A Helpful Guide to Single Parent Mortgages
Buying a house as a single parent and worried if you’ll be accepted? There are lots of options! Our single parent mortgage guide will tell you exactly what to do.
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No one has ever said that being a single parent is easy. Getting a single parent mortgage, on the other hand, can be fairly straightforward, if you’re aware of all the help that’s available and you take advantage of it.
In this guide, we explain how to overcome the challenges of getting a mortgage as a single parent, discuss government schemes that could help you out, and outline how the right mortgage broker can help you get the best deal.
The following topics are covered below...
Overcoming the challenges of getting a single parent mortgage
While it’s certainly possible to get a mortgage for a single mother or father, it’s best to know upfront about the additional challenges you might face, so you’re prepared to overcome them.
Income
Quite simply, two incomes are better than one when you’re applying for a mortgage. Most lenders will only allow you to borrow up to four and a half times your annual income. That might be enough for a small property if you lived alone but, in most cases, it won’t always stretch to a family home.
A few lenders are prepared to offer five times your income (and even fewer, six times your income). That could vastly increase the range of properties in your price range. Of course, you would need to pass the lender’s other affordability checks to qualify for a mortgage of this value.
Bear in mind that your income doesn’t just include your salary. Many lenders will consider your child benefits, tax credits, and child support as part of your income, which could increase the amount you can borrow. They might only allow this for children that are under 13, if they are concerned about how you’ll repay the mortgage when you are no longer receiving child benefits.
Time
An often-overlooked challenge for single parents is finding the time to complete mortgage applications amidst the demands of family life. Obviously, it’s best if you can get approval the first time you apply, but you may not know which lenders are likely to approve you, which can lead to wasting time on multiple applications.
Deposit
As a single parent, it can seem like an uphill battle to save the 10% deposit that most lenders require to give you a mortgage. Don’t be discouraged if this goal seems impossible, as we’re about to explain a variety of options that could help you.
Outgoings
Another factor that lenders look at before approving your application is your monthly spending. They’ll want to see that you can easily afford your mortgage repayments alongside your other typical outgoings.
As a single parent, your spending on essentials might be a lot higher than a single mortgage applicant without children. Before applying for a mortgage, see if you can cut back on any non-essential spending for at least a few months, to present the best possible picture of your financial situation.
Debts
Raising a family can involve unexpected expenses, so it’s not unusual for single parents to have debts. Mortgage lenders don’t expect you to be debt-free, but they will consider your debt-to-income ratio.
A debt-to-income ratio is the percentage of your annual income that is spent on loan repayments for credit cards, personal loans, car finance, etc, compared to the amount you earn. A debt-to-income ratio of 50% or more (i.e. more than 50% of your monthly income is spent on repayments) would worry a lot of lenders – but not all.
Try our debt-to-income calculator below to work out what yours looks like.
Debt to Income Ratio Calculator
You can use our debt-to-income (DTI) ratio calculator to work out how much of your income is going towards your fixed outgoings, expressed as a percentage. Based on that percentage, this tool will tell you whether mortgage lenders will class your DTI as low, medium or high.
Your Debt to Income Ratio is %
Good news! Most mortgage lenders will class your debt-to-income ratio as low. You’re unlikely to be declined for a mortgage based on your outgoings, but speaking to a mortgage broker before applying is still recommended as they can improve your chances of getting the best deal.
Most mortgage lenders will class your debt-to-income ratio as moderate, which means some of them might view your application with caution. Some lenders are much more strict than others when it comes to affordability and debt, so it’s important for you to find a lender who’s more lenient. You should speak to a mortgage broker before you apply to ensure you’re matched with a lender whose criteria you fit.
Most mortgage lenders will class your debt-to-income ratio as high. But that’s where we can help! With so much of your monthly income going towards debt repayments, you could struggle to get approved for a mortgage without the help of a mortgage broker. We can help you find a lender who’s more lenient on debt and affordability, and could still secure a mortgage approval.
If you have serious credit issues, such as bankruptcy or unsatisfied county court judgments, you’ll need to be very selective about the lender you apply to, as many will not consider your application. A specialist bad credit mortgage broker is often called for in these situations.
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Getting help from your family
If you have family members who would like to help you get a mortgage, here are a couple of products designed for your situation. Before applying, you should be sure that you can afford the repayments or that your family and friends can help with mortgage repayments if needed.
Family mortgages
With a family mortgage, sometimes called a springboard mortgage, you could borrow up to £500,000 without a deposit. Instead, you’ll need a family member to pay 10% of the property value into a savings account that’s linked to your mortgage.
They won’t need to give you the money as a gift – but they won’t be able to access it either. It will remain in the savings account for five years, and if you’ve made all your mortgage repayments in that time, they’ll get it back with savings interest. If you fail to repay your mortgage, your family member could lose their money.
Guarantor mortgages
With a guarantor mortgage, you’ll need a family member or loved one to act as your guarantor, meaning that they agree to make your mortgage repayments if you fail to do so.
Your guarantor’s home would be the security for the loan, so you could both lose your homes if you fail to make repayments, although an alternative option would be for your guarantor to place savings into an account held by the lender and secure the mortgage against them.
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Getting help from the government
Getting help from family and friends isn’t an option for everyone. If you need an alternative, here are three government schemes designed to help you buy a home without saving a huge deposit.
Mortgage guarantee scheme
Through the government’s mortgage guarantee scheme, you can buy a home with a deposit of between 5% and 9%. Though lenders are usually unwilling to lend more than 90% of the property value, the government guarantees the portion of the loan that’s above this. This gives lenders additional security in the event of borrowers defaulting, so as a result, the number of low deposit mortgages on the market has increased since the start of the Covid pandemic.
Shared Ownership
Another option is Shared Ownership. If you’re eligible, this allows you to buy a share of a home (usually between 25% and 75%) and rent the remaining share from a housing association.
Usually, if you were buying a home worth £200,000, you’d need a deposit of at least £20,000. But, if you are only buying a 25% share of that home (at £50,000), you’d only need a deposit of £5,000. You will, of course, have to consider whether you can afford both your mortgage repayments and your rent on the remaining portion, now and in the future.
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Getting help from a broker
Finally, you should be aware of all the ways a broker can help you to find a mortgage as a single parent.
Specialist knowledge:
An experienced mortgage broker knows which lenders will go above the usual limit of four times your income when deciding how much you can borrow. They know which lenders offer family mortgages and guarantor mortgages, or who will consider your child benefit income as well as employment income.
Lower repayments:
A broker can help you to get the best possible mortgage rate for someone in your circumstances, helping to keep your monthly repayments as low as possible, and freeing up more of your money to spend on family expenses.
Time-saving:
By working with a broker, you won’t need to spend time researching different mortgages and lenders. You’ll have an expert by your side to guide you through the necessary paperwork and boost your chances of first-time approval.
Finding a broker experienced in single parent mortgages
If you’re looking for a broker, it’s best to find one with experience working with single parents or low-income applicants. They can introduce you to the right lender, saving you time and, potentially, some money in the process.
A quick and easy way to find one is by using our broker-matching service, we’ll take your information and introduce you to a broker who we think has the right expertise to help.
Call us on 0808 189 0463 or get in touch through our website and we’ll match you with a broker experienced in single parent mortgages for a free, no obligation chat.
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We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects. Ask us a question and we'll get the best expert to help.
Pete Mugleston
Mortgage Expert, MD
About the author
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
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