How Lenders View Zero-Hours Contracts
Zero-hours contracts do not guarantee a set number of working hours, which means your income can fluctuate from week to week or month to month. This variability makes lenders cautious, as they need to be confident you can meet your mortgage payments even during quieter periods.
Most mainstream lenders will not automatically decline a zero-hours applicant, but they will apply stricter criteria. They typically want to see a sustained track record of earnings — usually at least 12 months, though some require longer — before they are willing to make an offer.
The FCA's affordability rules require lenders to stress-test your ability to repay at higher interest rates. With variable income, lenders may apply additional buffers to ensure you could still afford the mortgage if your hours reduced significantly.
How Your Income Is Calculated
Lenders assessing a zero-hours contract income generally take one of two approaches:
- Average income over 12 months — the lender calculates your average monthly or weekly earnings over the past year using payslips or bank statements
- Most recent three to six months — some lenders place more weight on recent earnings, which can help if your income has increased
If your income varies significantly between months, lenders may use the lower end of your earnings range rather than the average. Having consistent hours and pay over a long period is far more important than occasional months of high earnings.
Some lenders may also factor in other income sources — such as tax credits, a partner's income on a joint application, or a small amount of guaranteed hours — which can boost your overall affordability assessment.
Strengthening Your Application
The most effective way to strengthen a zero-hours remortgage application is to build up as long a track record as possible with consistent earnings. If you have worked for the same employer on a zero-hours basis for two or three years with steady income, your application will be far stronger than if you have been in the role for just a few months.
Keep all your payslips — lenders will typically want to see 12 months' worth. If you receive income from more than one zero-hours role, make sure you can evidence all income streams clearly. Organised financial records make a positive impression on underwriters.
Reducing your LTV by building up equity also helps. Lenders are more willing to overlook income uncertainty when the loan represents a smaller proportion of the property value. If your home has risen in value since you last mortgaged, you may have more equity than you realise.
Product Transfers and Alternative Options
If your existing lender offers product transfers, this may be the simplest route. Product transfers typically do not require a full affordability assessment, so your zero-hours income may not be scrutinised in the same way as a new application.
Contact your current lender before your deal ends to see what products are available to existing customers. Even if the rate is slightly higher than what you might find elsewhere, the ease and certainty of a product transfer can be worthwhile when your income is variable.
If a product transfer is not available or the rates are uncompetitive, a whole-of-market broker can identify lenders that are more accommodating of zero-hours income. Some building societies and smaller lenders have more flexible criteria than the big high-street banks.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.