As the workforce continues to shift towards more flexible and non-traditional employment arrangements, those who do not have a stable or predictable income stream may be wondering if they will be able to obtain a mortgage on a zero hours contract. The good news is that it is possible, but it can be more challenging than for those with a stable income.
Firstly, it is important to understand what a zero hours contract is. Simply put, it is an employment agreement where the employer does not guarantee any minimum number of hours of work for the employee. This means that the employee’s income can vary greatly from one week to the next, making it difficult to plan and budget. While zero hours contracts are often associated with part-time work, they can also be used for full-time positions.
So, what do lenders look for when considering a mortgage application from someone on a zero hours contract? The main thing they will want to see is evidence of regular income. While it may not be guaranteed, if you can show that you have worked consistently over a period of time and have a good track record of income, this can help strengthen your application. This could include providing payslips or bank statements that show a regular stream of income, as well as employment contracts or letters from your employer.
It is also important to have a good credit history. This means keeping up with payments on any existing debts and avoiding missed or late payments. Lenders want to see that you are a responsible borrower and are likely to make your mortgage payments on time.
Another factor that can help your application is having a larger deposit. The more money you can put down upfront, the less risky you appear to the lender. This can help offset the potential instability of your income and give the lender some extra reassurance.
It is also worth considering getting advice from a mortgage broker who specialises in working with those on zero hours contracts. They will have experience in dealing with these types of applications and can help you navigate the process.
In conclusion, obtaining a mortgage on a zero hours contract may be more challenging, but it is possible with the right approach. Demonstrating consistent income, a good credit history, a larger deposit, and seeking the help of a specialist mortgage broker can all help strengthen your application. With some careful planning and preparation, you could be on your way to becoming a homeowner.