We receive a number of enquiries from borrowers considering buying or remortgaging a property on their own, so have collated this article to provide all the relevant information you need to know in one place. In this article:
The most important thing: If you want to get the right advice, make an enquiry and we will pass you on to one of the sole applicant mortgage specialists!
“Will my mortgage application be rejected because I’m a single applicant?”
No! Many customers ask us this so we want to be clear that getting a mortgage as a single person is treated no differently by lenders, and is actually more common than you might think.
Many first time buyers decide to purchase their first property alone, which in most cases just means they have a lower deposit, or need to wait a little longer to buy than a couple with joint incomes who may be able to save quicker.
The first thing you need to know is if one lender has rejected your mortgage application, it doesn't necessarily mean another lender will too.
If after reading this article you’re still asking, can I get a mortgage as a single person, then make an enquiry or give us a call and we can explain in more detail.
How big a mortgage can a single person get?
Affordability comes down to two things, income and outgoings, alongside the lender’s interpretation and criteria of what is considered acceptable. Of course, buying a property as 1 person, mortgage lending limits will be lower than 2 applicants if the second has an income, or actually higher if they don’t, as the second applicant would usually be considered a financial dependent.
How lenders assess income for single applicants
All lenders have wide ranging criteria on the income they do and don’t accept, and have different ideas about suitable affordability limits, so this makes it difficult to establish an exact borrowing figure on paper for all.
For instance, all lenders will consider 100% of a basic wage, but when it comes to bonuses, some lenders consider 100% of them, some are 50%, and others don’t consider them at all. Some lenders consider overtime and others don’t. Some want self-employed borrowers to have been trading 3 years, others 9 months. And so on…
The impact of this can be massive on the maximum loan figures. For example, a borrower with 25k basic and 5k bonus with lenders happy to offer 4.5x income but accepting different % of the bonus income:
100% bonus income = 25+5k x 4.5 = Max loan of £135,000
50% bonus income = 25+2.5k x 4.5 = Max loan of £123,750
0% bonus income = 25+0k x 4.5 = Max loan of £112,500
The same borrower, with the same affordability from 3 lenders with different stance on income, means a range of over £22,500.
How lenders consider financial commitments in affordability
Anyone with financial commitments such as credit card debt or personal loans, will have these outgoings deducted from their disposable income used to assess affordability. Joint commitments with someone else are still likely to be considered in full for single applicants, as they are jointly responsible for the whole debt.
How lenders calculate affordability on a single person mortgage
With the sections above in mind, in general, most lenders will cap maximum lending at 4x joint income, others can go up to 5x, and a handful can even consider up to 6x in the right circumstances
Historically, most lenders for a single person mortgage in the UK, would use a mortgage multiplier for a single person to establish the maximum loan that someone could borrow. For example, some lenders would offer a maximum mortgage of 4 x salary, so those earning £25,000 could borrow £100,000.
However, these days more lenders will run affordability models based on a true reflection of their personal income and fixed outgoings, to establish a disposable monthly income with which they’ll have to pay a mortgage.
These calculations are not just based on the rate as it is today either, and often have an inbuilt stress-test to base affordability on rates if they were to increase in the future.
Single person mortgage calculators
So you want to know how much mortgage a single can person get? You might be scratching around the internet a while, and happen upon a few tools that may indicate the likely loan amount based on a few income details.
BUT beware! Often these are generic tools using multipliers, are over simplified, or are at best linked to a small number of lender policies. Even going through an official calculator with a lender will only give you that one lender’s figures.
If you are considering a mortgage application as a single person, we recommend speaking to an expert who can establish the most accurate maximum loan figure from the whole market. This takes knowledge and a bit of leg work, but is the best way to know where you stand, and not base your house hunting on inaccurate figures.
Can I apply for a mortgage on my own if I’m self-employed?
Yes, you can! The main considerations are:
Trading style (different figures used for sole traders and Ltd directors. Directors of Ltd companies will usually be assessed by the income they have drawn from the business, however some lenders will consider their share of retained profit that could have been drawn. This can result in far higher lending figures if you go to the right lender!)
Length of time trading (Most lenders want 3 years, some 2, some less than 1. The longer you have been trading, and the more profit in the business, the more lenders will be there to consider your application.)
Income figures (Turnover, Profit, and Drawings (salary + dividends). Most lenders will average your income over 3 years figures, so if you’ve had a large increase in income in the most recent year, lenders that take only this year into account will offer the largest loans.)
We receive so many enquiries from people who’ve either had their mortgage declined or reduced because of the income source, so don’t be disheartened! The good news is that there are several specialist lenders who consider these income types, and we work with the experts who can get you the right advice you’re looking for.
Right to buy in sole name
In general, if you qualify for the right to buy your council house, then the mortgage and ownership of the property will need to be in the names of the people on the right to buy paperwork.
So, if you are the only person who qualifies, with most lenders you’d need to apply for the right to buy mortgage alone. This means just your credit history and income count.
Getting a right to buy joint mortgage
There are instances where a single person is named on the right to buy paperwork but cannot get a mortgage on their own and wants to add someone else to the mortgage for their right to buy purchase. In these instances, there are a handful of lenders happy to accommodate, in a similar manner to a joint mortgage sole proprietor setup.
Single mortgages with low deposit
If you are buying a property on your own as a first time buyer, you might be surprised to know that single 95% mortgages are available on both open market properties as a straightforward purchase, and on Help to Buy deals with new build property (using the government Help to Buy equity loan).
If you’re considering buying on your own either a new build or existing property, get in touch and we will refer you to one of the specialists who’ll give you the right advice.
Important info if you’re mortgaging in single name but would prefer a joint mortgage
If you are looking for a mortgage in single name, when you’d prefer to apply in joint names, then it’s important to understand why.
Mortgages with bad credit are better than you think!
If this is to avoid bad credit showing up on the application with one applicant, by getting the mortgage in one clean credit applicant, then there are lenders out there that can cater for even the most recent and severe scenarios (from late payments, to debt management, to bankruptcy). The deposits needed can be surprising, as many think you need 50% before someone will touch you, when in actual fact buying with just 5% deposit is possible with bad credit in certain circumstances, and at great rates too! See our bad credit pages here for more info.
Being married and applying alone can be difficult
It’s also important to note that a LOT of lenders want married applicants to apply in joint names. Those not doing so, for whatever reason, might be limiting the lenders available and thus might not be eligible for the best deals as a result.
Can I ring fence my deposit contribution on a joint mortgage?
It is often the case that when purchasing a property on a joint mortgage with shared ownership, that one applicant will have a larger deposit contribution than the other.
If you have concerns about potentially losing your contribution in the event of selling the property due to a break up or a dispute, you can ring-fence your share by applying for your joint mortgage as tenants in common.
If however, you are buying in sole name, it is possible to write up a contract with a solicitor to agree terms separately from the mortgage – this is something a mortgage lender would not recognise, however.
Remortgage into one name (take someone off a mortgage)
To remortgage from a joint mortgage to a single mortgage is essentially the same as the person remaining re-applying for a new mortgage on their own, either with the same lender or a new one. Going for a new lender is likely to give you the best rates, but remortgage fees need factoring in.
Remortgage into one name with the same lender
If sticking with the same lender, and approved, you can usually retain your current mortgage deal, which helps avoid repayment penalties to those tied in. This of course means that the remaining owner would need to evidence they can afford the mortgage alone and that they have the right credit profile to be considered no less a risk than before.
Remortgage into one name with a new lender
If you are declined by the current lender for a sole remortgage, then there may be other options with new lenders who are more flexible when it comes to whatever issue is causing the problem (usually it’s affordability – where some will go up to 5-6x income, or credit history – where some will consider all manner of issues).
Legal process of remortgaging into one name
The legal process is slightly more complex than a normal remortgage, as it involves the transfer of equity from one party to the other, as well as the standard change of lender on the charge over the property. This can take some extra time, as well as usually costing more in legal fees (circa £200-500).
If you own a property alone and want to borrow more money
If you own a property in your own name and want to release some cash, you have the option of either borrowing on a main remortgage, or taking a second mortgage (secured loan).
The benefit of a remortgage can be that the whole debt is on one loan with the same lender, and at fantastic rates, whereas borrowing on a secured loan with a new lender can mean slightly higher rates and fees.
The benefit of a secured loan with a new lender however, might be if you are tied in on your current mortgage and it make sense not to pay fees, or you want to keep your current deal as the rate is too good to walk away from, or perhaps if you are on interest only and want to keep it that way.
Also secured loan lenders tend to be more flexible when they are underwriting the loan and can accept more recent and severe adverse credit issues, as well as being more generous on their lending amounts, in some instances offering over 10x income where most main mortgage lenders cap this at 4x (some will do 5x and a few will do 6x max).
If you have a joint mortgage and want a single secured loan
In general, it is not possible for one person to take out a secured loan on a jointly owned property.
Owning a property with someone else, even if you have decided on the % ownership using tenants in common, still means you both have to agree on the debts secured against it. The mortgage remains a joint and several debt that you are both responsible for, in full, and any new debt would be the same.
The only way of borrowing on your own when you’re in a joint mortgage, would be to take out an unsecured loan, or if you own another property in your own name, remortgaging or taking a secured loan against that property.
Can I apply for a mortgage in one person’s name even if there are two people buying the property?
Generally, no. In order to get a mortgage on the property, lenders will want all owners to be named.
It is possible to do the reverse, and mortgage in two people’s names with only one owner named on the deeds, however – known as joint mortgage sole proprietor, used for people to share liability for the mortgage with someone who has no legal right over the equity. Almost a guarantor mortgage, but not quite.
There are lots of reasons why somebody would want to apply for a single person mortgage when there are two people buying the property. As mentioned above, a common reason is that a partner could have bad credit which to some lenders would be an instant rejection on a joint mortgage application, especially as a first time buyer.
Buy to Let mortgages in sole name
Getting a buy to let mortgage in single name is much the same process as residential, but applications can fall foul of some lender minimum income thresholds and get declined where other lenders would be happy to offer the mortgage with no minimum income.
How to apply for a single person mortgage
If you’re considering applying for a mortgage for your first home, make an enquiry and one of the experts will take you through things and handle the entire process for you.
They already arrange single applications everyday, and work with the whole market to give you the best advice, with the knowledge of what lenders will and won’t accept.
Call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.
Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...
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