Getting a Mortgage as a Single Mum

Jaycee1972

Morning everyone, I wonder if you can help with a couple of things.

I am as of fairly recently a single mum. 18 months ago, I sold my house and hubby and I went into rented as part of a plan to buy a house together with an annexe for my mum. Shortly after, hubby sold his house so we each have a pot of money from the sales.

Basically, I have 50k in the bank as a deposit and I am wondering how lenders are about lending to part time working single parents. I earn 700 pcm wages, 130pw in tax credits and hubby is giving me 200 per month (nothing formalised) as child maintenance.

According to the nationwide website, they could lend me 80k+ which is only 50pcm more than my rent! I expect they would want proof of income and the earnings and tax credits would be easy enough but would they need something formal between me and my husband? I have no debts but pay 216pcm in nursery fees.

Can anyone see any difficulties?

My second question relates to my buying with my mum which I may still do. If hubby and I get back together (at present we haven't decided this is permanent or not) and he came to live with us, would he gain any rights to the property as it would be the matrimonial home and would this just be on my share of it? I am not worried about my share but I don't want my mums money to be at risk.

Thanks
Jaycee

maninthestreet

Is the £700 per month wages gross or net?

mitchaa

Also is the £200pm declared for benefit reasons?

i.e If you declare the £200m, will this effect your Tax credit claim?

maninthestreet

Assuming the £700/month wages is gross, and taking the £130/week tax credit into account, this all equates to £15160 p.a. An £80,000 mortgage is more than 5 times that figure, and would mean a monthly payment of £515, assuming a repayment mortgage at 6%p.a, over 25 years.

Jaycee1972

Hi

The 700 is net. Around 10k gross pa.

The 200 is not declared for tax credit purposes. Apparently you don't have to as it is not taxable.

Thanks
Jaycee

tomstickland

I sold my house and hubby

How much did you get for him? (Sorry, just being silly).

maninthestreet

£515/month mortgage, plus £216/month nursery fees = £731/month, which is more than your take-home pay. Then there is council tax to pay, gas/electricity and telephone bills. You would be reliant on the £131/week tax credits, plus what your husband decides to pay you - and his circumstances might change such that he decides to stop paying you. With no formal/legal agreement in place to ensure your husband keeps paying the £200/month maintenance, it's unlikely a mortage lender would that it into consideration, but I might be wrong.

mitchaa

Do mortgage companies even take TC into account?

I guess you get paid so much is because of your childcare costs? Your child will only receive these upto the age of 5 though and then you'll lose this entitlement. You will still receive some obviously but no-where near as much.

Mortgages are typical 25yr terms.

You have an annual income of around £10k, so based on this i think its near impossible.

minimike2

Some companies, including Nationwide, will not accept your tax credits as income. Your income from your husband and maintanence is also not acceptable to the majority of lenders as it is not via a court enforced arrangement / CSA. This leaves you your salary, which would get you a mortgage of about £35k - £40k - so you could buy at about £90k. No one will lend you £80k on those figures.

Anything above that is going to be too much. Is this a realistic price for houses in your area?

one-non-blonde

I was in a similar position 4 years ago (though with no deposit). The only lender who would touch me with a barge pole was the Halifax. I think they only gave a x1 multiple on the maintenance and tax-credits, nobody else would take this income into consideration. Evidence of ability to pay (having paid rent for years) didn't come into it unfortunately.

judi24

I asked a question a while ago about using child support and family allowance as income for a mortgage. I was advised that accord mortgages http://www.accordmortgages.com/ allow these. Although at the moment thier rates are not the most competative and you have to go through a broker to use them, it may be worth looking at as they also 'gross up' maintainance and benefits.