What To Do If You Can’t Afford a Mortgage

If you’re concerned that you can’t afford a mortgage, don’t fret. No matter your current position, you may still have options to buy and own a home in the UK.

This guide covers all you need to know about making it easier to afford a home loan. We’ll explain how to stretch your mortgage affordability, who to approach, and where to get an expert hand.

Keep on reading for all the details or click on a link below to jump straight to a section…

What are your options if you can’t afford a mortgage?

Being able to afford a mortgage can be a realistic goal for more people than you might think. You might believe that you can’t buy a house, but it’s likely you’ve not had a chance to fully explore all the potential options you have.

Getting a mortgage isn’t a tick-box exercise and there are plenty of strategies you can use to make homeownership more affordable. There’s plenty of misinformation about the costs of buying a house out there. You may have already started the process, but approached the wrong lenders. Luckily, it doesn’t have to be the end of your journey.

Here are some areas to explore further if you think you can’t afford a mortgage.

Higher income multiples

If you think you can’t afford a mortgage based on your salary, don’t panic. Although the average income multiple used by most lenders is roughly 4-4.5x your salary, it’s possible to get bigger multiples with some lenders. There are also scenarios where you can get access to a 5x salary, or even a 6 times salary mortgage.

Government schemes

There are some useful UK government schemes out there that can make buying a home more accessible, especially for those who might struggle to save a deposit. A few notable examples include:

• Help to Buy
• Shared Ownership
• Right to Buy
• Right to Acquire
• Mortgage guarantee scheme

You can find more information about each of these schemes through the links above.

Family mortgage options

It’s even possible to get support from your family, relatives, or friends. Some of the most popular options are:

• Guarantor mortgages
• Joint mortgages
• Offset mortgages
• Joint borrower sole proprietor (JBSP) mortgages

You can read more about each of these options through the links.

Using extra income

Some lenders will take all your income into account when calculating if you can afford a mortgage. So, if you earn commission, bonuses, overtime, or even if you have a side hustle doing extra freelance work – this could all be included on top of your salary. Certain lenders will also allow the inclusion of certain benefits you receive

Some mortgage providers cap the amount of supplemental income you can declare alongside your salary, but through the right mortgage broker, it’s often possible to declare 100% of it.

How a broker can help boost your affordability

Your exact circumstances will be unique to you. However, some lenders don’t have the resources or flexibility to show you all the potential options. Using a specialist broker means that they can introduce you to the right lender based on your specific situation. If any of the above methods apply, your broker will put you in touch with the right lender.

Support from a skilled advisor means that they can take a look at your whole finances and see where your income is coming from, then instruct you on the best way to set up your application. Once they’ve helped create your plan, an expert broker will explore all possibilities to get you a mortgage you can afford.

If you want to see your full range of home-buying options, just make an enquiry. We’ll introduce you to a specialist broker for free. Using an expert will allow you to stretch how far your money goes, making sure you end up with an affordable mortgage.

What to do if you can’t afford an existing mortgage

With rising interest rates and an increase in the cost of living, it may be the case that you can’t afford your current mortgage. If you think things are heading in that direction, it is possible to get ahead and make some changes.

There are many potential options you can look into.

• Speak to your lender: this should always be your first port of call. Openly discussing your situation with your lender can be the simplest way to get the result you’re looking for. However, this is still best done with the support of a skilled advisor to make sure you have some professional guidance throughout.

• Remortgage: by remortgaging, it might be possible to restructure your home loan and get better rates or improved terms. Doing this can result in more affordable payments, especially if you’re on a variable rate agreement.

• Second charge: a second charge mortgage is a useful way to get hold of additional funds without leaving your current lender, or sacrificing an existing rate you’re happy with.

• Extend your mortgage term: depending on your age and other circumstances, it may be possible to extend your mortgage term. This could be done with your existing lender or when you remortgage to a new lender. Either way, an extended term can lower your monthly payments and make it easier for you to afford the mortgage.

• Switch to interest-only: if you have a repayment mortgage, switching to an interest-only option is worth considering. This could be arranged through your existing lender or with a new one. Switching can be a short-term solution or a long-term way to make payments more affordable, as you’re only paying off the interest on the loan.

• Get a lodger: renting out one or more of your rooms can be an excellent way to generate additional money if you can’t afford your mortgage. Having a lodger or housemates can sometimes even cover the total cost of your monthly mortgage payments. You can then always go back to living alone once you can afford it. You should check with your existing mortgage lender to see if they will allow this.

• Request a payment holiday: the idea of a mortgage payment holiday became more mainstream during the coronavirus pandemic. But, it’s something that some lenders are willing to discuss, even if the world isn’t locking down. It means you get a break in your mortgage payments for a pre-agreed period of time, allowing you some breathing room.

• Swap products: if you are on a variable rate, it can usually make financial sense to swap onto a fixed rate. Doing this can reduce your payments and involves less hassle than a full remortgage. However, existing customers don’t automatically get the best rates. So, it’s worth using a knowledgeable advisor to help make sure you still get a top deal.

• Equity release: for those over 55, equity release, or a lifetime mortgage can be an extremely useful way to access money tied up in your property. It can also make things more affordable, as it would potentially remove the need for monthly payments altogether.
• Government support schemes: There are several government schemes which could help you out if you’re unable to pay your mortgage. In England, there’s Support for Mortgage Interest (SMI), which had its status changed from a benefit to a repayable loan in April 2018. Scotland and Wales have their own versions of this scheme.

What to do if you can’t afford a joint mortgage on your own

Another common scenario is if you’ve got a joint mortgage and something happens to the other owner. This could leave you in the lurch, meaning you have to cover the whole monthly mortgage payment, which then might mean you can’t afford it.

Below are some situations that occur quite regularly and are worth planning for.

Divorce or separation

If you separate or divorce from someone you share a house with, it’s important to stay on top of things, otherwise, it could affect both your credit scores. Depending on the exact situation, some options to discuss with your broker would be:

• Selling the home
• One partner buying the other out
• Applying for a guarantor mortgage with support from a family member
• Both keep paying off the mortgage and each keep your own stake
• Explore the options discussed in the previous section

Death

It can be the case that the person you own the home with passes away. If this happens, it may be up to you to keep up with the payments. There are lots of paths to look into, but one of the best tools is being prepared in advance.

There are various insurance and life insurance policies you can put in place to make sure your mortgage is covered should a death occur. Speaking to an expert broker is the best way to create a contingency plan for worst-case scenarios.

Speak with an expert if you can’t afford a mortgage

Whether you’re taking pre-emptive action or dealing with current payments that you can’t afford, using an expert broker is going to allow you to find an affordable solution.

We offer a free, broker-matching service. This means we’ll quickly assess your situation and then introduce you to a skilled broker who will best suit your needs.

Just call 0808 189 2301 or make an enquiry. We’ll set up a free, no obligation chat between you and your ideal mortgage broker today. One who will find you a mortgage you can afford.