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How to Get a Mortgage on a Low Income in the UK?

Written by, Marija Petkova

Updated September, 21, 2022

While low-income earners might not get the same rates and conditions as those raking in thousands of pounds a year, getting a mortgage on a low income is not impossible. 

Keep on reading to find out how to get a mortgage on a low income in the UK, as well as learn more about which income sources a lender will accept and the types of assistance available if you are unable to cover the mortgage payments. 

Can You Get a Mortgage on Low Income?

In general, you can get a low-income mortgage in the UK if you can prove to the lender that you can repay the loan

The type of mortgage you are applying for and the amount you want to borrow will also affect the ultimate decision. 

the ultimate decision. 

What is Considered Low Income in the UK?

According to the government, a couple with no children on an annual income of up to £14,800 (after housing costs) is considered a low-income household. 

To learn more about the average wage in the UK, take a look at this article.

Lenders tend to look at more than just your monthly salary and focus on overall affordability instead. To that end, they will check whether you can make monthly mortgage repayments and still manage to cover living costs, like household bills, food, travel and other expenses.

They will also consider your ability to pay off the loan if interest rates were to go up. 

What if You Don’t Pass the Affordability Check?

Some banks and lenders might reject your application. If this happens, your best option is to consult a specialist mortgage broker who deals with clients unable to get traditional home loans. 

What Is the Minimum Income to Qualify for a Mortgage in the UK?

Most lenders do not have minimum income requirements for a mortgage in the UK, however, this depends on your chosen loan provider and your personal and financial circumstances. 

Can I Get a Mortgage on a Minimum Wage and How Much Can I Borrow?

As long as you have a steady income, a solid deposit and good credit history, you can get a mortgage on a minimum wage. 

Can you make ends meet on a minimum wage in London? Find out here.

Some lenders are quite flexible and may approve a mortgage up to 4.5 times your annual salary. This means that if you make £19,760 a year, you could get approved for a  £70,000 to £80k mortgage product. The minimum income for a mortgage of £150,000 would be roughly £37,500 per year.

The rates offered by each mortgage provider vary, so it’s best to do a quick comparison and see which ones are best suited to work with you. 

What Sources of Income Do Lenders Consider?

Most low-income mortgage lenders (though not all) will look at other income sources in addition to your annual salary. This means that if you have multiple revenue streams, your chances of getting approved for a low-income mortgage will increase significantly.

Your income can include anything that goes into your bank account every month, such as:

  • Pension (state and private)
  • Investments and interest from savings accounts 
  • Overtime payments & bonuses
  • Rental income
  • Freelance work or salary from a second job 

Most banks and building societies will also count benefits as income, including but not limited to child support payments, carers allowance, disability living allowance, universal credit, and widow’s pension, provided you continue to receive them regularly throughout the loan term. 

You will need to provide the following documentation as proof of income:

  • Payslips (for the last three months)
  • Bank statements as far back as three months
  • P60 or your most recent annual pension statement
  • A copy of a court-ordered maintenance agreement (or CSA assessment if you receive child support)
  • The most recent council tax statement 

Lenders might require more documents, so it’s worth it to check beforehand and speed up the process. 

How to Get a Mortgage on a Low Income in the UK

Applying for a mortgage can be a daunting task, especially if you’re doing it on a low income. 

However, there are some things you can do to increase your chances of getting your low-income mortgage application approved.

1. Check your credit score

Borrowers with minimum wage can still get a mortgage at favourable terms if they have a good credit rating, as this shows the applicant can manage money well, despite earning less. 

2. Try to put down a bigger deposit

The bigger the deposit on the property, the less you will need to borrow and thus pay less in interest and monthly repayments. Plus, there is less risk to the lender, making it more likely to get approved. 

If you are struggling to raise a deposit, which is very common among low-income earners, you could try a lender that will accept a gifted deposit or a family-assisted mortgage. 

Worth noting: If you already bank with a certain lender or have a current or savings account with them, you have more chances of getting approved for a mortgage. 

3. Lower other expenses and debt

From the lender’s perspective, if you have fewer liabilities or expenses, you will have more to repay your mortgage each month. It also shows that you are responsible with your money and able to make payments on time.

4. Apply for a joint mortgage with your partner 

This way, the income of both applicants will be taken into consideration, thus increasing your chances of getting approved for a bigger mortgage.

Worth noting: Make sure that you have a legally-binding agreement regarding the division of property before you apply for a loan. Not all couples live happily ever after. 

What Home Ownership Schemes Are Available for Low-Income Earners?

There are a number of government schemes and support mechanisms designed to provide affordable mortgages for low-income earners. 

  • Under the Mortgage Guarantee Scheme, eligible applicants can make a 5% deposit and get access to 95% LTV government-backed mortgages. The scheme will accept applications until December 2022.
  • The Help to Buy: Equity Loan scheme is designed to help first-time buyers buy a newly built home with a small deposit. Under this scheme, you can make a minimum deposit of 5% and borrow up to 20% (40% if you live in London) of the property purchase price.  
  • Shared ownership allows you to buy a share in a property and pay rent on the rest. First-time buyers with household earnings of below £80,000 are eligible. The share you buy can be between 10% and 75% of the property’s full market value. 
  • The Right to Buy scheme enables eligible council tenants in England to purchase their homes at a discount. The maximum discount is £87,200 (£116,200 for London), but you need to have lived in the house for a minimum of three years to be eligible. 
  • A Guarantor Mortgage, when a family member or friend agrees to pay your mortgage debt, is a good option if you can’t afford to make monthly mortgage repayments anymore. 
  • You could also opt for a joint mortgage (with up to three other people), which, as mentioned above, will increase the likelihood of getting approved and receiving a larger loan. 

These are just a few of the mortgage options for low-income earners. It’s best to speak to a mortgage advisor and find out what is the best alternative for you.

Bottom Line 

Getting a low-income mortgage in the UK is not impossible, just harder. If you make less than the median hourly wage and want to buy a home of your own, it might be best if you start saving for a deposit as soon as possible (it’s worthwhile to look into tax-free savings accounts like a Lifetime ISA or think about making prudent investments). 

Try to include other sources of income that could boost your affordability, pay your debts and bills on time and get informed about government schemes designed for low-income homebuyers—all of these will help you get your dream home regardless of how much you earn. 

Frequently Asked Questions And Their Answers

Can I get a mortgage if I’m unemployed?

Yes, since most lenders do not have requirements when it comes to the minimum salary for a mortgage. As long as you have a good credit score and other sources of income, a lender will consider your application. The same is true for employees with zero-hours contracts. 

Can you get mortgage assistance if you’re on a low income?

Yes, there are several government schemes that can help you get interest-free loans or government-backed mortgages in order to make your mortgage payments more affordable. 

Can I get a buy-to-let mortgage on a low income?

Yes, some lenders are willing to let you use the rental income from the buy-to-let property as mortgage payments, but only if you are able to show that you have successfully managed BTL properties in the past. 

Can I get a mortgage with low income and bad credit?

Yes, although the terms will not be as favourable as someone with a good credit score receives. There are specialist lenders who are willing to work with poor credit applicants, as well as mortgage brokers who might be able to give advice on how to get a mortgage on a low income in the UK to bad credit borrowers.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.