How To Get A Mortgage On A Low Income

What is the minimum income required for a mortgage?

The good news is that most lenders do not set minimum benchmarks. Instead, they prefer to review applications based on affordability and an individual basis.

However, some lenders have specific stipulations despite this open policy, such as Beverley Building Society, which requires a minimum income of £25,000 for first-time buyers. Likewise, Leek Building Society requires a minimum income of £20,000 if lending in retirement. This relates to the total income required for the mortgage as a whole—even for a joint mortgage.

For those lenders that do stipulate a minimum income, the lowest is Aldermore, with a £10,000 limit, followed by Tandem Bank at £12,500. A few have a minimum of £15,000 (e.g., Vida Homeloans, Norton Home Loans, and Precise Mortgages), and then up to £20,000 for Bath Building Society and £25,000 for Swansea Building Society.

How to get a mortgage with a low-income

Getting a mortgage with a low income could be a bit trickier than for someone who earns more. So, rather than applying to numerous lenders, the smart move is to speak with a mortgage broker who already has experience successfully arranging mortgages for people in this situation.

Using our broker-matching service, you can speak directly with the right mortgage broker by simply making an enquiry online.

They’ll be able to help with:

• Downloading all your credit reports: A strong credit history will definitely count in your favour, and reviewing your reports beforehand means you can identify any inaccuracies or outdated information that could hinder your application
• Finding the right lenders: More specifically, those lenders who have a strong track record assisting people with low incomes still secure a mortgage at the best possible rates
• Gathering your paperwork: Your broker will be able to outline what documentary evidence is required to strengthen your mortgage application

What counts as income on a mortgage application?

It’s worth bearing in mind that whilst you may have a low income from earned employment, there are lots of different types of income sources that mortgage lenders will consider when reviewing an application, such as:

• Rental income (if you’re also a landlord)
• Investment income – share dividends, etc.
• Pension income
• Certain state benefits
• Commissions and overtime income
• Child maintenance
• Income earned overseas

Can you get a mortgage with a large deposit but a low income?

Having a large deposit certainly makes getting a mortgage easier, so long as you don’t tip the balance and end up actually out of the running for some lenders that may have a minimum loan limit (this ranges from £3,000 at Norton Home Loans to £200,000 at Market Harborough Building Society).

If you have a large deposit, the aim is to find a lender that aligns with your eligibility and deposit size.

While a large deposit will be a bonus, and lenders will likely view your application more favourably with one, it doesn’t necessarily mean that’s enough to get your mortgage over the line. You will still be expected to evidence your affordability to make whatever repayments you have over the term comfortably.

What can you use as a deposit?

There are several acceptable deposit methods. Lenders will consider the source of your deposit as part of your eligibility; some are more desirable than others.

Typical accepted sources would be:

• Personal savings gathered over time
• Inheritance
• Gifted from family members
• Sale of another property

Alternatively, deposits coming from a gambling windfall or having a lump sum from unregulated borrowing, for example, would most likely be deemed unacceptable. Lenders must be diligent about any threat of money laundering or funds gained illegally.

Getting a mortgage with a low income but high assets

There are circumstances in which someone is considered as having a low income while also being financially prosperous because of assets in their name. Rather than looking at your monthly salary, lenders may take an individual approach and look closely at how stable and robust your assets are as collateral.

For example, if you own rental properties that bring a healthy yield, a substantial trust fund or pension income, or even stocks and shares, these could be used as either additional income (in the case of rental yield) or security for your mortgage.

Speak to a mortgage advisor

The financial landscape can be daunting, especially with an uncertain market and rules changing constantly. But hope is certainly not lost just because you are on a low income, but have aspirations to purchase a home. You will need the right support, guidance, and help to boost your chances.

This is where our services, with our network of specialist and experienced brokers, come in. All you have to do is reach out to us, and we will match you with one of our amazing advisors!

Call us on 0330 818 7026 or make an online enquiry for details.