Let’s face it – purchasing a property can be quite challenging. And if you are a first-time buyer, the process can feel even more intimidating.
Luckily, mortgage schemes can streamline the purchase process to a great extent. As such, you won’t have to worry about eating up all of your savings.
On that note, many first-time property buyers commonly enquire about single person mortgages. As you can guess from the name, it is highly beneficial for single individuals living on their own.
Unfortunately, many aspiring homebuyers are not aware of the details of purchasing a property on their own and if this is any different to purchasing a property with another individual.
That is why we have delved into this aspect in this guide. So, if you are curious to know more about the single-person mortgage, then read on!
Table of Contents
What Is A Single Person Mortgage?
When a single individual opts for a mortgage plan, then they have to show they can purchase a property on their own. In other words, there is only one applicant with a single source of income to consider.
That makes it different from joint mortgages, which have more than one applicant (and hence, multiple income sources to consider).
There are a few other circumstances when single person mortgage can be beneficial, which include:
- First-time buyers
- Applicants whose partners have bad credit or are unemployed
- Separated or divorced individuals
- Purchasing buy-to-let properties
- Remortgaging
Since only one person applies for the mortgage, the process can be a bit simpler compared to joint mortgages in some ways. However, you will need to manage your finances well, as there is no one else to provide financial backup if things go wrong.
How Can You Afford A Single-Person Mortgage?
Many people feel sceptical about opting for mortgages on their own due to the financial challenges involved. After all, if you cannot complete the monthly mortgage payments, this could lead to issues in the future.
However, if you can manage your finances carefully, you may find that opting for a mortgage as a single applicant can be quite beneficial.
In that context, here are some factors that can help you to get a mortgage for single person.
1. Plan For The Initial Deposit
To be eligible for most mortgages a lender requires you to make an initial deposit that covers some portion of the total purchase cost.
According to statistics the average First Time Buyer pays around 20% of the property’s value as a deposit. It can be a relatively large sum of money that can be difficult to manage with a single source of income.
This is why you will need to plan and save for the deposit amount beforehand so that you can pay the initial deposit without any issues.
Alternatively, you can opt for mortgages that have low-deposit requirements. For instance, you can go with the 95% mortgage scheme, which requires you to pay only 5% of the amount as a deposit. It can be a great help for first-time buyers who have a single source of income.
2. Research The Different Types Of Mortgages
Before applying for a single person mortgage, it is advisable to look into the different types of mortgages available. You will need to consider different types of mortgage that you need to consider, such as:
- Fixed-rate mortgages
- Variable rate mortgages
- Interest-only mortgages
- Capital & Interest mortgages
- Tracker mortgages
Similarly, make sure to familiarise yourself with the different terms and guidelines of each mortgage type. Once you have a clear idea about these things, you will be able to decide which type of mortgage will be the best for your needs.
Also, consider speaking to a mortgage advisor who can explain the different mortgage types and advise you based on your personal circumstances.
3. Decide On The Mortgage Term
Besides the type, you will need to decide on the term of the mortgage. Generally, mortgages run for around 25 years, but they can be adjusted based on your income and financial capabilities.
If you opt for a long-term mortgage, the monthly payments will be lower. That said, the mortgage interest will increase, which means that the total amount you pay over the mortgage could be higher.
On the other hand, short-term mortgages have higher monthly payments, but the total amount you pay (including interest) tends to be lower.
4. Improve Your Credit Score
Whenever you apply for a mortgage, lenders will check your credit score, among other things. This credit score will ultimately decide whether they will consider your application or not.
If you have a good credit score, the amount of lenders available to lend to you is greater. On the other hand, a poor credit score will increase the chances of your mortgage request being declined. And even if it is approved, the interest rates could be higher, or the borrowing limits will be stricter.
Fortunately, your credit score can be improved if you complete your payments on time and show you are consistent with managing your debt. That shows proof of financial stability, which reduces the risks for the lenders.
Having a poor credit score does not always mean you won’t be eligible to get a mortgage so always seek advice with a specialist mortgage broker who can check your options and try to find a suitable lender for your needs.
What Is The Process For Getting A Single-Person Mortgage?
The procedure of getting a single person mortgage is not any different from other types of mortgage. In fact, they are both essentially the same thing – the only point of difference is the number of applicants involved.
In any case, if you wish to apply for a mortgage for single person, you can follow the steps we have discussed below:
1. Seek Out A Specialist Broker
After you have decided that you would like to get onto the property ladder, you will need to work out the technical details of the mortgage. This process can be pretty complicated and time-consuming, even if you have good knowledge about these things.
That is why it is advisable to seek out a specialist mortgage broker who can help you with this step. These individuals will be able to provide advice and guidance regarding the process, which can be particularly helpful if you are a first-time buyer.
They can also help in researching and comparing mortgages so you can be assured you are getting the best deal for your personal circumstances.
2. Gather All Documents And Perform A Financial Audit
Once you have decided on the lender, you will need to gather all the relevant documents, such as payslips, bank statements, credit records, and so on. You should always perform a thorough audit of your financial resources before you start the application process.
Also, ensure that the current income is good enough to support the mortgage and you have a set budget to work within that will be comfortable for you to afford.
If you find it difficult, you can seek help from a mortgage broker or advisor. They will be able to assess your financial condition effectively and provide the necessary guidance.
3. Apply For The Mortgage
The final step is to get in touch with the lender and apply for the mortgage. In this step, you need to provide all the necessary details so that the lender can properly evaluate your application.
And if everything goes well, your mortgage request will be approved once they are happy with the documents provided and they match the information provided on the application to them.
Given that there is only a single applicant, the number of documents that are needed will be less. However, you need to make sure that all the documents are up-to-date and reflect your current conditions and financial circumstances.
Final Words
Now that we have arrived at the end of this guide, we hope that your doubts regarding single-person mortgages have been cleared up.
It is a wise idea to have a long-term approach when going for a mortgage. If you don’t, you could face severe financial challenges in the future. Also, make sure to keep a backup and contingency plan if something goes wrong.
That way, your mortgage payments will not be affected, meaning that you can complete the repayments on time. And when the time comes, you can even opt for a remortgage to add another person to your solo mortgage plan.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
Our goal is simple – to provide most up-to-date and accurate mortgage information to make your mortgage journey as stress-free as possible. Have a question? Fill up the quick form and one of our mortgage advisor will connect with you.
