Top tips to get a mortgage when you are single


It is often said that two can live as cheaply as one. This is probably not true,  but it can be easier to start buying a home if you have two incomes to pay for it.
But although it might be a little more difficult to buy a home with a single salary, it’s certainly not impossible.  Here are some of our tips for climbing onto the property ladder single handed.

1. Get a bigger deposit to get a mortgage

The days of 100% mortgage have probably gone for good. In the current mortgage market you’ll need at least 5% of a property’s value to get a mortgage. If you wanted to buy a £200,000 property, you would need to save up at least £10,000 and borrow £190,000. But according to a recent Which? survey, the average first-time buyer deposit is 17%.

So with that £200,000 property would mean a deposit of £34,000, and borrowing £166,000.

Why save for a larger deposit? Many people need a larger deposit, because they can’t borrow enough to pay for the property they want. Lenders have become less generous. It used to be that the amount you could borrow was a multiple (often as much as five times) of your income. Things have become more complicated, as lenders now have to abide by FCA affordability rules.

With a single income, you may not be offered as much as a couple. A larger deposit can help you meet all the lending criteria.

2. Prepare for the extra costs

Although the deposit is the biggest cost that you’ll need to pay to buy a home, there are other things you will need to budget for, including:

  • Stamp duty: this is a tiered tax you’ll need to pay on any property costing over £125,000
  • Lenders fee: the lender may charge up to £2,000 to arrange your mortgage
  • Legal fees: you’ll need a solicitor to arrange the purchase of your property. Costs could range from a few hundred pounds to more than £1,000
  • Land registry fees: from £40 to £910, depending on the value of the property
  • Property survey and valuation: The lender will charge up to £300 for a valuation. You may want to pay for a survey at the same time which should spot any defects in the property.
  • Rainy day fund. If you have a partner and one of you loses their job, you still have an income coming in. If you are single, it makes sense to have enough money put by to keep paying your mortgage and other costs for a few months.

3. Get the government to help you build up the cash you need

It looks as though you will need to build up a sizable lump sum to cover the deposit and the extra expenses. This is not easy for a single person (or a couple), but with determination, and possibly some help from family, it can be done over a few years.

It used to be that people would save with the building society who would eventually oblige with a mortgage. Those days are gone, and cash savings are a very inefficient way to build up a cash lump sum, thanks to low interest rates. But there are solutions to help grow savings. An ISA can provide tax free savings, a stocks and share ISA might provide prospects for capital growth – and a Help To Buy ISA – or a lifetime ISA (Lisa) could both get the government adding 25% to your savings to help build your deposit faster.

4. Manage your everyday spending

The lender will look at your monthly income and outgoings to see that you will have enough to live on after you have dealt with the mortgage repayments, so you may need to rein in the expenses for a few months before you make your application.

Commitments like loans or HP payments will be deducted from the amount you have to spend each month, so it’s best to pay them off if you can. But there’s an exception to the austerity rule. A lender is more likely to lend if they can see you have a history of repaying loans. So, apply for a credit card and use it. Just make sure you pay it off each month. That way it won’t cost you anything, and it will help you build up a good credit history. It can even make you a little extra if you get one that offers cash back.

5. Get some professional advice

Whether you’re single or not, speaking to a mortgage broker means that you can call on expert advice for mortgages.

If you’re buying a home with one income, you’ll want income protection in case something happened to you or your job.

As well as finding you a mortgage, at Continuum we can help with income protection, life insurance and even the buildings and contents insurance you may need.

Please give us a call today and speak to one of our professional team.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Book a free initial consultation

Book an initial consultation with one of our independent financial advisers or call us on 0345 643 0770 if you would like to discuss further.

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