How much will I need to earn to get a mortgage alone?

[MushroomTree]

I'm a single parent to one DC and would like to get on the property ladder in the next 2-5 years.

I'll be buying alone in Hampshire/Dorset. I imagine budget will be 200k max.

I'm lucky enough that when the time comes I have money from a family member for one of the "lend a hand" mortgages.

But how much am I going to need to earn per annum to get a mortgage in the first place?

I'm in the middle of retraining and will be changing jobs once this is done so my financial situation will be different when I purchase a property.

Thanks @PinkSpring. It's good to hear a positive story.

How often are you able to buy more of your house? I suppose the reduced money you pay enables you to save towards buying the next chunk?

@MushroomTree you can staircase either in one go like we did, or I think two or three times? Depends on the HA.

Downside of staircasing multiple times is each time incurs fees (HA admin fees, solicitors fees, stamp duty, etc) so it's cheaper to do it in one go

@PinkSpring thank you for that. They keep quiet about the additional costs and make it sound like you just hand over more money until you've paid for it all.

www.moneyadviceservice.org.uk/en/tools/house-buying/mortgage-affordability-calculator

Just a quick Google away! Lots of building socs/banks also offer free online calculators.

Shared ownership beware the increasing cost of staircasing. The cost is based on the valuation at the time of wanting to staircase, not at the time of purchase, so increases exponentionally and yes people do end up trapped. I only know one family who did this and ended up having to get grandparents to bail them out.

Your best approach OP is to buy somewhere shit in the nicest area you can. Do it up gradually. By the time you come to sell you will have equity in the house to use towards a nicer house. Or, ideally, you have turned the shitty house into a nice house and don't have to move!

It's usually 2 x your income for a single lender they'll let you mortgage but I was quite surprised by how much our mortgage company were willing to lend us - it was more than we could afford to pay that's for sure - we bought a house about 75k less than was our offer.

Most high street banks have a calculator though.

Don't forget to make sure credit rating is in tip top place as well, it'll make a different to rates etc

You sound very suspicious OP. You’re buying part of a property everytime you staircase so of course stamp duty is due, and a solicitor does the conveyancing, as with any sale.

It’s best to do it as part of usual remortgaging (which you will
Have to do anyway unless you have the cash to buy another share)

No one keeps quiet about additional costs, I guess they just assume people know they need to pay stamp duty when they buy property.

Preggo- you’re going to end up trapped if your eArnings stay the same or decrease- of course you won’t be able to buy more of the property in these circumstances. Owning 50% of a property doesn’t suddenly become 100% without you being able to afford it. Clearly you need to be in a better financial position to staircase

Yes, obviously if the value of the property goes up, the remaining shares will cost you whatever the value of the property is at the time you want to staircase. So for us, we had 55% already which we purchased at the advertised cost five/six years ago, when we began the process of staircasing to 100% we had to pay for a RICS valuation (about £200) to tell us the current value of the house. That means we purchased the remaining 45% at the current market value.

I still think of it as it got us on the property ladder and we have a good amount of equity !

How long is a piece of string? Go see a mortgage advisor and they will advise you what you can borrow based on your income

Thanks @Preggosaurus9 I'll take a look. Shit house, nice area was my original plan anyway. I love a project!

I don't know about suspicious @Passthecherrycoke but definitely wary of making such a large financial commitment without knowing all of the facts.

Of course I know about stamp duty etc. I knew you'd have to pay it when you bought the first % but for some reason it didn't occur to me that you'd have to do it for the additional payments.

I'm sure they'd have told me when I actually signed up but for obvious reasons all the additional costs aren't featured in their marketing campaigns

Because they’re not their costs- you pay stamp duty to the government. You have got to know what you’re doing and research it, and it’s not as good as owning a property 100%- of course it’s not. No one who buy 100% of a property would do it though. You do it because you can’t afford to buy more

@Passthecherrycoke it's obvious now I think about it. I just hadn't thought about it. Mostly because everyone I talk to tries to put me off shared ownership so I'd only thought about buying a house in the traditional way.

It’s an shame it’s viewed with such suspicion to be honest it can be really good

I wouldn't trust shared ownership, can be hard to sell, you can be trapped for years, and it's not like owning your own property. At best you end up with half a house.

It does sound like it could be great. But as I've heard on here and from other people, if you never manage to make the additional payments you end up with only half a house at best.

Whilst I'd like to think my salary will continue to increase, if it doesn't, I'm stuck with only owning what I've already purchased. Equally, if house prices suddenly sky rocket I won't be able to afford to buy more of the house either.

Well if you only buy half a hosue, that’s all you end up with yes. It doesn’t grow into a whole house on it’s own.

But I would say the best case scenario is buying the rest of it and owning a home you wouldn’t otherwise have been able to afford

@Passthecherrycoke I like the sound of the best case scenario but my inner pessimist is advising caution.

I've got a few years before this is an option anyway. I just want to get all my ducks in a row as far in advance as possible.

As others say I would look at shared ownership. There are drawbacks, but if it's a long term home it is a really sound option for lower income families, not that you're necessarily a low earner, but are at a disadvantage with one income.

100% ownership is preferable to shared ownership, but I would say shared ownership is preferable to 100% renting (unless you have a council house). If you wait 10 years prices are going to get bigger, shared ownership you can usually staircase, buy now and increase shares as time goes on.

As with anything it has its place, and your situation is potentially it, so do your own research first.

Thank you for the advice.

As an aside, has anyone heard of WayHome? www.wayhome.co.uk/

It almost sounds too good to be true...

I bought a house on my own 3 years ago. I had a mortgage advisor who was fab. I was then earning 43,000, i was receiving child maintenance but that wasn't taken into account.
I also had an overdraft. I was able to borrow up to 164,000. I actually borrowed slightly less. That was with Prinicipality Building Society.

I recently bought a first home with my mum after years of thinking this would never be possible. We didn't fit the criteria well as I'm not working, my mum is in her sixties and on a low income, and we're both severely disabled. We got turned down by almost every major bank but finally got the mortgage we needed. So whatever happens, don't give up. Persistence absolutely pays off with these things. In the meantime, work on your credit score, and absolutely get a Help To Buy ISA or Lifetime ISA if you've not already done so.

Thanks @Chosennonetosurvive and @Kitty878.

The best way forward seems to be earn as much as possible, work on my credit score, and open an ISA. And track down a shit hot mortgage adviser

I'm trying not to lose hope. I don't want to buy a palace. Just somewhere for DD and I to call our own. Her whole little life has been a bit shit so far so I just want to ensure her future isn't.

That wayhome link is just shared ownership isn’t it?

@Passthecherrycoke they say it's different. You initially buy between 5 and 20%, rent the remainder from their property investors who jointly own the home with you. Anything you pay over the rent goes towards buying more of the house.

When you get to 40% you have to buy them out, probably by getting a mortgage.

Open your help to buy isa now. You have to do it before the 30th November