Raising a child as a single parent does not automatically mean you have a lower chance of getting a mortgage.
For the bank, the most important thing is not your marital status, but whether the new mortgage payment would be affordable based on your income, commitments and regular expenses.
For a single parent, additional sources of income can be particularly important, such as Child Benefit, Universal Credit or maintenance. This is where choosing the right lender can make a big difference, because lenders do not always treat these types of income in the same way.
Can you get a mortgage on one income?
Yes. There is no rule saying that you need two incomes to get a mortgage.
The bank carries out an affordability assessment, taking into account, among other things:
• the amount and type of income,
• the number of dependants,
• loans, cards and other commitments,
• childcare costs,
• child maintenance you pay,
• other regular expenses,
• the deposit amount and property value.
This is why two people earning exactly the same amount can receive completely different maximum borrowing figures.
What is more, the same client can receive different affordability results from different lenders.
Can Child Benefit increase mortgage affordability?
Yes. Many lenders may include Child Benefit as additional income, but there is no single rule that applies to every bank.
For example, some lenders may include up to 100% of Child Benefit if their criteria are met. The bank may also look at the child’s age and how long the benefit is likely to continue being paid.
Child Benefit is usually paid for a child under the age of 16 and, in certain cases, it can continue until the age of 20 if the child remains in approved education or training.
This is why it is not worth assuming in advance that Child Benefit “counts” or “does not count” towards a mortgage. The criteria of the specific lender need to be checked.
What about Universal Credit?
Universal Credit may also be considered by some lenders.
However, this does not mean that every bank will accept it in the same way. The structure of the benefit, other household income and the individual criteria of the lender may all matter.
This is one of the reasons why comparing only interest rates can be a mistake. The cheapest lender on the market will not always be the lender that offers the highest borrowing amount in a specific situation.
Can child maintenance be included?
Yes. Regularly received maintenance may be treated as income by some lenders.
However, the required way of proving this income differs between banks. A court order or a formal arrangement through the Child Maintenance Service (CMS) is not always required.
Some lenders may accept a history of regular payments visible on bank statements. For example, one lender may require three months of regular payments, while another may accept other forms of confirmation.
So the lack of a formal CMS agreement does not automatically mean that maintenance cannot be used in the affordability assessment.
Do childcare costs reduce affordability?
They can.
Nursery, childminder, before or after school care and other regular childcare costs may be included as expenses in the affordability assessment.
This matters because the bank does not look only at salary.
For example, someone earning £40,000 per year and paying £900 per month for childcare may get a different result than someone with the same salary who does not have those costs.
However, this does not mean there is a simple formula where you can subtract childcare costs from income and calculate the maximum mortgage yourself. Each lender has its own affordability model.
Do loans and credit cards matter?
Yes. When assessing affordability, the lender may take into account, among other things:
• personal loans,
• car finance,
• credit card balances,
• mortgages on other properties,
• maintenance that you pay,
• student loan,
• childcare costs,
• other regular commitments.
That is why it is worth checking the whole financial picture before submitting an application, not just the credit score.
This does not mean, however, that you should automatically close a credit card or repay all commitments before every application. In some cases, this may improve affordability, but the decision should depend on the specific situation and the planned application.
Credit score: does one number decide your mortgage?
No.
The credit score you see in an Experian, Equifax or TransUnion app can be a useful indication, but it is not a universal score that all banks use to make their decision.
A lender uses its own assessment process and may consider information in your credit file, your history of commitments, missed payments, how much of your available credit you use and many other details.
It is therefore worth checking your report before starting the process mainly to make sure the information in it is correct.
Do you need to be on the Electoral Roll?
Being registered on the Electoral Roll can help confirm your address history and the information in your credit file, but not being on it does not automatically mean your mortgage will be declined.
Not every person living in the UK is also eligible to register to vote.
If you are able to register, it is worth making sure your address details are up to date and consistent with the other information in your credit file.
Does the bank always carry out a stress test?
The lender must assess whether the mortgage is affordable, but the rules around future interest rate changes are not identical for every product.
Under current FCA rules, for certain mortgage deals, the lender must take into account the possibility of interest rates increasing.
There are, however, exceptions, including for products where the initial interest rate is fixed for at least five years.
So there is no single “stress test” that all banks apply in exactly the same way.
What if a standard purchase is out of reach?
If the deposit amount or available borrowing is a problem with a standard purchase, one option worth considering in England may be Shared Ownership.
Shared Ownership
Shared Ownership allows you to buy part of a property. Depending on the specific home and scheme, this can be a share from 10% to 75% of the property value.
The mortgage is taken on the share you buy, while rent is paid on the remaining share to the owner of that part of the property.
However, it is important to look at the full monthly cost, because in addition to the mortgage payment there may also be:
• rent,
• service charge,
• estate charge,
• management fees and other property-related charges.
In the future, you can usually buy more shares through a process called staircasing.
Shared Ownership can lower the entry point, but it still requires the appropriate affordability assessment.
Do you always need a deposit?
Not always.
There are also products on the market that allow the purchase of a property without a traditional deposit, meaning at 100% LTV. They have specific criteria and will not be suitable or available for every client.
If a deposit is needed, it does not always have to come only from your own savings. Many lenders accept a gifted deposit, meaning funds gifted by family.
Depending on the criteria of the specific lender, other sources of deposit may also be possible, and some lenders may accept a deposit coming from a loan.
So before assuming that a lack of your own savings rules out buying a property, it is worth checking the available options and the criteria of individual lenders.
What should you prepare before a mortgage conversation?
You do not need to work out by yourself which bank will accept Child Benefit, maintenance or Universal Credit.
However, it is worth preparing basic information about:
• income,
• benefits,
• maintenance,
• childcare,
• current loans and cards,
• deposit,
• address history,
• planned property price.
Based on this, affordability can be checked and the criteria of suitable lenders can be compared before submitting a full application.
The most important thing: one income does not mean one result
For a single parent, the biggest difference may not be the interest rate itself, but choosing a lender that properly considers all sources of income and the real situation of the household.
One lender may include a specific benefit or maintenance, while another may apply different criteria. The way childcare, dependants and existing commitments are taken into account may also vary.
So before assuming “I do not have enough affordability”, it is worth first checking how different lenders would assess your situation.
Mortgage availability and the amount you can borrow depend on your individual circumstances and lender criteria. Your home may be repossessed if you do not keep up repayments on your mortgage.