Restrictions imposed by a deed of covenant can negatively impact your mortgage application process. In addition, these limitations can affect the property’s value and make it challenging to resell.

This doesn’t mean mortgage lenders won’t consider properties with a deed of covenant, but they will require in-depth knowledge of what the covenant covers.

It is more challenging to obtain a mortgage on a property with a restrictive deed of covenant than a positive covenant.

A restrictive covenant prevents the buyer from certain forms of usage or improvement without permission. Often permission is not granted, thus limiting the homeowner’s living arrangements which can prove frustrating. No one enjoys being told what to do in their own castle!

This very reason puts potential buyers off when purchasing a home governed by a deed of covenant, therefore making the resale of these homes somewhat tricky.

Additionally, when banks look to mortgage a home, they want the surety of a quick resale should the mortgage fail, something a restrictive covenant is sure to impede.

What is a Deed of Covenant?

This is a legally binding document (deed) which details certain obligations or restrictions to which the homeowner must adhere. A covenant is there to ensure that homeowners abide by their property terms.

These stipulations are attached to the property and not to the property owner personally. Therefore they apply specifically to the property and not to the owner.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Types of Covenant

Covenants can be either positive or restrictive and can benefit or restrict your living arrangements.

• Positive covenants

Usually, positive covenants benefit the property. As a result, these covenants don’t represent a risk to mortgage lenders, and mortgages are relatively easy to obtain.

Types of positive covenants include those that detail repair and maintenance, installing boundary fences, and financial outlay for property improvement.

• Restrictive covenants

In contrast, restrictive covenants restrict land usage and make obtaining a mortgage challenging.

Types of restrictive covenants include but are not limited to alterations, satellite dishes, and buildings. They may also restrict the types of animals allowed on the property and prevent certain types of trade or vehicles from parking on the land.

Is it Possible to Get a Mortgage with a Restrictive Covenant?

Depending on the type of restrictions and the lender you select, getting a mortgage on a property with a restrictive covenant is possible. That said, some lenders are more suited to this type of mortgage, so it’s best to do your research.

Often the legal obligations attached to the property are why lenders are more cautious with this type of covenant. This is because some restrictions can affect the property value and resale ability making them more high-risk.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Disadvantages of Restrictive Covenants

When purchasing a property with a restrictive covenant, it’s best to discuss the restrictions with an experienced conveyancer.

This will help you understand your legal obligations towards the property. Some disadvantages of a restrictive covenant are detailed below.

• Restricted property renovations
• Reduced resale-ability
• Prevented from building on the land
• Unable to extend the property
• Mortgages may be challenging to obtain

Do Mortgage Lenders accept Restrictive Covenants?

Buyers looking to purchase a property with a restrictive covenant will have limited choice in terms of mortgage lenders. This is because lenders view these properties as higher risk due to the obligations you as the homeowner will have to adhere to.

In addition, restrictive covenants make properties harder to sell, thus further impacting the buyers’ ease of obtaining a mortgage. As a result, lenders often charge higher fees and interest rates to mitigate the risk, and a larger deposit may be required.

Specialist lenders design mortgages specifically for this type of purchase, and provided you meet the lender’s relevant criteria, a mortgage may be possible.

Can I Breach a Covenant?

Legally you are required to uphold the conditions of the covenant. Should you breach the covenant, the courts can grant injunctions forcing you to pay penalty fines.

Can I Purchase Insurance against a Covenant?

This is called indemnity insurance and is usually offered when purchasing the property by your conveyancer. However, this type of insurance doesn’t cover every property type and covenant. In addition, the cost of the insurance can be high and further impact your purchasing decision.

You may find that your mortgage lender requests you to purchase indemnity insurance, but this depends on the types of restrictions imposed on the property.

Is it Possible to Remove a Covenant from my Property?

This can be challenging and time-consuming and won’t provide a quick mortgage approval. Removing a covenant requires contacting the person with the benefit of the covenant to obtain ‘retrospective consent.’

As a last resort, you can contact the Upper Tribunal Lands Chamber to try and have the covenant removed or changed.

One disadvantage of removing the covenant prior to purchase is that it may increase the property’s value and thus cause your purchase price to increase.

Is it Difficult to Purchase Land with a Covenant?

While land mortgages differ significantly from property mortgages, they are also impacted by land that has an attached covenant. Often this means the mortgage options are limited due to the restrictions imposed on the land, which affects the resale-ability.

When purchasing land, lenders stipulate that you obtain building consent at the point of applying for the mortgage. This assures the lender that the property has value and will resell easily if required. Therefore, if the covenant prevents you from building on the land, this may create a challenge when looking for mortgage approval.

Obtaining planning permission prior to applying for a mortgage is common practice, and as long as the covenant restrictions allow, you can build with confidence in the future.

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• When was my house built? 
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• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Purchasing a Property with a Deed of Covenant Final word

Purchasing a property with a deed of covenant may present particular challenges when looking for mortgage approval.

For example, it may inflate the interest rate on the mortgage, increase the deposit required and impose restrictions that you will be legally obliged to follow.

However, not all covenants are restrictive. So, before you cross covenant restricted properties off your wish list, discuss your options with a specialist mortgage advisor. They can assess your situation and your exact obligations regarding the deed of covenant.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Prefab houses have been on the UK housing market since the end of the Second World War.

The post-war housing shortage meant that the demand for cheap, affordable homes sky-rocketed.

As a result, Prime Minister Winston Churchill used them as part of his plan to address this issue, and in 1944 they found their way into the Housing Act 1944 under the heading ‘Temporary Accommodation.’

The government at the time proposed to fill the gap in available housing by building 500 000 prefab homes which were only meant to last for 10 years!

Over the years, their popularity has remained static, and many have lasted long past their 10-year sell-by date!

However, this popularity has recently spiked due to the greater demand for sustainable and affordable housing.

What is a prefab house?

A prefab or prefabricated home is, as the name suggests, pre-made. Each piece of the house is factory manufactured and then transported to the building site where it is assembled.

This is the ultimate in flat-pack furniture. Prefab homes are the fastest, most affordable, and highly sustainable way of building a home.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Different Types of Prefab Houses in the UK

There are three types of prefab homes to choose from when building your forever home.

• Modular home

Each piece of the modular home is factory-made, transported to the building site, and constructed on permanent foundations.

• Manufactured home

Also called mobile homes, these houses are built and transported in bulk sections to be fully assembled on site. These homes are not affixed to permanent foundations.

• Kit homes

Construction is from factory manufactured pre cut pieces. These are then assembled by hired contractors or the homeowners themselves.

Is a Prefab House the Cheapest?

Prefab homes are between 10-25% cheaper to build than a standard brick and mortar home. Of course, this depends on the modern conveniences chosen.

However, even the modular home, considered the most expensive prefab home, is 10-20% cheaper than a traditional house.

The reason for this cheaper price tag is down to the use of mass-produced building materials and reduced need for carpenters, electricians, and plumbers on site. This reduces costs and keeps construction time to a minimum.

While a prefab may be cheaper in the long run, there are additional costs to consider aside from the actual price of the prefabricated pieces.

For example, you may need to purchase land, apply for permits, and request access to utilities and services such as electric, water, and sewerage. Additionally, you may need to factor in the cost of a driveway, garage, and possible landscaping.

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• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Can You Finance a Prefab Home?

While financing a prefab home is slightly more tricky than a standard build, some mortgage providers will offer homeowners the financing they need. This can be done in two ways: a construction loan or chattel mortgage.

• Construction loan

A construction loan can provide the finance you need to cover the initial costs of building the prefab home. This can then transition into a mortgage once the construction is complete.

• Chattel Mortgage

This is a loan specifically for unfixed property, for example, a manufactured home, houseboat, or plane. This type of mortgage uses the property (chattel) as collateral on the loan.

It is slightly different from a standard mortgage where a lien (right to keep possession of) secures the loan on the stationary property.

An additional incentive for buyers using this type of mortgage is that it can be used even if the prefab home is situated on leased land.

Besides all the benefits this type of mortgage offers, it is often more expensive than standard mortgages, and it can be challenging to find a mortgage provider that offers them.

Pros and Cons of a Prefab Home

Weighing up the pros and cons of a prefab home is a prudent thing to do. However, despite its cheaper price tag, it may not be the best option for you and your family.

Pros

• Sustainability

Prefab homes may have better insulation than standard homes due to tighter seams and joints. This results in better energy efficiency and lower energy consumption.

• Cost

A prefab house can be cost-effective and faster to build than a traditional house.

• Safety

Prefab homes are often better built than standard homes and can easily withstand adverse weather.

Cons

• Utilities

Rough terrain, closest water source, electric supply, and drainage issues can make setting up essential utilities and services difficult.

• Regulations

Zoning laws and building codes must be adhered to when constructing a prefab home. Additionally, homeowners will require specific permits and permissions when building a prefab home which can be costly and time-consuming.

• Upfront Cost

Unlike traditional houses, prefab houses are usually paid for upfront rather than over a period of time. This can make the initial upfront cost relatively high without finance.

• Financing

Depending on your financial history, financing for a prefab home can be challenging to obtain.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

How to get preapproval on a Prefab Modular Home

Preapproval is the mortgage lenders’ process to determine the loan amount you can borrow. This is usually determined by your income, credit score, and assets combined. They also use this to decide the interest rate on your loan.

When applying for preapproval, your mortgage adviser will ask for the following information.

•  Identification & address verification
• Employment status
• Debt-to-income ratio (DTI)
• Proof of income
• Credit history
• Other credit commitments

To ensure the preapproval process goes smoothly, you need the following documentation to support your application.

• Proof of address
• Bank statements
• Passport / Driving license
• Credit file
• Deposit finances

Once preapproved, you can start the process of searching for your forever prefab home.

Mortgages for Prefab Homes Last word

Affordability and sustainability are two words synonymous with housing trends today. Everyone seems to want a cheaper, eco-friendly alternative to everything, including housing.

This is why prefab homes are gaining traction in popularity on the housing market today. However, this doesn’t mean a prefab home is suitable for you, so be sure to weigh up the pros and cons carefully!

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Gone are the days when purchasing a buy-to-let property was a cost-effective way of getting onto the property ladder. Recent changes have impacted the complexities of the process.

Stamp duty increases, tax reviews, and changes to the lending criteria exacted by mortgage providers have meant that purchasing a property for buy-to-let purposes is now much more challenging.

Another change to the market was the consumer buy-to-let mortgage, a form of borrowing aimed at people who have become accidental landlords.

This is the term given to people who inherit property or perhaps move in with a partner and rent out their property on a short-term basis.

What is a Consumer Buy-to-let Mortgage?

A consumer buy-to-let mortgage is specifically designed for people who have become accidental landlords. As mentioned previously, this can happen through property inheritance or when people rent out their property for a short period.

Other forms of consumer buy-to-let mortgages included purchasing a property with the intent to let it to a family member or if being a landlord is not your primary occupation.

In more specific terms and according to the Mortgage Credit Directive Order 2015, a consumer buy-to-let (CBTL) mortgage contract is defined as – “a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purpose of a business carried on, or intended to be carried on, by the borrower.”

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Consumer buy-to-let vs. Standard buy-to-let

The primary differences between these two mortgages are who they are designed for and how they are regulated.

Standard buy-to-let mortgages are aimed at landlords investing in property to let to prospective tenants.

These landlords purchase properties for the sole purpose of letting them to tenants as a form of income. They are regarded as professional landlords.

In contrast, consumer buy-to-let mortgages are geared towards the individual looking to rent property to family members or those who fall into the accidental landlord category. As a result, the income generated from the rental agreement is not their primary source of income.

The FCA regulates consumer buy-to-let mortgages (Financial Conduct Authority,) while standard buy-to-let’s are unregulated. This is because investors purchasing a property specifically for buy-to-let purposes do not require the same amount of protection.

This consumer protection protects buyers from the dangers of mis-selling and poor advice by giving them the security of FCA regulated contracts and cover provided by the FSCS (Financial Services Compensation Scheme)

Next Steps for Accidental Landlords

Knowing what to do when you become an accidental landlord can be confusing. However, it is your responsibility as a landlord, accidental or otherwise, to ensure you understand your legal obligations and avoid being in breach of your agreement.

Below is a list of steps you should take to ensure you are not breaching your mortgage terms.

• Notify your current mortgage lender of your situation
• Request permission to let out your property
• Contact a consumer buy-to-let advisor

Note that you will breach your mortgage agreement if you let out a property with a residential mortgage agreement. Invariably this breach can allow the lender to demand full payment of the entire outstanding debt as a lump sum.

Unfortunately, most people don’t have access to this level of funds and may default on payment, affecting their credit rating and possibly losing their homes.

If you are unsure of the steps you need to take, contact a consumer buy-to-let advisor for expert advice. Always apply the golden mortgage rule; if in doubt, ask.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What Are the Eligibility Criteria for a Consumer Buy-to-let mortgage?

The below criteria will help you determine whether you are eligible for a consumer buy-to-let mortgage.

• Property rental is not your primary occupation.
• You or a close relative previously lived in the property.
• The property was not purchased to let it out.
• You do not own any rental properties.

Regulations governing consumer buy-to-let mortgages prevent applications in the following circumstances.

• Property rental is your primary occupation
• You own other rental properties which are rented out
• This is a new property that you plan to rent out once purchased

Lenders recognise that each buyer’s circumstances are unique; therefore, if you are unsure whether you qualify for a consumer buy-to-let mortgage, speak to an experienced mortgage adviser.

Which Lenders Offer Buy-to-let Mortgages?

BTL mortgages are pretty popular and are offered by many of the leading mortgage lenders in the industry. Big names such as Clydesdale Bank, Virgin Money, and Santander are some of the lenders that offer a BTL mortgage.

However, going directly to large lenders may mean you are only offered the products they provide, meaning you may miss the opportunity to compare the market. Comparing the market is crucial to ensure you get the best deal possible.

To do this, you would need to discuss your mortgage requirements with a mortgage broker specialising in consumer buy-to-let mortgages. This will allow you access to expert advice and the full quota of products you qualify for, resulting in an informed decision.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Do I need Insurance as a Consumer Buy-to-let Landlord?

Unfortunately, your standard home insurance policy probably won’t cover the property if you’re letting it out to tenants. This means you will need a policy that suits the specific requirements of your property while providing you with the best deal.

We recommend comparing different insurers to obtain the right level of insurance at the best possible price.

Types of insurance policies a consumer buy-to-let landlord should consider are as follows:

• Rental protection insurance
• Public liability insurance
• Landlords building /content insurance
• Legal expense cover

These types of insurance mean you, as the landlord, are covered in most instances when things don’t go quite to plan.
Last word

A consumer buy-to-let mortgage is an excellent option for those looking to rent to close family or have inherited property unexpectedly.

Buyers are protected by the regulations of the FCA (Financial Conduct Authority) and covered by the FSCS (Financial Services Compensation Scheme).

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking for an interest-only mortgage, you may have a hard time finding one. They used to be quite popular, but because of the higher risks involved compared to repayment mortgages.

Some providers still offer these mortgages, but you will have to meet specific criteria to get one.

Let’s investigate the criteria and eligibility rules surrounding this type of mortgage so you can decide if it’s the right mortgage option for you.

Interest-only mortgages explained

Firstly, let’s clarify what an interest-only mortgage is and how it works. Quite simply, the monthly repayments on the mortgage are, as the name suggests, made up of only the interest.

Therefore the lump sum capital initially borrowed is not repaid until the end of the mortgage term. Mortgage terms can vary and at the end of this term, the lender will expect full payment of the capital borrowed.

When you apply for the mortgage, the lender will require evidence of how you expect to repay the capital.

When discussing repayment, the term you may hear to describe this is a repayment vehicle.’ Common repayment vehicles include investments, the sale of property, pensions, savings.

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Interest-only mortgage criteria

As with any mortgage, there are specific criteria you will need to meet to get an interest-only mortgage.

For example, the lender will want to assess whether you can afford the load and if you can repay the capital sum borrowed.

In addition, there may be other eligibility rules the lender will expect borrowers to meet. For example:

Deposit

The lender will expect you to raise the required deposit and provide evidence of how you will repay the loan.

Earnings

Although you will only be paying the monthly interest initially, you will still be expected to prove your earnings. Usually, this is based on your annual earnings and may include a partner’s earnings if it is a joint application.

In addition, lenders will want to see you can afford the loan amount you wish to borrow.

Each lender will have criteria you will need to meet before providing a loan. However, the above are the most common requirements.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Reaching the end of an interest-only mortgage. Now what?

When the end of the mortgage term comes around, you will need to repay the initial capital amount borrowed. There are several ways you can do this, depending on your circumstances.

• Switch to a repayment mortgage

If you meet the lender’s criteria, you could remortgage and switch to a repayment mortgage agreement.

• Cash payment

You could use savings, investments, or the tax-free portion of your pension to pay off the loan. Always seek professional advice when cashing in investments and pensions.

• Equity release

If you are over 55 years old and own enough equity in your property, you could release it to repay the loan.

• Remortgage

Apply for a remortgage with your existing lender. For example, suppose you have a good repayment history, enough equity in the property, and a deposit.

In that case, your current lender may consider a new application for an interest-only mortgage, thus extending the term.

• Remortgage and Switch lenders

Consider switching lenders when trying to remortgage as some lenders offer longer mortgage terms and have different rules regarding the applicant’s age.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What repayment vehicles do lenders accept?

Depending on the lender, the criteria for repayment of an interest-only mortgage may differ. Each one will have their preferred method of repayment, and so while one may accept remortgaging, others may not.

In general, lenders will want proof of one or more of the following repayment plans.

• Property sale

Most lenders don’t accept this form of repayment. However, a few may accept it if you have as an example between £100,000 and £200,000 equity by the end of the term. You can also use the sale of a different property to repay the loan.

• Investments

There are quite a few investment types you can use to repay your home loan. These include investment bonds, endowment policies, ISA savings, stocks & shares, and unit trusts.

In all instances, the lender will want to see evidence of their value and projected growth.

• Pension lump sum

Some borrowers use the tax-free 25% portion of their pension to pay off their home loan.

This is usually drawable at 55 years. However, this may not be sufficient to cover the loan and could mean combining it with another source of funds.

In addition, drawing off your pension has tax implications and could affect your retirement finances. We suggest you discuss this with a pension advisor before making any pension withdrawals.

Minimum value required for repayment vehicles

While lenders will want to see that your repayment vehicle can repay the loan, you may not need the exact loan amount available when you take the mortgage. Generally, repayment vehicles grow over time; this is an accepted fact.

However, you will need evidence that it will grow and be able to pay the initial sum loaned. Some lenders require a minimum value for repayment vehicles, but if one lender rejects you, you can always approach another.

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Deposit required for an interest-only loan

Mortgages are based on the loan-to-value (LTV) ratio, determining how much you can borrow in relation to the property value.

For example, if you put down a £20,000 deposit on a house valued at £200,000, then 10% is owned by you, and your LTV is 90%.

Most interest-only mortgage lenders would expect an LTV of between 50-85%, which means your deposit could be as much as 15%.

Minimum income required for an interest-only mortgage

Many lenders don’t have a minimum income requirement and will use a mortgage calculator to ensure you can afford the loan.

However, some lenders require a high minimum income, while others are more lenient and accept income plus repayment plans. Each lender has different policies, and not all will expect a minimum income on an interest-only mortgage.

Types of income accepted by lenders include fixed monthly income, self-employed (based on net profit,) part-time (based on earnings), contract work, and pension income (based on pension payments.)

How much can I loan for an interest-only mortgage?

Usually, the amount you can borrow is 4 times your annual salary. However, this may not be enough to get an interest-only mortgage if your property value is high.

Depending on your circumstances, some lenders are more flexible and may consider loaning 5 or 6 times your annual salary.

It’s worth noting that an interest-only mortgage is capped at the value of the repayment vehicle if using property.

Therefore if the loan is based on the sale of a property in which you have £100,000 equity, the maximum mortgage amount would be for the same value.

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Interest-only mortgages final considerations

Lastly, all is not lost if you have a repayment shortfall and can’t borrow the amount needed on an interest-only mortgage.

Some lenders will allow you to take some of the loan as interest-only and the rest on a mortgage repayment plan, effectively splitting the loan. This can make qualifying for an interest-only mortgage a lot easier!

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking to secure a mortgage on a zero hour contract, it can be more difficult but isn’t impossible.

Over the past few years, the upward trend in zero-hour contracts has caused lenders to rethink the criteria required for buyers needing a mortgage.

Obtaining a mortgage on a zero-hour contract use to be more difficult because lenders tended to view this form of employment as unstable.

For example, no work equates to no pay, which means an unpaid mortgage putting the lender at risk.

However, recently, lenders have noticed the increase in this type of employment, meaning they have had to change their game plan to remain in the mortgage market.

Whilst most lenders prefer buyers to be in full-time employment, some lenders offer mortgages to those on zero-hour contracts, thus opening the proverbial home-buying door to those who may otherwise have found it firmly shut.

However, approaching the application with the correct information may lead to the approval of a mortgage and, subsequently, the purchase of your ‘forever home!

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Zero-hour contract mortgage explained

Firstly, a zero-hour contract can be broadly defined as an employment contract that allows the employer to hire staff without any guarantee of work.

Often the work is sporadic, offered at short notice, and your salary depends on the hours or shifts you work.

This causes uncertainty with lenders who provide standard mortgages as they require regular payments of set amounts which can easily be unpaid should your salary fluctuate each month.

However, a zero-hour contract mortgage is designed for those who have this type of employment contract.

Lenders who offer this type of mortgage understand that some employers don’t provide the stability of a full-time contract to their employees.

In addition, just because you are on a zero-hour contract does not mean you don’t earn the same or more than your full-time contract counterparts.

Can you get a mortgage on a zero-hour contract?

Yes, it’s possible, however, a zero-hour contract immediately labels you as higher risk, since lenders prefer more stable forms of income. However, the good news is that all lenders are different and some lenders will accept applications from higher risk applicants, including those on zero hour contracts.

Such lenders can be difficult to locate and its likely that your application will be rejected or you will be offered a mortgage with an extremely high interest rate, the key is to talk to a mortgage broker who will be able to do a full search of the market and find you the best possible lenders.

How do mortgage lenders view zero hour contracts?

The reality is that lenders will likely view an application from an individual on a zero hour contract less favourably than an individual on a full time contract.

Why? Your income is not guaranteed and so you will be considered higher risk and more likely to miss mortgage payments in the future.

This will typically mean lenders will reject your application, offer a higher interest rate or expect you to put down a larger deposit.

What criteria will lenders assess?

When considering a mortgage application from an individual on a zero hour contract, lenders will look at the following criteria:

Employment History

If you have been working for the same employer or in the same industry for twelve months, it demonstrates that your employment is secure. As a result, lenders often use this as their starting point.

In contrast, if your employment history has gaps or perhaps you have started a new job, it may cause lenders to feel that your employment isn’t quite as stable as they would like.

Earnings

Demonstrating that your income is sufficient to repay the mortgage will increase the confidence of lenders considering your mortgage application.

Zero-hour contracts don’t automatically mean you earn less than is required. Moreover, showing you have savings put away each month provides your application with additional ‘brownie points.’

Job role & industry

Your job role or occupation can show lenders the skills or qualifications you hold; this demonstrates the likelihood of you finding work easily to repay the mortgage.

It’s important to note that some lenders will never accept an application from an individual on a zero hours contract, however, some will as long as you can demonstrate a stable history of working in these types of roles.

If you have already been declined and you are on a zero hours contract, don’t give up quite yet, as our mortgage brokers will be more than happy to help you find a lender and offer assistance with completing the application.

Check Today's Best Rates >

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Deposit requirements for zero-hour contract mortgages

Figuring out the deposit you require can be quite tricky as it depends mainly on the lender and your circumstances.

In some cases this can be as little as a 5% deposit, but this is only usually possible via the help to buy scheme. In general, the standard amount needed is around 10%, but as much as 15% for individuals with a poor credit history.

It’s worth noting that the higher the deposit you can offer, the more favorable this looks on your application.

It stands to reason the higher the deposit, the less risk involved for the lender, which is what you want to show when working on a zero-hour contract.

To better understand the amount, you will require it’s best to speak to a mortgage advisor who can assess your circumstances and situation.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Zero hour contract mortgage lenders

Deciding which type of lender is best for you depends largely on the type of mortgage you require.

For example, a buy to let mortgage is very different from a regular mortgage, and those with credit issues may need to seek help and advice from an adverse credit lender.

Choosing the right lender for you is vital to avoid wasting your time, money and possibly missing out on purchasing your chosen home. Let’s take a look at lenders suited for zero-hour contract mortgages.

Specialist lenders for bad credit

Having a bad credit score doesn’t automatically cross you off the mortgage list. However, it will make the process more challenging. While specialist lenders may help, this will depend on the credit issues you are facing.

It’s also worth noting that a bad credit score coupled with a zero-hour contract may provide additional challenges. Often lenders will refuse mortgage applications based on the bad credit without considering the type of employment contract you hold.

Again, specialist lenders are there to help in this type of situation. However, the rates may not be as good compared to regular mortgages, and the fees may be higher.

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Buy to let mortgages for zero-hour contract workers

Can you get a buy to let mortgage on a zero hour contract? It may still be possible, but in general, it’s going to be more difficult.

Lenders commonly require to to provide proof of a minimum personal income through either employment or self-employment and assess this your accounts.

If this is your first buy to let property application, the criteria is much similar to a residential mortgage and you will usually need to provide 12 months of minimum income. However, there may be some specialist lenders that are willing to accept lending if you have less than 12 months income proof.

In addition, if you have previous history as a landlord, lenders will typically be more likely to approve your application, as the income criteria will be less important.

Mortgage advice for zero-hour contracts

Obtaining mortgage advice from a specialist advisor is a smart move for those on a zero-hour contract.

The truth is while some lenders recognise that the zero-hour contract is the future of today’s workforce, there are still very few that will consider your application.

Trying to figure out which lender will assist you can prove to be a daunting task.

However, a specialist advisor takes the guesswork out of your search. Furthermore, they can prepare your application and see you get the best mortgage rates possible.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

When looking to purchase a home, your first thoughts are probably around size and location rather than its structural material.

After all, aren’t all homes made from bricks and mortar?

In most cases, it’s bricks and cement that make up our homes. However, through the ages, we humans have used many materials to build our cozy abodes.

For example, in your hunt for your forever home, you may come across houses made from wood, concrete, brick, clay, and even steel.

While you don’t often see these materials hidden behind the paint and trimmings, they make up the base structure of your home.

The durability of this structure becomes important when trying to get a mortgage, especially in the case of steel framed houses.

Unfortunately, steel framed homes can be problematic when it comes to insurance and resale, hence the hesitancy of some lenders when considering a mortgage on them.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

The primary reason for the bad rep steel framed homes get is building quality because steel frameworks often develop structural issues over time.

While some lenders may consider offering mortgages on specific reliable steel frame constructions, others draw the line and refuse.

As with most challenges when running the mortgage gauntlet, it’s simply a matter of finding the right lender for the job. But this in itself can prove tricky.

Before applying for a mortgage on a steel framed home, one of your first steps should be to investigate whether its construction is structurally sound.

In other words, check if the structure is displaying signs of corrosion. This can be done by requesting a detailed property survey.

Why should you get a property survey done?

When looking to purchase a steel framed home, it’s imperative to get a building survey done by an experienced surveyor.

They will conduct a full property check and inspect the structural stability of the steel structure.

Choosing a surveyor with experience in surveying steel will ensure any defects are spotted timeously.

What does a surveyor check?

• Corrosion – Stanchions checked for rust
• Evidence of subsidence – Movement of the property’s foundations.
• Signs of asbestos/ hazardous materials – Asbestos was banned in the UK in 1999 and has been linked to many health-related illnesses and deaths.
• Roof – Checked for leaks and structurally sound.
• Drains – Checked for leaks, poor flow, blockages, and pollution.
• Pest infestations – Rats, mice, dry and wet rot, termites, and woodworm
• Signs of damp
• Boiler / Electric meter

Factors that could influence your mortgage

When purchasing a steel framed house, certain factors may influence its mortgage-ability.

Reinforcement

Reinforcing a steel framed property may increase its mortgage-ability. This is when brick is used to strengthen the foundations. However, this can be costly.

Insurance

Obtaining insurance for a steel framed home can be challenging as well as costly. While there are specialist lenders who may offer insurance, it’s often at a higher premium.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Do I need a higher deposit for a steel frame home?

When lenders consider mortgage applications, they look for ways to mitigate the risks they are exposed to.

As a result, you may need to supply a higher deposit to circumvent their risk of lending against what they term as a non-standard property.

This is a property made from materials other than bricks and mortar – in this case, a steel frame.

While most lenders require a deposit of 10%, this can increase if the property you purchase is steel framed.

Your credit history and the results of the property survey will determine the increase in the deposit required.

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Can you get a BISF construction mortgage?

Acquiring a mortgage for a BISF home may be more challenging than you think. Here’s why. Many homes on the steel frame market are BISF homes (British Iron and Steel Federation.) However, their numbers are not an indication of their popularity but rather their necessity.

Constructed in the 1940s, right after the second world war, BISF homes were a quick solution for the growing housing demand when building materials were hard to find.

As a result, the building quality was poor, made from panels resembling flat-pack furniture and quickly erected on site.

However, aside from cheap building quality and materials, these houses are also listed on the Housing Defects Act (1985), making them even more unattractive to prospective lenders.

To increase its mortgage-ability, you could reinforce the property with brick, but this can prove costly.

When considering the purchase of a BISF home, it’s best to discuss your options with a specialist lender who understands the steel frame market. They can help you make an informed decision and possibly assist with a mortgage.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Final thoughts

The mortgage process is challenging even for those with a great credit score purchasing a standard property. However, the process becomes more difficult for those looking to purchase a non-standard property such as a steel frame home.

The additional issues with a steel frame home can make reinforcing, insuring, and purchasing such a home more costly than you anticipated.

That’s why it’s recommended that you obtain professional advice when buying a steel frame home.

Using an experienced broker will help you traverse the pitfalls of purchasing a steel frame home and improve your chances of obtaining mortgage approval.

Frequently Asked Questions

1. Why are steel frame homes problematic?

The steel framework of these homes often develops structural defects. This makes them difficult to resell, insure and, as a result, obtain a mortgage on them.

2. Is reselling a steel frame home difficult?

Obtaining a mortgage and insurance on this type of home is challenging. Therefore you may find it difficult to sell in the future.

3. Bad credit, can I get a mortgage on a steel frame home?

Bad credit history can affect a mortgage application irrespective of the property you are looking to purchase.

However, the added difficulties experienced when purchasing a steel frame home may mean you need to seek the advice of a specialist advisor.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking for a loan to buy a property that needs major renovations, or you’re eyeing a property but can’t afford the renovations, a refurbishment mortgage can be suitable for your needs.

Conventional mortgages finance the purchase of properties or homes but won’t cover the cost of renovations.

You can take advantage of price reductions where renovations are required. Here’s everything you need to know about refurbishment mortgages in the UK.

What Are Refurbishment Mortgages?

Refurbishment mortgages are also called renovation mortgages or refurbishment finance. They’re a type of loan that allows repairs or renovations to commence on a property.

Some refurbishment mortgages allow you to take out mortgage sizes equal to the post-renovation value of the property.

You can use such loans to finance property purchases and fund the needed developments to make the house into your ideal home.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How Do Refurbishment Mortgages Work?

Refurbishment mortgages are short-term finance solutions that require you to have a clear exit strategy from the onset showing the lender how you’ll repay the loan.

Lenders base the loan amount you can borrow on the property’s projected value once the renovations are complete. They also consider the potential rental income the property could achieve if it is for a buy to let.

The release of funds usually occurs in two stages where a percentage of the property’s purchase is initially advanced, and then you receive the remainder once you complete refurbishments.

Bridging Finance may also be arranged over shorter terms. This agreement can be closed or open. Closed exits feature dates already known, like a completion date already decided upon for repaying the loan.

Open exit strategies feature an agreed timeframe dependent on delays or the completion of works.

Types of Refurbishment Mortgages

The type of refurbishment mortgage suitable for you will depend on the scale of work you need to undertake and can include:

Light Refurbishment Mortgages

Light refurbishment mortgages are suitable for properties that only require light or minor upgrades.

These are usually non-structural or primarily decorative works that don’t require compliance with building regulations or planning permissions to continue with developments.

Some examples of light refurbishments include:

• Redecorations or aesthetic changes.
• Fitting a new kitchen or bathroom
• New windows
• Electrical rewiring
• Central heating system installation
• Improvements to fittings and fixtures

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Heavy Refurbishment Mortgages

Heavy refurbishment mortgages are suitable for properties that require structural changes like extensions. These projects will likely cost more than 15% of the property value and require more formal planning.

You may be required to obtain planning permission and comply with building regulations requirements.

Heavy refurbishments can include:

• Conversions
• Demolitions
• Internal and external structural works
• Property extensions

Because of the nature of heavy refurbishment projects, you’ll need to consider the duration the finance will be required to allow enough time for the planning stage.

For larger projects, like developing multiple units like apartment blocks or building a property in its entirety, commercial or developmental finance is a better option.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Refurbishment Mortgage Rates

The rate you’ll be charged for the refurbishment mortgage and other associated fees will depend on your circumstances and the property itself and type of mortgage/bridging finance.

An essential factor to remember when considering refurbishment finance is that it usually only starts at around 75% of the property value after refurbishments are completed. It can be challenging to get financing for anything higher than 75% of the post-refurbishment value.

Refurbishment mortgages often allow you to take out a loan big enough to renovate the property at the same low-interest rate as the property mortgage. The amount you’re investing in and the scale of the project will all impact the rates you’re offered.

Consulting a mortgage specialist or advisor with access to the entire market can ensure you get the best deal available, depending on your circumstances.

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Suitability Of A Refurbishment Mortgage

A refurbishment mortgage is suitable if you’ve found the house of your dreams, but it needs some work before you can move in or sell it. These can include:

• Being in an appropriate location but needing more work
• You want to build up into the roof for a studio or an extra bedroom
• You want to get more living room by digging down into the basement
•  The house is currently unmortgageable

Many high street providers and private banks offer refurbishment mortgages for residential and commercial properties in the UK. You may need to look beyond high street lenders or building societies at other lending options if the property doesn’t fulfill their requirements.

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What To Do If The Property Is Considered Unmortgageable

In some circumstances, refurbishment mortgages may be ineligible if the associated property is deemed unmortgageable. Some reasons for this can include:

• Uninhabitable properties because of poor conditions like property derelict or lack of weatherproofing.
• There is evidence of invasive plants like Japanese Knotweed.
• The property faces flooding, rot, dump or subsidence.
• The property’s value is under £50,000.
• Planning permission is absent, or the property isn’t listed in the Lands Registry.

In such situations, you can use bridging loans for prompt property development, after which you can subsequently apply for traditional mortgages against the property.

Bridging loans are an alternative to refurbishment mortgages, especially when time is a factor. They can come in handy with auction properties when a deposit is required upon winning the property, and the refurbishment mortgage process takes too long.

Bridging loans also require you to have an exit strategy, and their suitability may depend on your circumstances. They’re short-term financial products that require you to own another high-value asset that can act as a down payment.

Refurbishment Mortgage Final Thoughts

Refurbishments are considerably different, so it’s wise to consult an advisor when looking for a heavy or light refurbishment mortgage.

They may have access to exclusive deals and products you’ll not find on the open market and can help you find suitable financing for your project.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Borrowers often think their options are limited as they consider buying a home when single or on one salary, but that isn’t necessarily the case.

You’ll not be treated any differently by lenders when applying for a mortgage as a single person.

It’s very common for first-time buyers to purchase their first property alone. Here’s everything you need to know about single-person mortgages.

Can you get a mortgage when single/on your own?

Yes! Single-person mortgages are pretty standard, and the application process can be more straightforward than joint application mortgages because only a single person is assessed.

The only limit is financial because it means you’ll be applying with only one income. It may mean that you’ll have a lower deposit or have to wait a little longer to buy than couples with joint incomes who can save for a deposit quicker.

Even if lenders have rejected you before, working with a mortgage advisor or broker can help you get a single-person mortgage with other lenders.

While you may need to work harder to get the necessary finances in place, you can put yourself in the best possible position to qualify through careful planning.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How much can you borrow as a single person?

Your income will determine the maximum amount you can borrow in a single-person mortgage. Many lenders place the limit they can advance at 4.5 times your income.

Under the right circumstances, some can stretch the amount to x5 or x6 times your income this depends on other factors and could be lower.

Different factors can impact a lender’s willingness to advance the loan on high-income multiples. The primary consideration among many lenders is affordability based on your income and outgoings and other financial commitments i.e. loans, credit cards that will remain.

An important thing to remember is that different lenders will consider you differently. Some may see you more favourably than others, so it’s essential to shop around for the best possible deal.

What size deposit does a single person need?

Many individual borrowers assume a larger than average deposit is needed when applying for mortgages by themselves, but this isn’t true.

Single-person mortgage applications can be stronger than joint applications, and you can even qualify for a 5% deposit. Generally, you can get a mortgage worth up to 95% of the property value in the UK.

It’s wise to save up as much deposit as possible because you have more and better options among lenders with a higher deposit. Lenders will consider you lower risk when you have a higher deposit, and the deal generally gets better every time you move up 5% in deposit size.

The higher the amount you can put down, the lower the interest and mortgage loan amount you’ll have to repay. As you save up for a single-person mortgage, aim for 5%, 10%, 15%, and 20% milestones.

Right to buy scheme as a single person

If you live in a council property and qualify for the right to buy scheme, the mortgage and property ownership will need to be in the names of the person or persons on the right to buy documents.

Therefore, if you are the only person on the paperwork, you will be the only one eligible to apply for the mortgage via most lenders. This means the lender will make the usual assessments based on you alone, including your income and affordability.

Right to buy as a joint mortgage

There are circumstances when a single person applying for a mortgage via the right to buy scheme will be ineligible for the mortgage on their own but their names will be the only one on the right to buy paperwork.

In this situation, it may be possible to add another individual onto the mortgage in a similar way to a joint mortgage sole proprietor setup.

When to consider a joint mortgages in a sole name

There are times when you may want to consider having a joint mortgage in a joint borrower, sole proprietor (JBSP) agreement. One common situation is when you want to help a family member out with their mortgage payments.

A JBSP enables second parties to help others purchase a home by joining the mortgage without being featured in the title deed. It’s often a good option for first-time buyers, and it can protect your assets and provide valuable tax benefits.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

A solo mortgage for bad credit

You may also want to consider a single-person mortgage when your partner has a bad credit history. If two people will occupy the property, but one has bad credit that can appear on the application, a solo mortgage is a suitable option with some lenders.

Many specialist lenders can still consider your application and approve the mortgage even if you have a bad credit score. Whether late payments, bankruptcy, or debt management caused your adverse scores, some lenders are more than ready to help you.

They’ll assess how recent or severe your credit issues are and concentrate on your affordability and how you handle your finances now. High street lenders will not consider you if you have bad credit, so it’s better to work with mortgage advisors or brokers who have access to specialized lenders.

Check Today's Best Rates >

Getting A Right To Buy Single Person Mortgage

If you meet the qualification for a Right To Buy Scheme and are looking to purchase your council house, then the ownership and mortgage of the property will need to be in the name of the person on the Right to Buy paperwork.

Frequently Asked Questions

Single Person Mortgages For The Self-Employed

You can still qualify for a single-person mortgage when you’re self-employed. They’ll consider your income & outgoings, employment, and accounts when assessing your mortgage application.

Depending on the lender you choose, you may be required to provide account statements for the last one, two, or three years for a Ltd Company and/or tax calculations. This is where working with a broker or advisor comes in handy as they know which lenders will accept shorter account periods.

These are some of the major factors they will take into account:

• Income figures – lenders will want to see your turnover, profits and drawing of any salary or dividends. Most will then average your income over the previous three years.
• Your accounts – lenders typically want to see your accounts over the previous few years, in general the longer the period you can show the better, but there are some lenders that will be happy to consider applications from individuals with accounts under 3 years.
• Employment status – lenders will assess mortgage applications from sole traders and limited company directors differently. If you are a limited company director, they will usually look at the amount of income you have drawn from the business. However, certain lenders will also consider the retained profit that’s been drawn, in which case the amount you can borrow could potentially be greater.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

How can you take someone off the mortgage?

You can also subject to affordability use a single-person mortgage to take someone off a mortgage. When you change from a joint to a single mortgage, it’s the same as having the other person reapply for a new mortgage alone with the same lender or a new one.

Such a move can provide you with better rates, but you still have to factor in the fees for remortgaging in your decision.

Can I get a single person mortgage with a low deposit?

It’s certainly possible. If you are looking to buy a home for the first time, there are 95% mortgages available, whether that be new builds or a direct purchase. There are also various schemes available to help first time buyers, including the help to buy scheme.

Can I apply for a mortgage in one persons name even if there are two people buying the property?

Typically not. Lenders require all owners to be named in order to approve the mortgage.

However, what is possible is to and get a mortgage in two names with only one owner named on the deeds.

This is referred to as a joint mortgage sole proprietor and is used when an individual wants to assist with mortgage payments, but has no legal rights to the equity.

There are some common reasons why this route may be pursued, for example, if someone wanted to help out a family member who has bad credit, yet wants to apply for a mortgage for the first time.

Can I get a sole name buy-to-let mortgage?

Yes. Securing a buy-to-let mortgage in a single name is a similar application process to securing a single mortgage on a residential property.

Typically, lenders will have have strict minimum income requirements for buy-to-let mortgages, but there are others who are more flexible, speaking to a mortgage broker will help you find the lenders that have no such requirements.

Single Person Mortgages Final Thoughts

With the right advice, getting a single-person mortgage can be effortless. Using an advisor has many benefits, and they can help you get the best rates available in the whole market.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you are are considered a professional, the mortgages available to you may include exclusive deals and rates you can get if you’re in particular lines of work.

Such professions can range from medical and critical workers to legal practitioners and business executives.

In this guide, you’ll learn what a professional mortgage is, professions considered, the benefits and how to find lenders specialising in mortgages for professionals.

What is a professional mortgage? 

Mortgages for professionals aren’t necessarily types of products. Mortgages for professionals refer to borrowers classed as professionals applying for mortgages and lenders offering them bespoke deals or exclusive rates.

It involves special treatment when a professional applies for the same mortgage product as everyone else.

Professionals can get such special treatment because they’re considered lower-risk borrowers, making lenders more lenient or flexible with their deposit requirements or eligibility criteria.

As a professional, you can get different rates among different lenders because not all lenders view professionals favourably.

To ensure you get an appropriate lender, you may have to speak to a mortgage broker experienced in arranging mortgages for professionals.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Which professions are considered? 

Professions considered by mortgages lenders to be lower risk include the following:

Key workers:

• Teachers
• Police
• Civil servants
• Military
• Firefighters

Medical professionals:

• Nurses
• Doctors
• Optometrists
• Pharmacists
• Vets
• Dentists

Other professionals:

• Architects
• Accountants
• Barristers
• Solicitors
• Surveyors

High earners: 

• Business executives
• Investment bankers
• Individuals with a high net worth or asset-rich may also qualify

Mortgage lenders will offer borrowers in such categories better deals. Their predictable career progressions, qualifications, and reliable income statistically make them a much safer bet than other borrowers.

Lenders are more willing to advance the mortgage at better terms to attract more of these borrowers.

You can even get an exclusive product range from some lenders for high earners and professionals, while others provide an enhanced discretion level or discounts.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Advantages of a professional mortgage

Benefits of borrowing through mortgage lenders who specialise in professionals include:

• Lower Fees and Superior Rates

Borrowers in qualifying professions can get fee discounts and favourable interest rates from some mortgage lenders.

• Lenient Deposit Requirements

Lenders often ask for higher deposits when risk is present. Working in any safe profession will help offset any risk, and your chances of getting a low deposit mortgage will be higher as a professional.

• Higher Multiples in Income

While average mortgage customers can only borrow from 4.5 to 5 times their salary, the salary or income of higher earners and professionals can be stretched 5.5 or even six times by some lenders.

• Overpayment Facilitation

Mortgage lenders usually allow borrowers to overpay on their mortgages by 10% annually without any penalties. However, they’re more flexible for those in certain professions, and the limit may go as high as 20%.

With the right circumstances, some mortgage lenders will not impose an overpayment capo at all.

• Options To Borrow Back

Professional borrowers have higher chances of coming across investments and making more enormous expenditures when opportunities arise. In addition to overpayment flexibilities, some lenders will also offer facilities for borrowing up to particular defined limits at any time.

The mortgage lender can allow you to borrow the total capital payments you’ve already made. Others will let you borrow additional funds without an entire application process, and others can provide instant cash withdrawals straight into your bank account up to a predefined limit.

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• Mortgage Repayment Breaks

Professionals are more likely to get approved for mortgage repayment breaks or holidays by lenders than non-professionals in the same circumstances. Generally, borrowers in high-earning professions are less likely to run into difficulties with their mortgages after they’ve postponed a few payments.

• Fewer Proofs for Income

To prove your income as a self-employed borrower, lenders may require you to provide two to three years of your account’s history. In contrast, professionals are more likely to get approved for mortgages with only a 12-month trading history, which can be helpful for those who haven’t been in their current roles for long.

• Specialized Treatment

Lenders who specialise in offering mortgages to professionals provide personalised services which translate to VIP treatments and smoother mortgage setups.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Mortgage lenders that favour professionals 

You can find exclusive deals for professionals among various high street banks. Some may offer discounts that include additional borrowing and offset facilities, among other perks. Others may allow you to borrow up to 5.5 times your salary.

Private mortgage lenders, challenger banks, and specialist lenders offer special deals for high earners and professionals. Such lenders don’t always advertise themselves, and you m unlikely to find them while searching on Google.

This is where mortgage brokers specialising in arranging finance for professionals come in. They can provide you with access to all lenders in the market, and the right advisor knows the exact lender who is suitable to your employment type and income. It ensures you get an appropriate lender the first time, which helps you avoid wasting time and gives you peace of mind.

How to Find Lenders Specialising in Mortgages for Professionals

Some brokers specialise in matching professional borrowers with lenders who cater to professionals. They understand the mortgage requirements for those in such lines of work and know the exact lenders to approach for the best deal and rates.

Therefore, if you’re looking for exclusive mortgage deals for high earners and professionals, the best place to start is with mortgage brokers experienced in arranging them. They have access to lenders who offer such arrangements, and they’ll negotiate the best terms and rates on your behalf.

They’ll also help with your mortgage application while providing you with bespoke advice you can’t find anywhere else.

Frequently Asked Questions

Can You Apply as a Newly Qualified Professional?

Yes. Some mortgages offer newly qualified professionals up to 5.5 times their salary. Such borrowing can allow you to borrow up to 95% of the property price provided you qualify and have a minimum salary.

Such competitive offers can benefit new professionals who are first-time buyers and have a small deposit at hand. And although the name only mentions newly qualified professionals, the deals remain open to those who’ve qualified for longer, even up to five years.

Therefore, some applicants can get an advantage since they’ve had time to see increases in their salary, which can boost how much they can borrow.

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Are there any mortgage schemes for professionals?

Yes, there are schemes available. For military and ex-military people, there is Forces Help to Buy. The First Homes scheme is also availble for NHS staff – you can read more about this initiative on the government’s website.

Finding the Best Rate

Remember, all loans, including mortgages for professionals, are subject to affordability assessments, and not all favoured professionals are guaranteed to qualify.

It’s vital to work out exactly how much you can comfortably afford before looking for a mortgage. You can use tools like mortgage calculators to get a ballpark of what your repayments may be at different rates. They’re usually free to use when you visit broker and lender websites and will not affect your credit score.

Also, consider the mortgage rates and look at a range of mortgage lenders to see if you can get a better deal based on your financial and personal circumstances.

Mortgages For Professionals Final Thoughts

As mentioned before, a whole market mortgage broker is your best bet for finding the best lenders and mortgages for professionals. They’ll also support you in the application process and in making realistic financial plans for your mortgage.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Zero hour contract mortgages
• Mortgages for professionals 
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re on benefits and have dreams of owning your very own council house, you may wonder if it’s even a possibility.

Being on benefits means less access to credit for many people, but does that really come into play when applying for funds to buy a council house?

The short answer to the question is “yes, you can buy a council house while on benefits!” In most instances, your benefit will be added as a form of supplementary income when the mortgage company carries out the required affordability assessment.

Of course, you will need to prove in most instances that benefits are not your sole income stream.

Which Benefits Allow You to Buy a House?

You may be able to buy a council house while on any of the following benefits.

• Working tax credit
• Widow’s pension
• Severe disability allowance
• Maternity allowance
• Industrial injuries
• Incapacity
• Disability living allowance
• Child benefit
• Carer’s allowance
• Attendance allowance

What’s the Catch?

One clincher is that you will no longer be allowed to claim housing benefits when you buy a house while on benefits – you certainly won’t be able to use a housing benefit to pay for mortgage costs.

Keep in mind that you’re only eligible for housing benefits if you have savings of less than £16,000.

If you have savings greater than that and are claiming housing benefits and applying for a mortgage while on benefits, you may find that your local council takes a closer look at your situation, and you may find yourself in a spot of trouble!

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Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Can I Get a Mortgage if My Only Form of Income is Benefits?

Most mortgage companies will require you to have additional income streams in addition to your benefits. That said, if your benefits are your sole income stream, there are still options available for you to get a mortgage and acquire housing cost payments.

Government Schemes That Will Help You Buy a Council House on Benefits

If you’re looking into government schemes that do more than pay off the interest element of your home loan, you’re in luck. Several government schemes will assist you with purchasing a council home on benefits.

• Right to Buy Scheme

This Scheme is aimed at individuals already living in a council house. It aims to help tenants purchase their homes at a considerable discount.

It is said that this Scheme will also become available to housing association tenants in the near future. The discount amount fluctuates depending on the location of your home.

You have a right to buy if the council house is your only home and is self-contained. However, you also need to be a secure tenant.

In 2019 the maximum discount was set at £82,800 in England, with a slightly elevated discount allowed in London of £110,500.

That said, discounts may increase annually, so it’s best to check with your council. Factors that influence the discount offered would include your tenancy term and, of course, the property’s value is placed on the market.

If you have been a tenant for 3 – 5 years, you can expect a discount of around 50% with an increase of 2% per additional year of tenancy, capped at a max of 70% discount.

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• Mortgage 5 times salary.
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• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

• Preserved Right to Buy Scheme

In instances where the council-owned your home but sold it to another landlord while you were an occupant, you could be eligible for Preserved Right to Buy. The Preserved Right to Buy is a legal right extended to former local authority tenants, provided they were secure tenants.

Preserved Right to Buy works very similarly to the Right to Buy Scheme, where discounts range from £84,600 across England to £112,800 in London.

The best way to find out if you’re eligible for the Preserved Right to Buy scheme is to check with your current landlord. If you’re not eligible, there is an additional scheme that may assist you – this is called the Right to Acquire Scheme.

You could be eligible if you were a secure council tenant and living in your home when it was transferred from the council to another landlord, like a housing association.

You could also be eligible if you then moved to another home owned by the new landlord. But not if you moved to a home owned by a different landlord.

Your landlord will be able to tell you whether you have the Preserved Right to Buy. If you’re a housing association tenant and you’re not eligible for this Scheme, you may be eligible for the Right to Acquire Scheme instead.

The Right to Acquire Scheme is aimed at tenants of housing association homes with a public sector landlord for no less than three years. You can then buy your home at a discount of £9,000 – £16,000, depending on the home’s location and value.

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Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Buy a Council House While on Benefits Final Thoughts

As you can see, there are several avenues you can take when wanting to buy a council house on benefits. Chat with your mortgage broker and your landlord to determine which option is best suited to your needs and financial situation.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts