Many people believe that it’s impossible to obtain a mortgage if your sole income is derived from employment on a zero hours contract. Whilst this is a more precarious type of employment and does make obtaining a competitive mortgage offer more difficult, it is possible.
With the growth of zero hours contracts in the UK over the last decade or more, lenders appreciate that more and more people are likely to be employed on these less predictable contracts of employment. However, just because your employment contract might not guarantee hours of work every month (and therefore income) many employees on zero hours contracts might well be earning a respectable income month in – month out, despite the lack of formal hours in their contract.
It is, therefore, important to make sure that you make the best case possible when making your mortgage application. For example, some lenders might want to see at least three months proof of income. Others might need 12 months. Making an application to the wrong lender for your needs could be time consuming and costly, involving you in wasted effort and perhaps even damaging your chances of obtaining a mortgage elsewhere if you are rejected by a lender that was never likely to fit your circumstances.
Mortgage lenders will want to reduce their risk. This means that higher earners with skills are likely to be a more attractive proposition. So are lenders with a larger deposit, especially those with a Loan To Value of 80% or less. Having worked in the same industry for a decent period of time or, better still, for one employer for a good while, will help.
It’s also worth noting that many people borrow as a couple and if one borrower has a salary and the other has an income through a zero hours contract the impact might be less relevant. Also, where you are buying a property to let as an investment your income might have little or no relevance as some lenders in the buy to let market assess their lending criteria on other factors such as LTV and net rental income.
Therefore, when on a zero hours contract, it’s important to make sure you apply to the right lender for your circumstances and present your application in the most favourable light.
For an initial chat and a no-obligation consultation contact BlueQ, today.