Joint Mortgage But Only One Income

Can you get a joint mortgage with one income? How does it work? 

It’s definitely something we’re seeing more of nowadays, especially with childcare costs at record highs. It is definitely something that you can do.

It would work as a conventional mortgage with two incomes would. The only difference is that obviously having one income can put more of a strain on affordability. 

What you might find is that although you can get a mortgage, you might not be able to borrow as much as you hoped. Every lender will have different rulings around it and there’s quite a bit of a variance in terms of what you could be able to borrow.

Can I get a mortgage if I don’t work but my partner does? Can couples apply with a single income?

It’s definitely something you can do. It’s just the case that you’re going to have reduced affordability, due to having less income into the household. 

A lot of lenders will base their calculations on figures from the Office for National Statistics around utility bills, food costs and things like that. Because those costs are covered by one income rather than two, your borrowing might be reduced in comparison to someone applying on their own with one income. Essentially, you have a second person to cover with those living costs.

That’s then made worse if you have children. If there’s a stay-at-home parent and only one income, there are costs for children that can further reduce what you can borrow.

Should I just apply for a single applicant’s mortgage?

We do often have that conversation with clients in this scenario. There are pros and cons to each. If you were just applying in one name with one income, you might get better affordability than two people on the mortgage with only one income. 

The downside is that the majority of lenders will only allow one person to be on the property deeds if there’s only one on the mortgage. 

Let’s say the wife is the only income earner for example. If she applies for the mortgage in just her own name, it would only be her name on the property itself. Although established couples might be fine with this, having joint ownership of a property can be important. 

So there’s a tradeoff between having the mortgage and property in just one name versus having ownership and the mortgage in both names, with potentially a lower borrowing figure. 

It’s down to personal preference. Some people might be comfortable having one person named. Others might want the security of having both names on the mortgage and the property. 

Can you get a joint mortgage if the only income is self-employed?

It’s definitely doable. It is calculated the same way that a normal self-employed mortgage would work, generally by averaging out the last two years’ earnings. 

But having only one income and being self-employed can reduce what you’re able to borrow. A couple of lenders also have other requirements for the self-employed. For example, they may cap the percentage of the property they’ll lend on. Some might only give you a mortgage worth 75% of the property. 

It is still definitely doable, but there might be additional hoops to jump through. But every lender has different criteria, so if one can’t help you, the likelihood is that another one can.

How much does a couple need to earn to get a mortgage?

It varies, and it’s a regional thing as well, depending on the average house price in your local area. Gone are the days of lenders just giving you four and a half times your income. It’s not not that easy any more. 

There can be Loan to Income caps in the background and lenders will base affordability on a number of different things. We’ve touched on ONS data, for example, and we haven’t discussed other credit commitments like car finance, credit cards, personal loans and things like that. 

So it is really a case-by-case basis. If you’ve got self-employed income or earned income of say £40,000 a year, one lender might offer you four and a half times that amount, another might offer more while another offers less.