Getting a Mortgage as a Single Parent

single parent being consolodated

If you are a single parent and looking to get a mortgage you may be concerned about whether you will be accepted. Obtaining a mortgage as a single parent can be much harder than getting a joint mortgage or even a mortgage for single people without children. 

The good news is there are many lenders who can be favourable and help you get onto the property ladder. This guide outlines everything you need to know about getting a mortgage as a single parent.

Let’s explore single parent mortgages.

Can You Get a Mortgage as a Single Parent?

Yes, you can obtain a mortgage as a single parent. However there are a few barriers to entry that make getting a single parent mortgage more difficult.

All lenders will allow you to apply to them as a single parent, though with some lenders it will be difficult to get your mortgage accepted. Mostly this is because of:

  • Affordability calculations
  • Benefits not being considered
  • Income not meeting the lender’s threshold
  • Bad credit or poor credit history

Why Use a Mortgage Broker as a Single Parent Looking for a Mortgage?

When you apply for a mortgage, the lender will conduct an affordability calculation. Typically, lenders allow you to borrow up to 4.5 times your annual income with a few lenders allowing you to borrow up to 5 times your annual income.

Part of this affordability calculation also considers the number of children you have in most cases. For each child you have, the lender will factor in the costs associated with looking after that child and this can reduce the amount you can borrow.

Some lenders will accept some benefit income, whereas others will not consider benefit income at all. Lenders will also want a minimum income level. For example, if you earn £11,000 per year, you might be declined altogether regardless of the affordability calculation because the income is too low for a lender to believe that you can meet your repayments.

A Whole of Market mortgage broker will be able to get an overview of your complete financial situation and then match you with a lender who is most suitable for you.

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How Much Can I Borrow as a Single Parent?

The amount you can borrow is largely dictated by your annual income. There is technically no upper limit to the amount you can borrow providing you have the income to make the repayments and pass the affordability calculation.

As mentioned earlier, a lender typically allows you to borrow 4.5 times your annual salary, assuming minimal financial commitments/adverse credit and an average mortgage term.

For example, if your annual salary is £50,000, you may be able to borrow up to £225,000 with most lenders.

You may find that once the affordability calculation is completed, the amount you can borrow is less than you expected. Lenders reduce your borrowing amount in line with your expenditure and factors like loans, credit cards, store cards and even school fees can reduce the loan amount. As mentioned, your mortgage term will also have a significant impact on the borrowing sum available. As a general rule of thumb, the shorter the overall mortgage term, the lower the maximum mortgage sum.

You will also need to have a deposit that meets the lenders’ criteria. For example, lenders typically ask for at least 5% of the purchase price or valuation to be put down as a deposit.

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Do Benefits Count Towards Income for a Mortgage?

Some lenders may accept benefit income but as a rule of thumb you should not expect your benefit income to be included in mortgage affordability. This is because your benefit entitlement can change over time as your circumstances might change, or the government may adjust how much you are entitled to.

Likewise, your child maintenance payment may be allowed by some lenders whereas others might not consider it at all.

What Government Schemes Can Single Parents Use?

The government have a few schemes currently. The key schemes you might find applicable to a single parent mortgage are:

  • First Homes Scheme
  • Help to Buy ISA
  • Help to Save

The first homes scheme is the only fully fledged mortgage scheme for low-income single parents. It allows you to buy a property to live in at a discounted value. When you sell the property, you will need to sell it through the same scheme at the discounted value.

With that said, the first homes scheme is ideal for those looking to buy a property and live there indefinitely. Rather than paying rent and having nothing in return for your payments, the first home scheme allows you to pay towards your equity each month.

The Help to Save and Help to Buy ISA schemes are designed to help you save money for a deposit. The Help to Save account will only allow for a small amount of savings but offers a generous 50% return paid as a bonus.

You can find all details about these schemes on the government website.

Can I Get a Mortgage as a Single Parent with Bad Credit?

Yes, but be aware that having poor or bad credit will limit the number of lenders available to you. This limitation adds an extra level of difficulty when obtaining a mortgage as a single parent.

Because of the limited range of lenders available to adverse credit borrowers, you may find benefit income you had expected to be included is not considered by your adverse credit lender.

If you have enough income to pass the affordability calculation and a suitable deposit, you should not find it difficult to obtain a mortgage with adverse credit. You will find that your interest rate is typically higher than a standard mortgage product.

Speak to a Specialist Mortgage Adviser

There are many intricacies involved in getting a single parent mortgage and you should be prepared for a challenge.

A reputable Whole of Market mortgage broker will be able to simplify the process and help you find a mortgage product that works for you. A mortgage broker with experience in this area will alleviate the stress of applying for a single parent mortgage considerably.

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Brokerage. Boon Brokers offers fee free mortgage advice.

Contact Boon Brokers to book your single parent mortgage consultation today.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.