how can i get a mortgage with low income uk

How Can I Get a Mortgage with Low Income in the UK?

Getting a mortgage when you’re on a low income can seem daunting. You may worry that lenders will automatically reject your application. But the good news is – it is possible to get a mortgage, even if you don’t earn a high salary.

In this comprehensive guide, we’ll explain everything you need to know about getting a mortgage with low income in the UK

What Counts as a Low Income?

There’s no definitive threshold for what counts as low income. As a general rule, though, an income below the national average might be thought of as low.

The average UK salary is around £30,000. So, if your income is much less than this amount, lenders may think you have a low income.

Of course, what you can borrow depends on various factors, not just your salary. But earning less could mean you’ll need to put in some extra work to secure a mortgage.

Can I Get a Mortgage on a Low Income?

The short answer is yes. If your income is low, you can still get a mortgage.

Here are some key points:

• Lenders look at affordability, not just income. Things like your outgoings, credit score and deposit will be considered.

• There’s no minimum income requirement for most lenders. Instead, they’ll assess if repayments are affordable.

• You may be able to borrow around 4-4.5 times your annual income. Earning £20,000 could get you a mortgage of £80,000-£90,000.

• Getting a larger deposit can improve your chances, as can having a partner’s income on the application.

So you shouldn’t assume lenders will automatically reject you. But you may need to save a bigger deposit or find ways to boost your application.

How to Improve Your Chances

You can improve your chances of getting a mortgage even if your income is low by:

• Save a larger deposit – Having at least 10-20% of the property’s value can make a big difference.

• Reduce debts – Pay off loans and credit cards to lower your outgoings.

• Boost your credit score – Maintain timely repayments and keep your credit utilization low.

• Add a partner’s income – Combining salaries with a partner often increases how much you can borrow.

• Seek government help – Schemes like Shared Ownership are designed for low earners.

• Use a broker – An expert mortgage broker will match you with suitable lenders.

Taking these steps demonstrates to lenders you can comfortably handle mortgage repayments, improving your chances of approval.

Are There Minimum Income Requirements?

Most lenders don’t specify a minimum income to qualify for a mortgage. They prefer looking at each case based on overall affordability.

But some lenders do set salary rules, especially for certain mortgages:

• First-time buyers – Some lenders ask for minimums between £20,000-£25,000.

• Retirement lending – May require at least £20,000 income.

• Buy-to-let – Often has minimum income requirements.

So while there’s no universal minimum, some lenders have their own benchmarks. The lowest is around £10,000. But meeting the minimum income doesn’t guarantee approval. Affordability assessment is still crucial.

Using Other Income Sources

When applying for a mortgage, make sure to include all your potential income sources beyond just your salary. Lenders may consider:

• Income from benefits – Certain benefits can supplement a low salary.

• Pensions – Steady pension income is viewed positively.

• Rental income – Earnings as a landlord can be included.

• Investments – Share dividends and investment returns.

• Commissions and overtime – Unstable, but can help.

• Maintenance payments – Child or spouse maintenance counts.

Adding these extras to your earned income from employment could bolster your application. But benefits may be treated differently by lenders.

Getting Help from a Broker

Don’t struggle alone! Seeking advice from a professional mortgage broker is strongly recommended.

An experienced broker will:

• Review your full financial situation.

• Suggest suitable lenders and products.

• Help you gather paperwork and evidence.

• Assist with the application and negotiations.

• Handle communications with the lender.

Their expertise can prove invaluable in successfully securing a mortgage when you’re on a low income. Brokers have extensive knowledge of lender criteria, so they can match you with greater chances of approval.

Consider Government Schemes

Special government schemes exist to help people with low incomes buy homes:

Shared Ownership – You purchase a portion of the property through a mortgage and pay subsidized rent on the rest. This reduces upfront costs.

Help to Buy Equity Loan – The government lends you up to 20% of a new build home’s value interest-free for 5 years.

First Homes – Discounted new builds in England sold to first-time buyers at lower prices.

These programs make getting a footing on the property ladder more accessible. Lower earners who struggle to buy outright can benefit.

The Takeaway

Getting a mortgage on a low income is feasible with the right approach. While you’ll likely need to put in extra effort, homeownership doesn’t have to remain out of reach.

Focus on the key steps covered in this guide. And don’t hesitate to enlist the help of a talented broker. With persistence and the right support, you can secure the mortgage you need despite a lower than average salary.