Life, as we know from recent years, has a knack of throwing up the unexpected. For example, your partner may now be unemployed but you still need a joint mortgage despite having only one income.
You may wonder if that’s possible. Well, the short answer is ‘yes’. Like any other time you borrow money from a lender, it really all depends on individual circumstances. This includes your credit score and income.
Here, we look at all you need to know about applying for a joint mortgage with one income.
How a joint mortgage with one income works
Single income mortgages work in the same way as the traditional joint mortgage. But instead of both applicants having income to contribute towards the calculations of affordability, only one can list their income.
The second applicant needs to list their occupation as unemployed, retired or a ‘houseperson’. This all depends on their current circumstances.
Lenders then look at the income and expenditure of the applicants and assess whether they want to offer a mortgage.
The first issue that might arise is that the lender will look at the overall rather than individual expenditure and income. They will need to be satisfied that the wage earner can cover the expenses (including future mortgage payments) of both applicants.
It is more difficult to pass affordability with one income because it is expected to cover twice as much expenditure compared to two income applicants. That means you’ll probably be offered less than the average of 4.5 times salary.
As interest rates rise, lenders are becoming more cautious (as these figures show) so you must make sure you have everything in place to increase your chances of securing an affordable mortgage.
What about applying for a single applicant mortgage?
If such issues are making you think about applying for a single applicant mortgage be careful. A single applicant mortgage assumes only one person is purchasing the property and it will become theirs once the mortgage and interest is paid.
But if you are genuinely living with a partner, most lenders ask for the full expenditure of the household. And that could raise questions if it’s unusually high for a single person.
There may be issues in the future if buying a property in a single name that is used by a family.
Should you marry or divorce in the future, a judge may rule that the property is the family home. That could mean you have to vacate it but still pay the mortgage on it.
As ever, it’s all down to your individual situation.
The best thing to do is discuss it with a trusted mortgage adviser who will look at your case on an individual basis. You can contact one of our team today to discuss your mortgage requirements using this form.