Mortgage: is it important that we both work?

[WhenLifeGivesYouLemonsx]

We will be in the process of applying for a mortgage soon. However, one thing I am a bit concerned about is whether they look at our outgoings or do they look at our earnings?

At the moment, I am working part time, on minimum wage, earning around 10k a year. My husband does a lot of overtime, which brings his income of around 30k a year.

Sometimes I think is it worth me working as £600 of my monthly earnings goes on childcare, so I am effectively only getting just under £200 back, then my husband pays the rest of the bills.

If I stopped working, would that lessen our chances of getting a mortgage? Even though I'm on shit wages! I'm not academic enough to do anymore than that so that's why I'm stuck in a dead end job.

Yes they look at both income and outgoings, but you still bring in money even once childcare paid so definitely worth it.
One thing to bear in mind - when we got our mortgage they didn't count overtime in income only contracted hours.

@Ohhgreat I thought they would look at his earnings as well? He is doing all this overtime because he is showing that we are able to afford it. Would our chances be less if I become a SAHM and had no childcare to pay for?

For a bank to accept a mortgage they usually look at 2 sources of income even if the second source is lower. The idea is that one of you lose their job or fall ill and unable to work any longer to have a back up income which will cover the mortgage. Obtaining a mortgage as a single person is difficult because of this and the amount you can borrow is usually very low. So imagine now 2 people cohabiting on only one income if that income is lost you are left with nothing to live on let alone pay mortgage. If i were you i would keep the job until i secure the mortgage. Get one with a 5 year fixed interest rate and then you can juggle around and see how it suits you best financially but you have 5 years of breathing space. Best of luck!

Yes. It shows some contingency if your husband was to lose his job.

I’m not in the UK so don’t know the lending rules there, but in most countries it’s a multiplier of incomes. So, with you working, you’re going to be able to borrow more.

Using a multiplier of 3.5 tines household income as an example, with you working, you could get a mortgage for £140,000 (£40k x 3.5).
Without your income, that would fall to £105,000 (£30k x 3.5).

However, your husband’s overtime may not be taken into account to calculate the amount you can borrow.

Also it depends on the bank but our bank took only half of overtime into consideration. Reason is that is not a stable income sometimes you can do overtime sometimes not. But is definitely a plus. They will look at outgoing off course and what will you be left after all which is called disposable income. If your disposable income after all your expenses is 50% or so higher (they also take into consideration the posibility of unforseen emergency expense) it should not be a problem but remember that every lender have different set of rules and criteria so it is best to talk to a mortgage advisor. I spent £500 lifetime fee is the best money ever spent. When the fix term comes to end they call me chase lenders and give me the best option for me at that time which is better than what banks would offer me.

Sorry, if your disposable income is 150% or higher than the mortgage monthly payment

If you're making more than you're spending it's best to keep your job til after you've bought to maximise the amount they'll lend you. Overtime isn't guaranteed so may not be taken into account- what if they stopped offering it?

But yes, see a mortgage adviser.

They'll look at your income too. Also remember that if you're looking at a 20-25 year mortgage, childcare fees will only apply for a small portion of the time - so in a few years it will be closer to £800 a month and not £200

If you do not include the second person's income in the application, it is none of the bank's business.

It depends what the main earner's salary is, I suppose. We definitely needed our 2 salaries. Together we earn 100000.

If you stop working you become a dependent and therefore many lenders will loan less. NatWest disregard childcare costs.

It’s definitely worth you working. Your childcare costs will drop over time and advancement opportunities may become available. It also gives you more resilience as a couple if anything should happen in your husbands job

I would discuss this with the bank, I think you normally can get a mortgage based on one income only but obviously affects amount you can borrow.

If you’re fairly low income but have a reasonable amount of equity certain lenders like Nationwide will take things like tax credits and child benefit and so on into account even if there’s only one of you working. (That’s how we got our mortgage).

We just used one income for ours (have two) and mortgage was offered for just over 4 times the one income.

I think you normally can get a mortgage based on one income only but obviously affects amount you can borrow.
You guys are so young
when I was first borrowing, womens' earnings were an add on !!!
SAHM were still the norm

We have always had a sahp and had several different mortgages.
My oh is also self employed and only makes the bare min.
There was only one company who were difficult with us, but they didn't refuse, we went elsewhere anyway.
Brokers are worth the extra, they can save you a fortune.