Single Person Mortgages: Everything You Need to Know

If you’re a single person spending significant sums on rental costs every month, you might ask yourself ‘can I get a single person mortgage?’. In this article we’ll outline everything you need to know, about applying for, and being accepted for a single person mortgage.

John Ellmore Last updated on 17 November 2020.
Single Person Mortgages: Everything You Need to Know

Getting a mortgage as a single person is achievable, though inevitably harder on one salary than two incomes. But, if you’re a single person fed up with the cost of renting with no return, there’s no reason why you should give up on your dreams of owning your own home.

The amount you can borrow is based on your income, your affordability, and the deposit you are able to pay down on the property. So, let’s dive into everything you need to know about single person mortgages.

How can I get a mortgage as a single person?

Mortgage providers typically calculate how much they could lend you based on how much you earn. They usually are happy to lend mortgage applicants between four and five times their annual salary.

For example, if you wanted to buy a £150,000 property with a deposit of 10%, you’d need an annual income of £27,000.

Another major factor is your ability to afford your monthly repayments. Lenders will complete a full check of your finances to ensure you can comfortably meet all your financial obligations once the mortgage is in place.

How much you could borrow - mortgage calculator

By using our ‘how much can I borrow’ mortgage calculator you will get a more accurate representation of what lenders might be willing to lend you. You can then compare over 4,500 mortgage deals on our mortgage comparison table, to find the right deal to suit your financial circumstances.

As you can see, it could be more difficult to secure a mortgage as a single person compared to a couple with two incomes.

So, what can you do to increase your chances of being accepted, and eliminate the stress and wasted time in the case of your application being denied?

1. Save and budget

For a single person on a modest salary, a mortgage can seem out of reach- a distant dream that cannot be achieved. It’s no wonder many Brits prefer to save for a more immediate reward, like a holiday, to enjoy the fruits of their labours. However, with a bit of planning, foresight and a small amount of self-denial, almost any single person can save for a mortgage.

A good place to start is working out how much you can afford to realistically save each month from your pay cheque, while still having a decent quality of life and being able to treat yourself from time to time. Many first-time buyers saving up for a mortgage commit to putting away 20% of their monthly salary in order to boost their deposit.

Remember, the higher the deposit you can put together, the more attractive you are to lenders. Putting down a larger deposit sum makes you seem less of a risk to lenders and opens up opportunities. With a higher deposit you’ll have a lower loan to value (LTV) ratio and will be able to explore a much larger range of mortgage products.

Again, with a higher deposit you may be offered better mortgage deals, face less risk, have cheaper monthly repayments, and a better chance of being accepted by mortgage providers. But, first you’ll need to work out how much you should put down on a deposit.

To explore this subject more take a look at our how to save for a mortgage deposit guide.

2. Fix your credit score

Taking out a loan of any description requires a good credit score to demonstrate to lenders that you are capable of keeping up with financial commitments.

A quick and easy way to improve your credit score is to pay off any outstanding debts you have. Mortgage providers assess your affordability by thoroughly examining your financial commitments as well as your income. So, by paying off any debts you do have, a mortgage provider will be able to see that you can contribute more to your monthly mortgage repayment costs each month.

Get started by reading our guide on how to rebuild your credit history.

3. Understand the different types of mortgages

There are lots of different types of mortgages available. When exploring mortgages for the first time you’ll also come across lots of jargon which won’t make much sense to you. To get the best deal you will need to understand the following terms: loan to value (LTV), annual percentage rate of charge (APRC), arrangement fee, base rate, fixed rate mortgages and variable rate mortgages, to name just a few.

Our essential guide of things to know when comparing mortgages will help translate tricky mortgage terminology and get you on the right track to choosing a competitive mortgage deal.

4. Consider low deposit mortgages

Low deposit mortgages have a 95% loan to value. This means if you have limited savings and want to move ahead with securing a mortgage, you can do so with a deposit of only 5% of your chosen property’s value.

You will pay higher rates for a low deposit mortgage, so consider if saving for a more traditional mortgage deposit is a better option for you.

100% LTV mortgages are also a possibility for first-time buyers without savings. Providers of these types of mortgages will require another person to be responsible for your deposit either by depositing money or securing against their own property, or become a full guarantor of your mortgage should you default on your repayments.

Read our guide on how to get a mortgage with no deposit for more information.

What do I need to know when choosing a mortgage?

A mortgage is one of the biggest financial decisions of your life. We don’t mean to daunt you, but when exploring your mortgage options it’s essential to be aware that your decision will impact your finances for a number of years, and potentially decades.

It is worth remembering that most mortgages have initial rate periods. After they expire you can choose to renegotiate your mortgage terms with your provider. Alternatively, you’re able to consider the options available in the mortgage market and choose a new more suitable deal to remortgage.

Where possible, it’s useful to take a long term view when choosing a mortgage For some people this will mean choosing a mortgage with a fixed rate; by choosing this option it’s possible to know exactly how much you’ll be expected to pay each month over the length of your mortgage.

However, fixed rate mortgages typically have higher interest rates than variable or tracker mortgages, which are more changeable and unpredictable. For more information read our guide on variable vs fixed mortgages.

As always, take the time to research the best option for you.

About the author:

John Ellmore is a director of NerdWallet UK and is a company spokesperson for consumer finance issues. John is committed to providing clear, accurate and transparent financial information. Read more

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