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Original poster

Getting a mortgage on a low income?

28 replies

HopefulHouseBuyer · 13/04/2019 20:58

Does anyone know of, or have experience of getting a mortgage on a low income.

Single income of around 12k a year with very low outgoings. I know that alone wouldn't give me a hope in hell. However, I have a substantial deposit of at least 50% of the property price.

So for example (not exact figures)

100k property with a 50k deposit.

I know no one on here can tell me outright if it would be possible for me, but i'm hoping to hear of similar encouraging stories. Rather than visiting a mortgage broker and having them laugh me out the door.

OP posts:
IceCreamAndCandyfloss · 13/04/2019 21:14

The deposit will help but a single part time income will rule out a lot of companies.

Fairylea · 13/04/2019 21:17

Do you get tax credits etc as well?

Nationwide and some other companies take these into account with your income.

We had a similar situation to you when we first purchased our property. Husband was on a very low wage, most of our income was maintenance from dds dad, tax credits and dla. Nationwide accepted us and as we had some equity it wasn’t an issue.

Xyzzzzz · 13/04/2019 21:24

Lots of brokers don’t charge and can offer a free fee service as they charge the lender and not you. They can also look at a number of lenders who will look at taking benefits into account if you claim them.

Also a 50% deposit will work in your favour massively. I used to work in mortgages so trust me a broker will not laugh at you. I’ve seen people with low income get mortgages.

Interested in this thread?

Then you might like threads about this subject:

General money
Original poster
HopefulHouseBuyer · 13/04/2019 21:28

Ok so this is helping to reduce the anxiety a bit, so thank you.

I used to work in mortgages so trust me a broker will not laugh at you. I’ve seen people with low income get mortgages.

Everything online seems so negative so to hear real life examples is really helping. I thought I had zero chance even with a high deposit, hence putting off seeing a mortgage broker.

OP posts:
Xyzzzzz · 13/04/2019 21:38

No no speak to a mortgage broker their job is to find you a mortgage. Like I said their are lots out that offer a fee free service and also speak to your bank as they can sometimes help as your an existing customer.

roshi42 · 13/04/2019 21:39

Some banks lend up to 5x your salary, most between 4x and 4.5x. There's a useful list here: https://www.which.co.uk/news/2018/11/can-you-get-a-mortgage-of-six-times-your-annual-income/.

A big deposit definitely helps as your loan-to-value (LTV) percentage is lower and banks reserve their best deals for low LTV borrowers. Credit rating is also massively important - can make a real difference in being able to borrow the max. Check your rating now at Experian and be very careful not to negatively impact that while you search (e.g. by letting brokers do hard checks with banks).

Have a look on Virgin mortgages website - they lend max 5x and their 'how much can you borrow' calculator is very accurate. It will tell you what they'll lend under your circumstances without impacting your credit rating.

Original poster
HopefulHouseBuyer · 13/04/2019 22:18

No no speak to a mortgage broker their job is to find you a mortgage.

So it's not likely to be an outright no, there are things they may be able to do to help?

OP posts:
Bamchic · 13/04/2019 22:24

Have you thought about shared ownership? Xxx

Xyzzzzz · 13/04/2019 22:27

Yes they have access to different lenders. It can also depend on your credit score and outgoings and incomings. Worth a phone call or enquiry.

I’ve had a shared ownership property and wouldn’t recommend. It’s a ball ache to buy them out. It’s just my personal opinion.

Original poster
HopefulHouseBuyer · 13/04/2019 22:31

I've heard bad things about shared ownership, especially about how over priced they are, so I had discounted them as an option. However, if i've been misinformed i'm happy to reconsider.

OP posts:
Original poster
HopefulHouseBuyer · 14/04/2019 13:22

Did you have a shared ownership @bamchic?

OP posts:
Bamchic · 14/04/2019 14:00

I’m looking at buying SO from our local HA, we can buy a 25% share of a 200k house with a mortgage and rent the rest, it’s the only way I think we will be able to buy.

masktaster · 14/04/2019 14:04

We're in the process of buying our first house - single income (about 12k) + tax credits, the property is 93k, and we have about 25k of deposit. I think the DIP our mortgage advisor gave us was with Nationwide.

Definitely talk to a good mortgage broker (pref one that looks at the whole market) ours is definitely worth her weight, and the fee.

Original poster
HopefulHouseBuyer · 14/04/2019 14:08

That's great to hear Mask, it's definitely reassuring to hear that others are where i'm hoping to be.

OP posts:
onceandneveragain · 14/04/2019 17:33

I did this about three years ago as a single buyer - my income was higher (£20k) but didn't have quite as big a % of the deposit - about 40% on a £135k property? I did talk to a mortgage broker initially as the estate agent for the house I was looking for offered the consultation free, but then when I went for a different house just went with one of the main banks, with no issues.

What I did which helped (although I appreciate you may not be in a position to do so):

  • got rid of all dd's and committed expenditure (e.g. gym membership, even netflix) I could so that my disposable income was as high as possible for the few months they ask you to show bank statements for before applying
  • further to this I even moved in with my parents for those few months for the same reason - it seems completely mad because obviously you wouldn't be paying rent and the mortgage at the same time, but it was something they looked at and queried the first time
  • extended the mortgage term for as long as possible (because I was quite young they gave me 35 years) which I plan to cut down now I'm coming up to remortgaging
  • used the H2B isa

Good luck!

Answeringonlyyesorno · 14/04/2019 17:59

I was on £8k a year and got a mortgage to help me buy 25% of a SO property. Bought 100% over 5 years mainly by proving I could afford the mortgage as it was cheaper than rent plus mortgage. Sold it and got £70k for deposit on a non SO home.

StrongerThanIThought76 · 14/04/2019 18:37

I'm with Newcastle Building society. When I was looking for a mortgage (£80k on a £150k property) they were the only lender who would accept tax credits, child maintenance etc. This was 5 years ago though. See a broker. Or more than one!!

Original poster
HopefulHouseBuyer · 15/04/2019 07:58

Thanks for the helpful tips onceandneveragain I'm already doing most of them. I'm glad you were able to get your house, I suppose your higher wage also really helped as it gives you so many more options. Smile

Answeringonlyyesorno You bought the rest of the property within 5 years? I'm very intrigued as to how you manged this on 8k a year. Any help and advice on SO properties would be welcome as I had ruled them out due to all the negative stories.

StrongerThanIThought76 If you don't mind me asking were buying as a single income, and if so how much? As an 80k mortgage seems unattainable for me even with a high deposit, due to the 4.5 - 5x income cap.

OP posts:
3luckystars · 15/04/2019 08:04

I don't know where abouts you are but here there is an allowance of up to 7.5k allowed for room rental.
Is that an option, could you say you are renting one bed room out, and staying in the other yourself. (If it has two bedrooms) and if you are thinking about that.

3luckystars · 15/04/2019 08:10

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

This could bring it up to 19.5k if you rented a room out. A girl I know did this for a year or 2 to get her first house.

Best of luck.

Didyousaysomethingdarling · 15/04/2019 08:27

I'm not a mortgage advisor, so just an idea to explore...
Leek Building Society offer an interest only mortgage, where as long as your deposit is enough to buy a property outright, anywhere in the UK, they will lend you money on an interest only deal (this will probably be cheaper than your rent!). Could you use this mortgage to initially purchase a house and carry on saving at the same time? Then when the fixed rate ends, remortgage to a repayment mortgage?
www.leekunited.co.uk/intermediaries/interest-only/

Original poster
HopefulHouseBuyer · 15/04/2019 12:32

I'm not really keen on renting out a room, and the property would be a 2 bed max. I really like my own space and would find a lodger very stressful. However, I do appreciate the idea, it's always nice to have a curveball.

Interest only is something to look into, like before with SO I hadn't heard great things so it wasn't an option I had considered.

OP posts:
Answeringonlyyesorno · 16/04/2019 07:34

My salary did increase over the 5 years, so I bought 25% more each time. My SO was a very established charity who were in it to help people, not stitch them up. If I were you I'd research one of them, and look for an existing SO property coming up for resale rather than a new build.

nrpmum · 16/04/2019 07:39

Please speak to London & County. They don't charge and are very good.

StrongerThanIThought76 · 16/04/2019 07:45

OP yes, on a single income. Had only been in my job for 8m too, term time only gross salary approx £15k. I also had evidence of child tax credits, child benefit and child maintenance via CMS for the next 11 years (due to kids ages). I did have a massive deposit of about 45% too. Plus fantastic credit rating with well-managed overdraft and no other debts.

My mortgage is £300, previous rent was over double that.