Applying for a mortgage as a single buyer can seem daunting. It throws up all the general concerns and questions buying with a partner does, but you’re making decisions alone and you don’t want to miss anything important.
Whilst there may be some additional challenges for single mortgage hunters, generally speaking, there are solutions for them. We’ll take you through the main ones and explain the ways in which they can typically be overcome.
Buying a home on your own should be an exciting time. Being prepared for any obstacles and knowing how to deal with them means you can get back to looking forward to moving into your new home.
Higher deposit requirements
There isn’t a higher deposit requirement for single mortgage applicants.
For a residential mortgage, lenders tend to look for at least a 10% deposit, which may feel huge if it’s just you having to find the funds. And, of course, the bigger the deposit you pay, the bigger the reduction in your monthly repayments and you should be able to access better interest rates.
With all this in mind, there are government mortgage schemes around, which enable you to just put down a 5% deposit, like the Shared Ownership or Deposit Unlock Scheme, that you may qualify for. It’s worth taking the time to understand how these work in case you could benefit from one of them.
Impact on loan-to-value (LTV) ratio
The loan-to-value (LTV) ratio is the property value compared to how much you want to borrow as a mortgage, in percentage terms.
For example, if you take out a £90,000 mortgage to buy a £100,000 home, the LTV is 90% as you’ll be borrowing 90% of the home’s value.
The more you are able to put towards the deposit, the better the LTV will be and the easier you’ll make things for yourself.
Buying on your own means you are solely responsible for the mortgage repayments, so it’s important to consider your deposit size very carefully before coming to a decision on the amount. Affordability is key.
