50% deposit but tiny income - has anybody made it happen?

[Bargate]

I sold my first home and have a total of £170k in cash but require another £170k to buy the property I want, so would need a 50% mortage loan.

However, when I bought that first home I gave up my decently paid job as I no longer needed to pay London rent, and began working from home as a sole trader. I make very little doing this - 700 to 1000 a month although it grows a little each month and should continue to do so steadily over time.

My question is this - has anybody been in a similar position and still been able to get a similar sort of loan with a 50% cash deposit? I'm expecting it to be highly unlikely, but I've been told that mortgage brokers can come up with suprising finds so I thought no harm in asking.

Thanks in advance!

(Please no pedantic advice on just being grateful and finding a cheaper property instead- I do realise that is the sensible and obvious option.)

I could only borrow £80k on my salary of £25k so I don't think the banks would lend you £170k on a £12k salary.

My LTV was 50% too.

I very much doubt you would be able to get a mortgage of that size on that wage regardless of deposit. I think you'd be lucky to get a mortgage of £70k. Check out a few mortgage calculators or get in touch with a broker is the best way to find out.

Any other income? Maintenance, universal credit? Some lenders take those into account too.

Otherwise I can't see the figures working out when the payments on your mortgage would be over half your monthly income.

Thanks all, appreciate the input!

Will speak to broker as suggested.

🙏🏻

Have you considered a shared ownership scheme? Some do allow you to build up to owning 100% of property.

Thanks Els1e, I don’t see how that relates to this query tbh, but everyone I know in Shared Ownership bitterly regrets it, I’d never go down that path. Also I’ve done my time renting - never going back there. I don’t mind if I have to get a mortgage at some point but I’m never paying someone else’s rent again 😏

*paying someone else’s mortgage again I meant 🙄

Would your parents act as guaruntors? That could be the way ✨✨

Unless the housing market crashes; this won’t work. High deposit is good; but a good broker may be able to push for closer to 5x earnings rather than 3x earnings... I’d suggest you’ll struggle to get £50k.
From a banks perspective; even with a low interest rate; even taking out a 35 year loan the monthly repayment would be £600 for £170k mortgage; which is almost all your take home income; it’s just not affordable.

Could you consider:
Buying with someone else
Looking for a better paid job for a period of time (6 month +) to secure the mortgage?
Otherwise I think you’d have to wait till your income exceeds £40k (maybe more if self employed) to have a chance of getting a mortgage to cover.

Yes I have. I had a big deposit following a divorce but a small salary. Things that worked in my favour were excellent credit score (obvs), I had very small outgoings, - no car, no commuting costs to work, no expensive hobbies. I also got child maintenance for my DD which I could count as income, and my tax credits counted as income. I had to put the mortgage over 35 yrs to keep the repayments low, but have since made regular small overpayments. This was in 2014 thou. Good luck

Didnt quite borrow as much as you are aiming for though

Do you have 3 years of accounts?

you might be able to get an interest-only mortgage via a broker. one that allows overpayments ideally. then if you are lucky and interest rates stay low or your business takes off or you get a big inheritance then all will be well. there would be a very big risk of you ending up homeless though if you don't strike lucky. affordability calculations look at whether you would cope if interest rates rise significantly after the initial introductory period. if interest rates rise to 4% you wouldn't cope even on an interest-only loan so most lenders wouldn't consider this, but a broker might be able to find one who would.

How much would it leave you to live on in a bad month?

@Bargate

Is there a way to get your £170,000 to grow a bit in the meantime?

For example, the recent stock market crash has meant that stocks are quite low at the moment. The general point is buy low and sell high. That said, stock market investment is always risky and there are no guarantees (it may still get even lower and no one knows when it will recover...).

Another point is that the house you need a bigger mortgage for is also likely to have a higher council tax band to factor in too. It all adds up.

Is there a Shared Ownership option for the property?

Like others have said, a mortgage broker sounds like a safe bet.

Good luck!

How are you going to pay a mortgage of £170k if your earnings are so low. Unless you don't put everything through your books.

No chance. Also have 50% LTV and to get £170k you need an income of around £35-40k.

Repayments over 25 years would be in the £7-800 pcm mark which you would never be able to afford.

How will you pay a 170k mortgage if you only earn 700-1000 per month? Our mortgage payments on a £156k mortgage are £800 per month, you’ll have nothing left for bills and food etc.

Why did you sell without costing in a move up the ladder to see if it was feasible? Where are you living now? As others have said, you'll need a bigger income to get a £170K mortgage.

Maybe also post on the money saving expert property board as there are lots of brokers on there.