News, Culture & Society

HSBC makes it easier to get a mortgage on a zero hours contract as bank relaxes application rules

It’s now easier to get a mortgage on a zero hours contract as HSBC becomes the latest lender to relax the rules for those not in full-time work

  • HSBC relaxes its application rules for zero hours contract workers 
  • Applicants will now have to submit less evidence of income and tax paid
  • Bank says this will help more borrowers get onto the housing ladder 

Workers on zero hours contracts will now find it easier to apply for a mortgage with HSBC as the bank joins a growing number of lenders relaxing the rules for those not in full-time work. 

Mortgage applicants will no longer have to supply as much earnings and tax evidence – something the bank says has previously hindered their chances of getting on the housing ladder.

Zero hour contracts are working arrangements in which the employee has no guarantee of a minimum number of hours per week. 

While they provide flexibility for many, these contracts have been controversial as they don’t offer the certainty of regular work for employees – many of whom don’t have a choice but to accept this type of work.

Zero hour contracts’ lack of regular hours make mortgage affordability assessments tougher 

When it comes to mortgage applications, lenders also have a hard time with these contracts as they make affordability harder to assess.

Lenders like certainty, and not having a guaranteed regular income means that applicants are viewed as higher risk. As such, some banks and building societies outright refuse to lend to this type of worker. 

However, given the rise in the number of people on zero hour contracts, some mainstream lenders will now consider applications. 

These lenders may ask borrowers for years’ worth of earnings evidence, something HSBC says has become a barrier for many borrowers.   

HSBC borrowers will now only have to show proof of one year’s employment with the same employer rather than two, as well as just one P60 tax form rather than two. 

Instead, they will now have to show the bank the last three payslips they received, rather than just the one payslip that they previously asked for.  

HSBC’s head of mortgages Aaron Shinwell said: ‘A significant number of people, approaching two million contractors working an average of 25 hours a week, are on zero hours contracts, and rely on them for their income.

‘We have done is take on board feedback that certain requirements and documentation were hindering zero hours contractors’ chances of getting onto the property ladder, or remortgaging, with us, and as such our mortgages were not really an option. 

‘These improvements will benefit all agency workers.’

You can read This is Money’s guide to getting a mortgage while on a zero hours contract by clicking here.   

Contractors are usually recruited across the financial services and technology sector

Contractors are usually recruited across the financial services and technology sector

Lenders are making it easier for contractors to borrow  

Contractors and consultants are found across the financial services and technology sector, in areas such as IT or software development, and have traditionally been treated the same as any self-employed applicant when applying for a mortgage.

This is despite the fact that such contractors on ‘day rates’ have in many cases significantly higher incomes in than those in similar fields in full-time work. 

HSBC’s move is the latest in a flurry of lender activity which has seen the rules relaxed for those not in full-time or permanent work. 

Earlier this year Skipton Building Society joined Clydesdale, Halifax, Metro Bank and Nationwide in changing its rule book to make it easier for contractors to get a mortgage.

You can read our guide to getting a mortgage if you’re self employed by clicking here.   


Find local lawyers and law firms at