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Single person mortgage (Guide)

Single person mortgage (Guide)

A single person mortgage

Single person mortgages are very common. You don't need a co-borrower to be eligible for a mortgage. If you are a single person with a good mortgage affordability then you may be able to get a single person mortgage to buy your property.

What you need to get a mortgage on your own

If you are single or you simply want to get a mortgage on your own then this is very possible.

As long as you have a good credit score, a mortgage deposit and your salary meet the mortgage lenders mortgage multiple requirements then you may be able to get a single person mortgage.

The alternative to getting a single person mortgage will be to get a joint mortgage. The benefits of joint mortgages are of course the fact that you may be able to combine the mortgage affordability of more than one borrower meaning you could potentially build a mortgage deposit faster and get on the property ladder quicker.

What mortgage deposit do you need for a single person mortgage?

When getting a single person mortgage you may find out that the deposit requirement is much larger than if you were getting a joint mortgage. This doesn't mean you are being required to put down a larger mortgage deposit but rather because there is no one to split the mortgage deposit requirement with you it appears bigger.

The typical mortgage deposit you can be expected to pay when you are a single person getting a mortgage or two people getting a joint mortgage is the same. Most mortgage lenders will require a mortgage deposit of 5% these days but some may request as much as 20% or upwards.

Example of a mortgage deposit which you may need to put down for a single person mortgage:

You want to buy a house for £500,000

The mortgage lender wants a mortgage deposit of 20% and due to that a loan to value of 80%.

This means you will need a mortgage deposit of £100,000. This may seem too much for you to save at first but you may have some help.

If you are planning to get a mortgage alone then it is better to start your mortgage planning far in advance as it may take you longer to save when it is just you saving. If you have family members or friends who may be able to help you with their savings then you may have some family deposit mortgage options such as the family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.

These mortgages act like a form of guarantor mortgages but they aren't exactly. You may still be able to find some guarantor mortgages which could reduce the strain of a mortgage deposit for you.

Aside from the family springboard mortgages your family members or friends could also simply gift you a mortgage deposit but not all mortgage lenders are keen on lending to borrowers who have been gifted their mortgage deposit and the ones who accept this may insists in a gifted deposit letter which ensures that the gift is indeed a gift and not a loan which may have some claim on the first charge mortgage if the mortgage lender ever had to reposssess the property.

If you aren't able to find any family members who may be able to help you then there is help from the Government with its first-time buyer and home mover government schemes

Government help for single person mortgage?

If you are an eligible first-time buyer or home mover then you may be able to get a mortgage with a government scheme. You can use the scheme as a single person or with multiple people but the scheme rules will still apply.

If you are a first-time buyer then you will likely need to sign a first-time buyer declaration

Example if the maximum property price on a property is £500,000 then even if there were two of you the maximum property price the government scheme will accept is £500,000.

Some of the Government schemes you may be able to use with a single person mortgage include:

  • Lifetime ISA- gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
  • Help to buy ISA- gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy- allows you to buy your home at a discount price.
  • Preserved right to buy- same as above.
  • Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

How much can you borrow for a single person mortgage?

When working out how much you may be able to borrow if you are borrowing alone the first thing you may want to do is check the mortgage lenders mortgage multiple.

The mortgage lenders mortgage multiple will be the first indication of if the mortgage lender may be willing to lend you the amount of mortgage you want based on your income.

Mortgage multiples are essentially a number by which the mortgage lender multiplies your annual income by to let you know the maximum they will be able to lend to you. When you apply for a mortgage in principle a mortgage multiple is likely what is used as a first indication of if a mortgage lender will lend to you.

Different mortgage lenders have different mortgage multiples so comparing for every mortgage lender may be hard and this is why a mortgage broker who may have experience of the mortgage multiples being used by a mortgage lender.

Mortgage multiples can be a bit misleading as when you get a mortgage in principle you may think that this is some guarantee that you are going to get a mortgage but it isn't.

After you have found a property which you want to buy, you will usually then go back and make a full mortgage application so the mortgage lender can give you a formal mortgage offer.

At this point, the mortgage lender will request your financial documents such as:

Your p60 tax return
Your SA302 tax calculation form if you are self-employed
Bank statements for at least 3 months
And 3 months worth of payslips

With all this information the mortgage lender will analyse your finances to see how much you have in disposable income per month and if this can cover the cost of your monthly mortgage repayments.

If you can't cover the cost of your monthly mortgage as you are a single borrower then you may want to consider finding a co-borrower who can split the mortgage deposit with you or who will split the monthly mortgage repayments with you and apply for a joint mortgage.

You should seek independent legal advice when doing this as you may need to go into a tenants in common agreement, a cohabitation agreement and have a declaration of trust agreement if necessary.

When getting a joint mortgage you should ensure that your co-borrower is also eligible as a first-time buyer if you intend to use a home buying government scheme as an eligible first-time buyer. If your co-borrower isn't an eligible first-time buyer then you won't be eligible for any of the governments home buying schemes which require you to be.

This is also the case for the first-time buyer stamp duty relief.

Can you get a single person mortgage with supplementary income?

When getting a single person mortgage you may be able to increase your mortgage affordability with supplementary income. Supplementary income could be overtime, bonuses, stipend income and benefits.

Mortgage lenders don't all accept supplementary income but those who do may only accept a percentage of it rather than all of the supplementary income.

If most of your earnings as a single person are of supplementary income then you may need to find a mortgage lender who is willing to lend you the amount you are after and also accept most of your supplementary income.

Some mortgage lenders may also accept benefits whilst some will not accept benefits. If benefits play a significant stake in your income then you will want to find a mortgage lender who accepts a huger percentile of benefits as income.

Supplementary income could include:

Pension income
Investment Income
Overseas earned income
Maintenance Payments
Rental Income
Bursary
Stipend

How many debts can you have when applying for a mortgage alone?

If you are applying for a mortgage as a single person then the number of open debt accounts the mortgage lender may be willing to see open on your credit file may be limited.

Mortgage lenders may like to see that people could keep up on their debt obligations by paying back their debts on time but too much debt may not be good for anybody.

Usually, before a mortgage lender will give you a mortgage offer they will take a deep dive into your credit file to see how many debt accounts you have open and your repayment history on the debts.

As a single person, the mortgage lender may focus more on your disposable income after your committed expenditures which includes your debt.

Some mortgage lenders may prioritize the fact that you can make all your debt repayments each month and still have enough disposable income to cover your monthly mortgage repayments.

Other mortgage lenders may look at the current amount of debt accounts you have open as a single borrower and determine that they are too many.

Can you get a single person mortgage with bad credit?

Getting a mortgage as a single borrower with bad credit may be difficult as mortgage lenders may usually want to lend to borrowers who have a good credit score and have shown a good repayment history on all their previous debts.

There are however mortgage lenders who will offer a single person mortgage to a borrower depending on what type of bad credit was and what the circumstances were.

If it was a CCJ which was satisfied and is a certain age then some mortgage lenders may be willing to lend. Other mortgage lenders may lend if the CCJ was a maximum amount.

When looking to get a mortgage with bad credit the requirements from different mortgage lenders will differ and a bad credit mortgage broker may be able to assist you in getting a single person mortgage.

Bad credit could include:

A CCJ
An IVA
A debt management plan
A default
A bankruptcy
A home reposession

Can you get a single person mortgage if you are self-employed?

Getting a single person mortgage if you are self-employed is certainly possible but most mortgage lenders may want to see your accounts for 3 years at the very minimum although there may be mortgage lenders willing to offer a single person mortgage with less than 3 years worth of accounts but at least 12 months.

The documents you may need as a self -employed mortgage include:

Your P60 tax return
Your SA302 tax calculation form
Your company accounts if you work through a limited company

You may find using the services of a mortgage broker who has experience dealing with self-employed borrowers.

Other considerations a mortgage lender may take into account when offering a single person mortgage to a self-employed are:

The Trading style: are you drawing a salary from a company or do you have a claim over a share of retained profits. These could make a significant difference on how much you may be able to borrow.

Your experience: how long have you been self-employed and what is your working history.

Can you remortgage a single person mortgage?

Getting a remortgage as a single person is almost the same as getting a mortgage for a single person. For you to be eligible for a remortgage you will need to show the mortgage lender that you can keep up payments on your remortgage.

Can you remortgage into one name? (take someone off a mortgage)

Yes, you can remortgage to take someone off the mortgage but this is essentially getting a new mortgage on the property and the other person consenting to be taken off. It doesn't have to be done with the same mortgage lender.

If you choose to stay with the same mortgage lender there may be some advantages like avoiding early repayment fees and in some cases, you may be able to stay on the same mortgage product but ensure you check it is still competitive.

Whether you are staying with the same mortgage lender or you are remortgaging to a new mortgage lender you will need to meet theirmortgage affordability requirements and prove that you can make the mortgage repayments on your own.

When remortgaging and removing someone from the mortgage there may be some costs due to the transfer of equity process. If you change to a new mortgage lender there may be fees associated with getting a new mortgage as well to consider.

You should also seek tax advice as there may be some stamp duty considerations to take into account/

What to do if you have been rejected for a single person mortgage?

If you have been rejected for a single person mortgage the first thing you should know is that it isn't the end of the world and you may still be eligible for a mortgage with a different single mortgage lender.

Your mortgage broker will look to find out why the mortgage lenders have rejected you for a single person mortgage and what you can look to do to increase your mortgage affordability before applying for a mortgage again.

It may be the case that you aren't eligible for a mortgage at the moment and may need to save more or find a co-buyer to reduce how long it takes you to get on the property ladder but you may want to first consult your mortgage broker or the mortgage lender to get a full understanding of why you were declined for a mortgage.

Are there any benefits with joint mortgages than getting one yourself?

When comparing if to get a joint mortgage or get a single person's mortgage you may see some advantages straight away.

Getting a joint mortgage will usually mean that you are able to get on the property ladder much quicker as you can pull the resources of two people rather than a single person towards the mortgage deposit and the monthly mortgage repayments.

Joint mortgages may have some extra costs than a single person mortgage as you may have to seek legal and tax advice(in some cases).

Joint mortgages also mean you may be able to ring-fence your ownership and mortgage deposit contribution to pass to your children or kids in your will. This will usually have to be through a tenants in common agreement and may require you to seek independent legal advice.

Getting a right to buy joint mortgage

If you looked into getting a single person mortgage but you weren't eligible you may be able to get a right to buy joint mortgage but it is very likely the person you apply for the right to buy joint mortgage with will need to be eligible for the right to buy scheme for that property.

Single person mortgage calculator

Most mortgage lenders offer single person mortgage calculators which can give you an idea of how much you may be able to borrow as a single person but these calculators don’t show a true reflection of your mortgage affordability. You should speak to a mortgage advisor from the mortgage lenders mortgage department or an independent mortgage broker who may be able to advise you on all your single person mortgage options in the market.

How to apply for a single person mortgage?

To apply for a single person mortgage you may want to first contact a mortgage broker.

Mortgage brokers are important as they can access single person mortgage products from across the whole of the market in some cases. This could be over 11,000 single person mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which single person mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously. Once you have found a home you want to buy the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your single person mortgage with the help of a conveyancer.

Single person mortgage FAQs

How much can a single person get a mortgage for?

A single person can get a mortgage which is a mortgage multiple of their salary and based on their monthly disposable income. Different mortgage lenders have their own mortgage affordability requirements but if you have a good credit score and a mortgage deposit of at least 5% then you could find mortgage lenders who offer a 95% LTV mortgage.

You may also be able to get help from guarantor mortgage or the Governments first-time buyer schemes

How can I buy a house with a single income?

You can simply get a single person mortgage to buy a house with a single income. This is very possible and people do it every day. Speak to a mortgage broker who can advise you better.

How many months payslips do you need to get a mortgage?

You will usually need to show a minimum of 3months worth of payslips to get a mortgage.

How much money should you borrow for a mortgage?

The mortgage lender will only let you borrow as much as you can afford when seeking a mortgage but you should always look to borrow only what you need as you pay interest on a mortgage.

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Single person mortgage (Guide)
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