The introduction of zero-hour contracts has divided politicians. Whatever your thoughts on this new wave of flexible employment, there’s no denying that they are popular with employers. Zero-hour contracts mean that workers are not guaranteed work every week. This can offer flexibility to both employer and employee, but at what cost?
Getting a mortgage can be more difficult when you are on a zero-hour contract. This is because your income will be irregular and unsteady. At any point, an employer can decide to stop giving you work. This can be a red flag for many mortgage providers. If you are dreaming of getting on the property ladder and you are on a zero-hour contract, there are steps you can take to increase the likelihood of your application being accepted.
Get Your Employment History in Order
Some lenders, like Halifax, will accept mortgage applications with a zero-hour contract if you can show that you have been on the same contract for at least 12 months. See Niche Mortage Info for more details. So, before you start the application process, get your employment history in order and make sure you don’t have any gaps in employment. Gather things like pay slips for various jobs to show that you have been continuously employed for at least 12 months.
Talk to Your Employer
In some cases, you may be able to switch your contract to a permanent or even a fixed term contract. Talk to your employer and ask if there are any permanent positions available with the company. They may appreciate the steady workforce, even if it does mean giving up some of your flexibility.
Save a Larger Deposit
Lenders are always more likely to accept an application from anyone with a larger deposit. If you are looking to secure a 95% loan to value (LTV) you will struggle to get approved. If the LTV is closer to 80%, lenders will look more favourably on your application. There are two ways you can increase the size of your deposit. Either save for longer to increase your savings pot or set your sights on a property with a lower value.
Fix Your Credit Score
Regardless of your working situation, a good credit score is essential for a mortgage application.
Your credit score is an indicator of your trustworthiness and reliability with money. If you can show a strong history of keeping up with your financial obligations then a lender will see that your zero-hour contract has never caused you problems in the past. If you have a history dotted with late payments, this might lead the lender to worry about your ability to make your mortgage payments on time.
Find a Guarantor
A guarantor can be a family member or friend who owns their own home. They must be willing to sign a legal document that says they will make payments towards your mortgage if you are unable to do so. They can usually offer security in the form of their own home, or a deposit. The deposit is held in a savings account owned by the lender. They will not be able to access their money until the borrower has paid off a certain amount of the mortgage.
Don’t Give Up!
Being rejected by one lender doesn’t mean that all lenders will reject you. In many cases, you will simply need to seek the guidance of a specialist mortgage broker. They will be able to advise you on the best route forward and how to make your application more attractive to lenders. With so many variables, it helps to have an expert’s perspective on mortgages.