Our client was a first-time buyer looking to secure a mortgage to purchase his first residential property. He had approached his existing bank but was quickly rejected due to his status as a zero-hours contractor.
His bank took issue with the gaps between the various contracts. He approached us to see if we could source a solution.
We secured a mortgage with a high street bank fixed for two years at a rate that was one of the cheapest in the market at point of application. The bank was reluctant to lend at first but an open dialogue with the broker was key to ironing out any concerns that the lender had with regards to the structure of the contracts.
Typically, zero-hour contractors can be tricky to place; a lot of banks don’t lend in this sector due to the erratic nature of the contracts. Income levels can often be unstable and the gaps between the contracts can cause further concern for lenders when factoring in the applicant’s ability to make their mortgage payments consistently over the long term.
Key to securing a deal was understanding each lender’s individual policy on contractors and creating a shortlist of potential options. Often, some advisors will simply revert to a specialist lender that they know will lend on these types of contracts.
However, these deals are more expensive so it was crucial for us to engage with the high street banks as some can consider if the case is presented in the correct way. While this may take a little longer to secure approval, the overall cost saving can be significant.
The client was a lecturer at three separate universities who each offered a zero-hour contract which varied in length but usually lasted around 4 months before being considered for renewal. We approached a prolific high street bank and provided a background of the applicant’s employment history.
The lender was initially hesitant due to the somewhat erratic nature of the client’s income but we were able to move forward once we presented a 2-year track record of employment history. Additionally, we reached out to the various HR departments at each university to secure an explanation in writing as to why each establishment offered their contracts in this format. With this, we were able to present a strong business case to the lender which was duly accepted.
While the process took around 4 weeks from start to finish, we were able to secure a market-leading rate that was even cheaper than the product the applicant had initially applied for with his existing bank. Once the offer was secured, he was able to complete quickly and secure his new home leaving him delighted.
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