Can You Get a Joint Mortgage if One Person is Unemployed?

woman reading whilst other woman searches on computer

Unemployment comes in various forms and it is common for couples to seek out joint mortgages where one person isn’t currently employed.

You or your partner may be staying at home to look after children or even be retired.

When searching for a mortgage you may have found that you are filling in numerous affordability calculations and being frustrated by the end result.

There is a lot of complexity around single income mortgage applications and it can be confusing.

This guide explains how affordability calculations are made for single income joint mortgage applications and how you can improve your overall chances of success. Let’s explore this further.

Is it Possible to Get a Single Income Joint Mortgage?

Yes, it is entirely possible to arrange a mortgage along these lines. However many people run into difficulties passing the affordability calculation.

If you have a high income that is more than enough to cover your mortgage borrowing and living expenses, you should have no difficulty obtaining this mortgage.

Complications arise with this type of borrowing if:

  • The affordability for the mortgage is tight on the single income.
  • Your partner has little/no credit history.
  • Your partner has retired.
  • The deposit amount isn’t adequate for the lender.

We will look at these problems in more detail throughout the article but, rest assured, they shouldn’t be insurmountable challenges.

How Do Single Income Mortgages Work?

A single income mortgage works in exactly the same way as a traditional joint mortgage product would work.

Instead of both applicants having an income to contribute toward affordability calculations, only one person would list their income.

The other applicant would list their occupation as unemployed, retired or houseperson, depending on the exact nature of their unemployment.

The lender will then look at the income and expenditure of the joint applicants and assess whether they can lend or not.

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Can Couples Apply with a Single Income?

As lenders look at the overall income and expenditure of both applicants, the first hurdle tends to crop up here.

Whoever has the income in the partnership will need to demonstrate to the lender that they can cover the expenses of both applicants, including future mortgage payments.

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As a result of this, you might find completing affordability calculators online a frustrating process and instead of being able to borrow the average 4.5 times your salary, you’re being offered much less.

In short this is because your salary will have to go further on a single income mortgage compared to a mortgage with two income applicants.

It could even be the case that your income needs to cover twice as much expense compared to two income applicants which could return half the affordability calculation you had expected.

How Are Affordability Calculations Affected?

Affordability calculations look at a range of aspects that make up your overall financial situation.

First and foremost, they will evaluate the total income available for the mortgage.

For example, you may have an annual income of £50,000.

Once the calculator has taken the headline income figure, you will need to account for all your expenditure. Expenditure covers a broad range of financial liabilities, such as:

  • Existing financial agreements (loans, credit cards, hire purchase agreements and overdrafts).
  • Property costs (rent, existing mortgage payments, utility bills and council tax).
  • Work related expenses (car, fuel, insurance, phone and internet costs).
  • General household expenditure (food, clothes, childcare and school fees).
  • Any other regular expenditure not covered above (leisure, subscriptions and hobbies).

When two applicants are on a mortgage application, the expenditure of both applicants will be considered by the lender.

When only one applicant has income, it typically gets more difficult to pass affordability.

When looking at affordability calculations you should ensure that your expenditure is within your financial means and wherever possible, look to cut back on regular expenses.

For example, it can be beneficial to clear an outstanding loan prior to making a mortgage application because the monthly loan payments will not be factored into the affordability calculation.

Should I Just Apply for a Single Applicant Mortgage?

At this point you may be wondering whether you should go down the joint applicant route for a mortgage.

A single applicant mortgage could mean you only need to cover your own expenses.

The answer to this question is a little more nuanced though, you could find yourself applying for a single mortgage and still needing to declare the full expenditure of your partner/household.

This is especially the case if you have children.

You might also run into complications in the future if you purchase a property in a single name that is used by a family.

For example, if you’re married and divorce in the future, you could find the judge prescribes the property as the family home, which could mean you have to vacate the property and still pay the mortgage on it.

The Legal Aspect of Buying a Property When Married and Divorcing

If you buy a property when you’re married it will be classed as a marital asset. This is the case even if you’re the only applicant on the mortgage or have the property in your name exclusively.

If you divorce, a court will look at one of three options typically:

  1. If there is enough equity in the property to buy both parties a new home each, the judge is likely to put the house up for sale. At a minimum for this option, a deposit on a property each would need to be viable with the existing equity.
  2. In the event the equity isn’t sufficient, a judge will look at whether one party can borrow money and buyout the other party. If you’re the sole income holder in the marriage, the likelihood is that you will retain the property but need to buy out your partner for an equal share.
  3. Where children are involved, it can complicate matters further and a Mesher Order or Martin Order can be made, which means one party has the right to remain in the property for a pre-defined time (even if the excluded party has to continue paying the mortgage).

Having a joint mortgage application with the property held in joint names can be favourable to everyone involved if a divorce occurs it means that both applicants will have the financial responsibility to pay for the property and one party will not be potentially saddled with the entire financial burden (and potentially excluded from living in the property).

Sometimes it can be beneficial to apply on a single applicant basis. As you might have gathered, it really depends on your personal circumstances.

A mortgage adviser will be able to look at a mortgage specific to your situation and advise which route is best to take.

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Do Benefits Count Towards Affordability?

A potential advantage of applying for a mortgage on a single income joint basis is that most lenders will take benefits (or some forms of benefits) into account when assessing affordability.

For example, you might have working tax credits or child tax credits that could bump up your income if you’re in a single income household.

The lender may also consider any benefits your partner has as well.

This is rarer as lenders like to assess benefits alongside other income. 

This is because benefits are subject to change, and you can’t guarantee a fixed benefit amount for any length of time.

You should discuss any additional income you or your partner has with your mortgage broker.

They can advise you on which benefits you can put toward your mortgage application.

What About Retirement Income?

Buying a property isn’t only a young person’s game and you may find that later in life you want to make a single income joint application for a mortgage.

If your partner has already retired, you may be wondering if pension income can be used with a mortgage application.

This could be to include your partner’s income on the mortgage or to make provision for your own upcoming retirement.

Some lenders accept pension income.

That means you could theoretically make a joint income mortgage application. 

Some lenders will allow you to borrow money prior to retirement and then take your pension income into account beyond your retirement date. 

Unfortunately, there are some lenders who don’t accept pension income.

Looking for a mortgage where one or both of you are either retired or planning to retire during the mortgage can be a bit more complicated you should discuss your situation with a mortgage broker and inform them of planned retirement dates and expected pension income.

Lenders that assess pension income will also want to see pension statements to corroborate the amount of income you’re declaring from your pension.

It can be helpful to contact pension providers in advance of a mortgage application and request your pension statements, so your figures are accurate.

What Mortgages are Available with a Single Income?

Almost all mortgage products that are available to joint applicants can be made with single income joint applicants.

Remember, these products are designed to reflect two sets of income and affordability stress tests have been calculated accordingly. 

As discussed at the beginning of the article, if your income is more than sufficient to pass the affordability calculation, you really shouldn’t have any difficulty in obtaining a joint mortgage with a single income.

You should still consult with a broker even if your income covers affordability calculations. They will advise on whether the product that you are looking at is most suitable for your situation and ensure you get the best mortgage deal.

You might also want to consider a single applicant mortgage.

The affordability calculation might work out more favourable in these circumstances once again it is best to discuss your plans with a mortgage broker who can point you to the best product and lender.

Speak To A Mortgage Adviser

Free consultations are offered in the UK.

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Credit Scoring with Single Income Joint Applicant Mortgages

Both applicants on a single income joint applicant mortgage will need to pass the lenders’ credit score requirements.

This can cause issues if your partner has not worked before and hasn’t built up a credit history. 

You should check both credit scores before thinking about making a mortgage application and look at improving any areas that might be impacting either score negatively.

For example, clearing overdrafts, defaults and CCJs will likely help with a mortgage application. 

Boon Brokers has created an extensive guide to credit scoring and how to improve your credit score in anticipation of a mortgage application.

 

Follow the guide to tackle any problem areas and start restoring your credit score today.

Lastly, there are lenders who will accept adverse credit scores which means even if you can’t recover your score in time, there should still be a mortgage available to you.

These mortgages tend to have much higher interest rates though, which can be an additional burden if your affordability is already tight on a single income joint borrower mortgage.

Are There Steps I Can Take to Improve My Mortgage Chances?

Yes, there are three easy steps you can take to improve your chances of a successful mortgage application.

  1. Look at your income and expenditure. First calculate all sources of income and ensure you’re including everything. Look at expenditure and see if there are areas you can cut back on? Do you need the Netflix subscription, or can you do without the weekly date night?
  2. Fix issues with credit scores. If there are errors on your report have them corrected and clear any problem debts and repay credit cards and overdrafts wherever possible.
  3. Contact Boon Brokers, a whole of market mortgage, insurance and equity release broker. We offer fee FREE advice and have extensive experience arranging single income joint applicant mortgages.

Applying for a Single Income Mortgage

Now you have a basic understanding of how single income joint applicant mortgages work you will want to discuss your specific situation with an expert. 

Boon Brokers is a whole of market mortgage, insurance and equity release broker.

Boon Brokers can look at your overall situation and advise you on the best course of action to get a mortgage and help you with every step of the process.

Contact Boon Brokers 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.