On a zero hours contract? Here’s how to get a mortgage

Written by Lisa Stanley Mann on 4th April 2017

This blog is sponsored by Ipswich Building Society


Loathe them or love them, zero hours contracts (ZHCs) are here to stay. In fact the number of workers on zero hours contracts has reached a record high of 910,000.

But with inconsistent earnings patterns and no proof of guaranteed work in the future, if you are on a ZHC and also trying to get a mortgage, you might find you are faced with a computer that just says no.

Zero hour contract workers typically face difficulty when applying for a mortgage because they do not have fixed, contracted hours of employment and therefore fail to meet the underwriting criteria of some banks and building societies. But, luckily for this increasing sector of the British workforce, mortgage lenders are starting to sit up and take notice – and, hopefully, change their approach.

Mainstream mortgage “misfits”

Indeed, latest data from the ONS for April 2016 to June 2016 revealed that more than a third (34.2%) of zero contract employees actually worked full time, with 41% having been with their employer for more than two years.

Ipswich Building Society is one such mortgage provider who has recently announced it will consider applications from people on ZHCs. It has amended its lending terms to allow creditworthy ZHC workers access to its range of mortgage products.

ZHC mortgage applicants will need to have a minimum of 18 months’ history of working within their role and be able to supply their P60 and three months’ payslips.

Danny Matthews, founder of Mortgy, a new online mortgage platform, says: “Most people on zero hours contracts have been for quite some time – some for as many as 10 years at more income than they would have had in a full time permanent position.

“Lenders seeing these people as a risk has gone on for too long. As we all know, permanent positions can be just as risky as contract positions and it’s great that more and more lenders are starting to accept ZHCs – in most cases as long as the borrower has been with the same employer for 12 months or more – but it would be reassuring to start to see some of the more mainstream lenders taking a more realistic and positive view of ZHCs.”

Richard Norrington, Chief Executive of Ipswich Building Society, said: “Zero hour contract workers have limited choices for mortgage borrowing. We are continuing to improve our products and introduce new programmes to help those who are creditworthy, yet marginalised by mainstream mortgage lenders. We believe that ‘mortgage misfits’, such as those who are on a zero hour contract and can demonstrate a consistent income, should have the same level of options and access to the mortgage market as any other applicant.”

So how GOOD is the Ipswich Building Society?

We like its strapline, ‘Championing the mortgage misfit’. And Ipswich Building Society says it is proud of its place within the local community in Suffolk and it is dedicated to understanding and caring for the need of its members, staff, local businesses and its environment. As well as delivering this through products and services, it states it is heavily involved with local charities and community groups.
For example, it runs financial education programmes within schools and prisons, and has close ties with Suffolk Community Foundation who help very local charities – in particular tackling hidden deprivation and homelessness which often gets overlooked in what is perceived as a fairly affluent county.
The mutual also operates a Sponsorship Committee, meeting quarterly to distribute smaller grants and its staff and members have a programme of volunteering in the local community.
Its mortgages are available to borrowers across the UK who come to the society directly, but savings products are only available in certain local postcodes.