Single Parent Mortgage
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Mortgage Options for Single Parents
What challenges may face a single parent applying for a mortgage?
As a single parent, there are a range of challenges you may face when you apply for a mortgage. For example, income and affordability are generally lower in single parent families, due to the reduced earning power.
Fortunately, there are options available to you as a single parent. As well as flexible mortgage products which are more geared towards your needs, there are lenders who will consider single-parent families. Whilst willing lenders are not always easy to find, an experienced Mortgage Broker will be able to point you in the right direction.
What factors affect your eligibility for a mortgage as a single parent?
As a single-parent family, it’s very difficult to bring in a full time income. Childcare needs can rarely be properly accommodated around a full time job, meaning that most will have little or no income.
Whilst lenders will be more cautious and the mortgage loan amount offered is likely to be lower, there are specialist lenders who will consider these circumstances in some cases.
Affordability is not as straightforward as your income level. When a mortgage lender calculates your affordability they will take into account your outgoings to establish a debt to income ratio.
The number of dependents you have will also affect your affordability, as lenders will consider that those with a larger family will naturally have higher outgoings.
If your salary is very low, it’s unlikely you will be able to borrow enough to purchase the home you want. Those lenders willing to consider single parent applications, however, are generally willing to consider other sources of income on top of your salary. The following may be taken into consideration when assessing your affordability:
- Child Benefit Payments
- Tax Credits
- Maintenance payments from estranged partners
- Universal Credit and Disability benefits may also be considered in some cases
Adverse Credit Issues
Applicants with a history of adverse credit are ordinarily looked upon as high risk and less attractive to mortgage lenders. As well as considering the severity and timescale of your credit issue, most lenders will also look at the reason behind it. Some lenders will appreciate that single parents can experience financial difficulties through no fault of their own. For example, an expensive divorce or the forced sale of a jointly owned negative equity property may have a huge impact on your finances.
Overall, those applicants who are honest about their bad credit will be looked upon more favourably. Before making an application, ensure that you’re familiar with your credit report, which you can obtain for free online. It will also be beneficial if you can explain your defaults and even better if you’re seen to be making an effort to restore your credit score.
For more information about your credit score: https://www.checkmyfile.com/?gclid=Cj0KCQiA-aGCBhCwARIsAHDl5x9TkT-NqzMLaYeZcUYP8I6vHNHG9xUOud72B6KMIz4i0avRk86vQZkaAvHlEALw_wcB
What mortgage help is available?
Government-Backed Help to Buy
This scheme involves First Time Buyers borrowing a 20% equity loan from the government towards the cost of your home. This means you’ll only need to find 5% deposit, which can be helpful for those with minimal savings. For more information https://www.helptobuy.gov.uk/
The Shared Ownership scheme allows those with a lower income to purchase a percentage of their home, making the monthly repayments and deposit much more affordable. Some lenders will even provide 100% mortgages on shared ownership properties.
A guarantor mortgage is when another party, usually a close family member, offers their own home or other assets as security on your mortgage. This should only be considered where you’re certain you can afford the mortgage payments, however, as the guarantors home or assets are at risk.
Family Gifted Deposits
Whilst it’s rare these days, some family members, parents in particular, are able to gift their children a deposit to buy a home. This can be an easy way to get onto the property ladder without any savings.
Whilst it’s tough for many single parents to save a deposit alongside their other outgoings, a personal loan should be a last resort. Most lenders will be concerned that you can repay both the loan and the mortgage. If you feel confident that you can do so, however, it may be possible in some cases.
How Can The Mortgage Mum Help?
Whilst certainly possible, it can be more difficult to find a lender that will consider a single parent mortgage applicant. A Mortgage Broker will be able to source those lenders for you and advise you which are more likely to accept your application, based on your individual circumstances.
They can assist with the paperwork and local contacts and take you step by step through the house buying process, meaning you have a safe pair of hands to help with the burden.