HSBC’s new mortgage rules make it easier for zero-hours contract workers to get on the housing ladder

HSBC is making it easier for zero-hours contract workers to get a mortgage by reducing the amount of paperwork needed to prove their earnings.

It's the latest in a string of lenders who've relaxed the rules for those who don't have a full-time job.

Before, buyers had to provide two years worth of documents to prove they've been working for the same employer.

Now, they only have to handover a year's worth of documents including one P60 form - a HMRC document that shows how much tax you've paid on your earnings.

But borrowers will have to show three month's worth of recent payslips, rather than the current requirement of just one one, to give a more thorough understanding of your earnings.

It's the same application process for first-time buyers as those who are looking to remortgage.

Zero-hours contract workers are technically employed but have no guarantee that of any work.

Although they offer flexibility, the lack of regular working hours makes them controversial but many workers don't have a choice.

And without a minimum number of working hours guaranteed, it makes assessing affordability for loans difficult.

Often applicants' hours can change dramatically and employment can be unreliable.

These borrowers are viewed as a bigger risk to lend to, so require more paperwork and are often offered higher rates.

Around two million people are currently on a zero-hours contract, according to the Office for National Statistics (ONS), a figure that is steadily creeping upwards.

Given the rise in the number of people on these contracts, lenders are having to adjust their requirements.

Skipton Building Society, Clydesdale, Halifax, Metro Bank and Nationwide have all already tweaked their application process to help those with non-permanent work get a mortgage.

Aaron Shinwell, head of mortgages and savings at HSBC UK, said: "The reality is that 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.

"The flexibility suits their lives and their lifestyle, and their needs shouldn't be ignored."

It's important you get the right paperwork together when you apply for a mortgage of else you'll be rejected, which can leave a mark on your credit score.

This can affect any future applications. In fact, a poor score can leave you paying £262 extra every MONTH.

You can read our guide on how to improve your credit score before applying for a mortgage.

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