Single Income Mortgages

There’s a wide range of reasons why you may be looking to purchase a home independently. Luckily, whether you’re buying solo as a first-time buyer, as a single-income family, or as a divorcee, there are lots of mortgage solutions available for one income.

In this article, we’ll look at what lenders look for in a single-income applicant, the mortgage options available to you, and why seeking the right advice can make all the difference.

Can you get a mortgage based on one income?

You certainly can, and there’s really no difference between single and joint applicant mortgages, other than potentially how much you can afford to borrow. Of course, this won’t necessarily always be the case, as a high-income earner, such as a doctor, may well be able to afford more than a couple who are both in minimum wage roles.

How is affordability calculated?

No matter the number of applicants, mortgage lenders base their decision about how much you can borrow on the same factors, which are predominantly income and outgoings. Although mortgage lenders use a multiple of your income as a guide, it’s not quite as straightforward as that.

Depending on your circumstances, lenders may consider lending between 3 and 6 times your income, although 4.5 times your income is a more typical amount. Beyond this, however, there are a number of other factors that can affect how much you can borrow, which vary from one lender to the next.

Find out how much you could potentially borrow by using our mortgage affordability calculator below.

Income

Lenders have a responsibility to ensure that a buyer can afford the repayments on their mortgage for the full duration of the term, so they look at your income in far more detail than simply how much you earn. As a single income applicant, the burden falls completely on you, which means you could be more carefully scrutinised in terms of affordability, for example:

• Income type – If you have a straightforward PAYE salary, it will be used as your income figure. Less standard forms of income, such as shift allowances, bonuses, commission, or overtime payments may or may not be included in lender calculations. Some will look at 50% of any supplementary income, however, there are lenders that will be willing to include 100% of it, with substantial proof of regular availability.
• Job stability –  Some lenders view employed applicants more favourably than their self-employed counterparts. Those in self-employed roles will generally need to provide a more substantial history of their earnings (typically 1-3 years) to satisfy the lender of a stable income.

Lenders will also consider how long you’ve been in the role, and how stable the industry that you work in is. If you’re new to a particularly vulnerable industry, this could be a red flag to some. Those with professional qualifications, on the other hand, may be seen as having a sustainable career, even early on in their employment.

• Outgoings – It’s very unlikely that your affordability will ever be assessed as 100% of your salary. Even those with robust employment and higher incomes will also have their outgoings assessed. Your current financial responsibilities, including any existing loans and childcare costs, etc, will be factored into this, alongside the typical costs of homeownership. Lenders offset your outgoings against your earnings to work out your debt-to-income (DTI) ratio. Use our DTI calculator below to work out what yours is and what it means for your application.

Other eligibility factors

Other factors can have an indirect impact on the amount of mortgage you can borrow as they can determine the number of lenders and products you have access to.

Deposit size

There is no requirement for solo applicants to provide a higher deposit than joint applicants. The minimum deposit each lender is willing to accept will be a set percentage, usually between 5-20%, depending on the mortgage type and your circumstances.

That said, those applicants that are able to offer higher than the minimum deposit will always benefit from doing so. As well as reducing the total amount of your loan, this also gives you access to a greater variety of lenders and more competitive rates.

Credit issues

Applicants with a strong credit record may have access to a wider range of lenders and have access to more favourable interest rates. If you have a particularly low credit score or bad credit some lenders may reject your application or charge you a higher rate. There are specialist bad credit lenders, however, and the brokers we work with will be able to direct you to them, if necessary.

How a broker can help

Whatever your reason, buying a home as a sole applicant can seem more challenging. Seeking the right advice before you apply, however, can make securing the mortgage you need much easier. If you’ve already been rejected, it may just be that you haven’t found the right lender yet. Each has different criteria, and some will be more sympathetic to the needs of solo applicants than others.

We work with brokers that have lots of experience in helping people get single-income mortgages, and they’ll know exactly which lender to approach. You might need a lender who will look at your income more favourably, or that’s willing to overlook a lower credit score.

Whatever your circumstances, an expert in single income mortgages will be able to find a suitable lender. If you get in touch we can arrange for an advisor we work with to contact you straight away.

Options for single income mortgage applicants

Whilst it’s relatively straightforward for those with an ample salary, substantial deposit, and exemplary credit history to obtain a single income mortgage, in reality, the high cost of living and buying a property in the UK makes this unrealistic for many people. The good news is there are a number of options available to help solo buyers who are struggling to get onto the property ladder.

If you have a low income

If your individual income won’t allow you to borrow enough to buy a suitable home, there are a number of options to consider:

• Family help – Some lenders offer a JBSP (Joint Borrower Sole Proprietor) mortgage, and to a lesser extent, guarantor mortgages. Both allow the income or assets (such as a property) of another individual, usually, but not always family, to be considered alongside your own, increasing the size of the loan available to you.
• Government home ownership schemes – A range of schemes may be suitable to you as a single income applicant, for example, a shared ownership property, a first home scheme property, or the right to buy scheme, if you rent from a local authority or housing association.

If you have little or no deposit

It can be difficult to save a deposit on one income, especially if you’re already renting. There are a number of options you could consider to help with your deposit, however:

• • Savings boosters – The help to buy ISA or lifetime ISA (LISA) are government schemes created to help people save a deposit more quickly. Both schemes top up your own savings by up to 25%, making a deposit easier to achieve on your own.
  • Family help – A deposit can be gifted to you by a member of your close family, as long as you can prove the source. This could be an inheritance, from their personal savings, or as an element of their lifetime mortgage or pension funds.

• The help to buy equity loan scheme – If you have a minimum of 5% deposit available, this scheme will provide you with a government loan of up to 20% (40% in Greater London) to increase your deposit. The loan is interest-free for 5 years.

If you need to strengthen your application

Sometimes proving that you’re a safe bet in the eyes of a mortgage lender can help you to obtain a mortgage on one income. There are a number of things that could help stabilise your application:

• A backup plan – This could be savings, a definite future inheritance, or self-improvement, such as studying for a degree that would result in a better-paid job in the near future.
• Income protection – Whilst you might not consider life insurance if you don’t have a family of your own, having a substantial income protection policy in place to ensure that your mortgage is paid if your circumstances change could help to minimise the risk of lending to you. The brokers we work with can advise you about suitable policies and providers.
• A joint applicant – It’s become far more common in recent years to buy a property jointly with another person that is not necessarily a partner. It’s perfectly possible to buy with friends or family if this is something that you would be comfortable with.

Speak to a broker who specialises in single income mortgages

Whatever your circumstances, if you’re looking to buy a property on a single income, our free broker matching service will introduce you to someone who specialises in this type of application. Whether you need a lender that offers guarantor options or offers more flexibility to self-employed applicants, the experts we work with will tailor their advice to you.

Your first meeting will always be free, and you are under no obligation to continue the discussions beyond that. Just call 0808 189 0463 or contact us via this form, and let us take the hard work out of finding the right advice.