versed in mortgage comparison tools, dip your bread. If you’ve never used such a tool before, you can find full instructions here.