Mortgage Advisor & Director
Mortgage Advisor & Director
There is no universally agreed salary amount that is classed as ‘low income’. As far as mortgage lenders are concerned, it’s more about whether you can afford what you want to buy. Modern property prices dictate that a single person on minimum wage would find it difficult to buy even a modest home; but that’s not to say it’s impossible.
While it’s not easy to achieve, we’ll look at the mortgage options available to low income applicants, which lenders have minimum income limits, and how to get a bigger mortgage on low income if you can’t quite afford a home.
Can you get a mortgage with low income?
It’s likely to be harder to find somewhere suitable to buy on a low budget, but it’s by no means impossible. According to the Office for National Statistics (ONS), the average house price in the UK ranges between £197,000 in Scotland and £309,000 in England, however, there are cheaper options available across the UK.
While someone on a low income may not be able to afford the average property, there are mortgage options for low income prospective homeowners. For example:
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If you have a large deposit - you won’t need to borrow as much to buy a home, so a lower salary could stretch far enough to cover affordability for a smaller loan
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If you have supplemental income available - If your main income is low, you may be able to supplement your income in a number of ways to help boost your affordability. Different lenders will consider different types of supporting income, including but not limited to: Pension payments, certain types of benefit, rental income from another property or other investment income, income from second jobs and bonuses
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If you apply jointly with others - Buying with at least one other person by using a joint mortgage should increase your affordability as lenders will consider their income alongside yours. Some lenders will look at the income of up to 4 applicants
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If you have low income but high assets - some lenders will look at other valuable assets in support of a mortgage application, even if you don’t have an income. This would typically only be if your assets represent substantial wealth and specialist lenders are most likely to be open to this type of arrangement
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If you find the optimum lender for your circumstances - lenders offering higher income multiples (5 times salary and up) as standard can also help you borrow more on a low income. In addition, those that will make the best use of your income, for example accept your specific type of additional income or assets, will improve your chances of securing the loan that you need
How much could you borrow?
How much you can borrow will depend on your income, outgoings and the size of your deposit, amongst other things. But to get an idea of how much you might be able to borrow, our calculator can help. Enter your total annual income below to get started:
Are there any schemes that could help?
If you have family or friends willing to help you get onto the property ladder, it may be possible to get a Joint Borrower Sole Proprietor (JBSP) or guarantor mortgage. These allow others to help you boost your affordability and/or deposit, which can be great for those on a low income.
If not, however, don’t worry, as there are also certain government and building industry schemes that can help those on a low income to secure a mortgage more easily. These include
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Right to Buy scheme - which can help some social housing tenants to buy the property that they live in at a discount
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Shared Ownership Scheme - Which allows you to buy a percentage of a home, starting with as little as 10%, which can be increased over time until you own the whole property. This scheme is aimed at those on a low income and shared ownership homes are typically part bought and part rented through a housing association
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First Homes Scheme - only available in certain parts of England, this scheme consists of new build properties that can be bought at a discount of up to 50% below market value. They are intended for key workers, and those on a low-income and must be sold only to those who qualify under the scheme
How a broker can help you get a bigger mortgage
Finding a broker who specialises in low income mortgages is the best way of both securing a mortgage, and of securing a large enough loan to buy the property you want. There are multiple ways they can help you find the best low income mortgage deal for your needs.
As brokers with access to the whole market, at Teito, we can help you source those lenders that accept whatever source of supplementary income you may have, whether that’s investment income or benefits. We can help you look at those lenders willing to stretch affordability to the highest income multiple for your earnings and, if needed, those that will accept applicants from schemes such as shared ownership and first homes.
You can book in a free, no-obligation chat with one of our brokers below:
Connect with a low income mortgage specialist
Available mortgage lenders
In theory, most lenders will accept applications from low income applicants, assuming they are still able to meet affordability for what they want to buy. The best mortgage lenders for low income applicants, however, are going to be those that don’t have a minimum income threshold. These range from around £10,000 to £25,000, depending on the lender.
However, not all lenders have a minimum limit, so, providing you approach the right lender for your needs, there is no reason to worry about your income holding you back. We can help you to find those lenders without any restrictions on minimum income.
Getting a buy-to-let mortgage on low income
It’s possible to get a buy to let mortgage if you’re on a low income, however, it’s usually more likely that lenders will have a minimum income threshold of around £25,000. That said, there are lenders willing to look at applicants with a lower income, assuming the rental investment is strong and likely to comfortably cover the mortgage repayments.
Why choose Teito for your mortgage needs?
Teito helps low income applicants to secure the best deal on a mortgage every day. We work with over 100 lenders, and have a working knowledge of which are the most likely to look at your specific circumstances the most favourably.
We can introduce you to lenders who specialise in low-income mortgages, and what’s more, your initial consultation with us is free, so you have nothing to lose by reaching out to see how we can help - get started with one of our mortgage advisers here.
FAQs
There is no specific minimum level of earnings that will guarantee you a mortgage. It’s actually much more complex than that, as even those on a high salary can struggle to qualify if their outgoings are very large.
Some lenders have a minimum income threshold, but this is uncommon, and it’s usually fairly low. Keep in mind that benefits and supplementary payments, such as commission and shift allowances are accepted by some lenders and could push you over these thresholds too.
The amount you need to earn is also entirely based on how much you need to borrow, as you’ll need to prove that you can afford to repay the loan. You would therefore need a much higher income for a 5 bedroom house than a 1 bedroom flat in most cases, for example.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.