According to the Resolution Foundation, since April 2011, the average cost of a home in the UK has risen by a whopping 36%. Though this is great news for homeowners, it’s left many first time buyers struggling to get their feet on the property ladder. Matters haven’t been made any better by the fact that wages have failed to keep up with the increase in house prices. While the cost of a property has gone up by over a third in the last five years, the average salary has increased by just 7% over the same period.
As a result, buyers are feeling the pinch. With the average house price up 8.4% in just a year according to the Financial Times, getting on the property ladder is hard enough, even if you have a partner to join forces with. If you’re on your own, securing a home of your own can be even tougher. Luckily for prospective homeowners out there, getting a mortgage as a single person is pretty straightforward, all you need is a bit of careful planning, a decent deposit and a strong financial history and your dream of home ownership could come true. Keep reading to find out more.
How much can you borrow?
The amount you can borrow will depend on your financial situation and on the lender you borrow from. As a general rule, most mortgage providers offer up to five times the value of a salary. So if you earn £30,000, you’ll be able to borrow around £150,000.
If you were buying with a friend or partner, you'd be able to borrow five times your combined salary. This means that, as a single person, you'll probably have less cash to play with when it comes to making offers.
Upping your salary
If your current salary doesn't give you enough of a budget for your dream home, you're left with two choice: find a new job or ask for a pay rise. If you choose the first option, you'll have to wait for any probationary period to finish before you can apply for a mortgage. If you opt to talk to your current boss about a pay rise, ask them to consider working any over time or bonuses into your standard pay packet. This will allow your lender to take them into account when calculating your mortgage.
Deposit
The bigger your deposit, the more likely it is you’ll be able to secure a mortgage. Most lenders offer mortgages that start at 90%, though a few do now offer 95% loans. If you have a deposit of more than 10% of the value of your property, you may also be able to secure better rates on your loan, making your monthly repayments easier to manage.
Affordability
Following new regulations introduced in 2014, lenders now have to make sure that applicants can afford their repayments. They’ll look at things like how much debt you have, what your average outgoings are and how much spare cash you have left over at the end of every month.
Before you apply for a mortgage, try to cut back on your outgoings. Avoid spending money on expensive restaurant meals, gym memberships and even services like Netflix and Spotify. Pay off any credit cards you have and repay any other debts you’ve built up over the years. The more money you can save – and the less that leaves your account – the better.
To find out more about getting your foot on the property ladder, or for more information on the houses available in your price bracket, take a look around our site today.
