In This Article
What is a low income mortgage?
When people refer to low income mortgages, they usually mean mortgages that do not have minimum income criteria to qualify.
There are many reasons why a person’s income may be considered low. One reason for this is a salary below the average UK person’s.
Another reason could be that a self-employed person does not draw the amount they could do in dividends from their company, choosing instead to retain profit.
Other Borrowers with a low income may get a top-up in benefits or child maintenance payments.
Even if your income is low, this does not necessarily mean you will not get a mortgage as you may still have options.
A skilled mortgage adviser can assess your whole income and full situation and look for a mortgage lender accordingly.
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Can you get a low income mortgage for buy to let?
People with low incomes can still apply for some buy to let mortgages. The lender’s criteria will vary as they all have their own individual rules but some lenders have no set requirement for income amounts.
This is because they underwrite the buy to let mortgage using the expected rental income that the property will generate.
It may be that a lender with no minimum income criteria has other conditions to meet to qualify for one of their mortgages.
For example, they may need you to already own the property that you live in to qualify. Another lender may have a condition that you need good credit to qualify for a buy to let mortgage with a low income.
There are also buy to let lenders that have minimum income criteria, with a common minimum income of £25,000.
Some lenders even need you to be able to afford the mortgage on a residential basis before offering it on a buy to let basis.
Buy to let mortgages are a minefield so best to find an experienced mortgage adviser that can work out your low income buy to let options. Read more: Can I Get A Buy To Let Mortgage With No Income?
Can you get a low income mortgage for a commercial property?
Some lenders will consider a commercial mortgage for people that are on low incomes.
If you plan to occupy the commercial building yourself running your business from it, your lender would need to be comfortable that your income is healthy enough to keep paying the commercial mortgage.
If you plan to rent out the commercial property and use the rental income to pay the mortgage, many lenders will not be so concerned about your level of income.
It is more likely that they will need to be comfortable with who the tenant will be and their financials as their business will be generating the rent payment to go towards paying the mortgage.
Commercial mortgages are bespoke with the marketplace is wide. If you are looking for a commercial mortgage, it would be recommended to find a commercial mortgage adviser with relevant experience.
Your mortgage adviser will likely be a member of The National Association of Commercial Finance Brokers (NACFB).
Can you get a low income mortgage for an urgent transaction?
If your property transaction is urgent with little time to complete, the mortgage product that you apply for should consider this.
An example of when this happens is when somebody buys a property at auction and only has 28 days from the auction date to complete the property.
This can put pressure on the transaction making a standard mortgage product unsuitable. This is because underwriting on a standard mortgage can take a long time.
In this scenario, most mortgage advisers would recommend a bridging loan as the finance is designed to be quick.
Bridging loan lenders can consider people on low incomes depending on what the plans are for the property and how the bridging loan will be paid back.
Your mortgage adviser would need to get a full understanding of your plans before making a recommendation of whether a bridging loan or standard mortgage is suitable.
If you are considering a bridging loan with a low income, you should look for an experienced bridging loan adviser.
They will be able to understand your full situation to work out if there is a bridging loan lender available to help you and what your exit strategy choices are.
If you plan to remortgage later and keep the property, it is important to research this upfront to ensure you are in a position to get a standard mortgage when the time comes to exit short-term finance.
If you would like I NEED ADVICE to find you an experienced bridging loan adviser, please complete the contact form.
Click here to find out more about Bridging Loans or read our guide all about a Bridging Loan.
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Do I need a special mortgage broker for a low income mortgage?
You do not need a special mortgage broker to arrange a low income mortgage. It is, however, important to find a mortgage adviser that has relevant experience in your transaction.
If, for example, you have a low income or bad credit, and are looking for a buy to let mortgage, you will want an adviser that has arranged this type of transaction. The mortgage advisor may also be able to get you a larger loan.
Mortgages can be a minefield and different mortgage advisers specialise in different areas.
When you are talking to your mortgage adviser, it would be recommended to find out whether they have experience with similar transactions.
Can people on benefits get a low income mortgage?
If somebody is on benefits, it is possible to find lenders that are happy to include these benefits in the make-up of their income.
Not all lenders will do this, and the ones that do may not accept every benefit.
Benefits come in a large range such as universal credit, child tax credits, working tax credits, child benefits, disabled living allowance, carer’s allowance and more.
Lenders may have certain rules around the benefits that they accept and the percentage of applicants’ total income that the benefits can be before taking the case outside of their criteria.
As a result, if you are on benefits looking for a mortgage, it would be prudent to look for a mortgage adviser that has experience in mortgages for people on benefits.
They would be able to get a full understanding of your total income along with your overall situation to calculate which lenders are available to you and advise the terms of the mortgage.
Read more: Can I Get A Mortgage On Benefits?
Can you get a low income mortgage if you have bad credit?
People with low incomes can apply for mortgages even when they have bad credit.
Bad credit can come in many shapes and sizes. It can mean bankruptcies, debt management plans, individual voluntary arrangements, defaults, arrears or County Court judgements and so on.
To find out more about your credit history, you can visit Check My File to sign up for a free trial.
Not every lender allows bad credit and for the ones that do, they will have their criteria about what is and isn’t acceptable.
It may mean that a larger deposit is required when you have bad credit due to the increased risk to the lender.
Your mortgage adviser will need to look for a lender that can allow both bad credit and low incomes.
Can you get a low income mortgage as a self-employed person?
It is possible to qualify for a low income mortgage when you are self-employed.
The reason that your income is low from your self-employment will vary from one applicant to another.
A common reason is, that a limited company director may choose not to draw all of their potential income out of their company and retain the funds within their company bank accounts.
In this situation, some lenders will not lend the amount needed. The reason is, that some lenders will only work on a salary and dividend basis.
There are, however, some lenders that can look at the full profits of the company when assessing the applicant’s income for affordability purposes.
Another reason may be a large expense that has been offset for a self-employed person on the company accounts. Although this can’t be ignored, perhaps this expense will not be showing on the later years’ accounts that are due very shortly?
In this scenario, your mortgage adviser should have access to mortgage lenders that can use the latest years’ accounts.
To be sure, the best thing to do is look for a mortgage adviser with experience arranging self-employed mortgages who can give you the advice that you need.
Conclusion
It is certainly possible for people with low incomes to qualify for mortgages.
The level of income, however, may determine the amount that they can borrow.
If you are looking for a mortgage with a low income, it is always wise to look for a professional mortgage adviser that can give you the advice that you need.
If you would like I NEED ADVICE to match you with a qualified mortgage adviser with experience arranging low income mortgages, please complete the contact form.
They are experienced, which can boost your chances of being approved.
