Getting a Mortgage on a Zero-Hour Contract 

Zero-hour contracts are still embroiled within a storm of controversy, with many people calling for an overhaul of their terms and legality, and others seeking their abolishment altogether.

Regardless of how you feel about them however, recent figures from the Office of National Statistics (ONS) show that they are currently a major source of employment for many workers, with more than 900,000 people hired under such a contract at the end of last year, and so the fact that these people often struggle to get mortgage approval is a very real problem that needs to be addressed.

What is a zero-hour contract?

A zero-hour contract is an agreement between an employer and a worker under which the employer is not obliged to offer a minimum number of working hours each week. Instead, the member of staff will be called upon on an ad hoc basis, only when specifically needed. In way of compensation for this, the worker is not required to necessarily accept the hours offered, theoretically leaving them with the flexibility to seek additional employment elsewhere and fit their working life around their personal one.

Why is it difficult to get a mortgage if you’re on one?

Getting accepted for a mortgage is more or less about proving you can be trusted to consistently meet your monthly payments. A large part of this involves showing the lender that you have a steady income, and because zero-hour contracts don’t generally provide this, an applicant employed in such a way would typically be considered too high risk, with a fluctuating income that wouldn’t be consistent enough to keep them in the black.

Why is this a problem?

This situation is considered particularly harmful for young people, as they are often the ones offered zero-hour contracts at a time in life when they are likely to be looking to get onto the property ladder for the first time, leaving them in a tricky situation.

The ONS also showed that 34% of people on zero-hour contracts work the equivalent of full-time hours anyway, and that 41% of people on the contracts have been with the same employer for more than two years, meaning they probably would meet affordability criteria and that their immediate dismissal from the mortgage application process is unjust.

What can you do to improve your chances of approval?

In many cases, it comes down to who you approach when it comes to maximising your chances of approval. Ipswich Building Society assess applications on an individual basis and make their decisions based on each person’s unique circumstances, putting a higher emphasis on a regular income pattern than the specific contracted hours that others tend to look to. Advice from a consultant and a range of products that suit different needs mean that at last, people on zero-hour contracts don’t have to abandon all hope of getting a mortgage, and therefore, the home they’ve always aspired to.

from Finance Girl


Author: Frozen Pension

Our aim when we set up was to help people like you track down their frozen pensions with the greatest of ease. Tracking a lost or frozen pension can often be a complicated process for people who are unfamiliar with the system, and we realised that we could provide the help and expert support that people need.

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