How to Afford a House with Low Income
Are you eager to buy a house but think your low income is getting in the way of owning your dream home? Constantly stressing about how to afford a house with low income? Stay positive because we have some good news - buying a house with a low income is definitely possible. All you need to do is follow these steps.
4 ways to buy a house on minimum wage.
1. Low Income Fix
Buying a home with low income can seem like a never-ending cycle of doubt and frustration. This is not to say that buying a house with a low income is impossible - there are some things you can do to increase your chances of buying a home. It is important to note that: a mortgage is not solely lent to you based on your salary (so trying to buy a home with low income isn’t hopeless) – there are other factors that affect your chances of obtaining a mortgage, like your credit score (more on that in no.2). Here are some things that can help with buying a home with low income:
- Ask for a raise. A rule of thumb - the more you earn, the more inclined a mortgage lender would be to give you a mortgage. So, pluck up some courage and ask your boss for a pay rise – if you don’t ask, you might never get!
- Cut your spending. Saving up is essential when buying a home with a low income (or even with a higher income). Make sure you eliminate all costs that don’t serve you – do you really need that brand-new coat to add to your collection of 9 others? And is that £60 a month phone contract a necessity? Be wise with the money you spend if you are obsessing over how to afford a house with low income – every little counts.
- Do your research. Shop around for different lenders and find the one that suits your needs best. Some lenders are open to lending you more money if you are keen on buying a house with low income.
2. Eliminate Bad Credit
Wondering how to purchase a house with bad credit? Purchasing a house with bad credit will be possible as long as you steadily build on your credit score rating. Lenders will be unlikely to lend you money if they can see that you have high amounts of outstanding debt which you have not yet cleared. Some tips to improve your credit score rating include:
- Be registered on the electoral roll. This influences your credit score because it confirms your identity and lenders will be more likely to trust that your identity is accurate (this prevents fraud and identity theft).
- Pay your bills on time. Make sure you have made your monthly payments for your phone bill and internet, this will assure lenders that you will also pay them back in a timely manner.
- Eliminate ALL outstanding debt that you may have. If you pay back all the money you owe certain parties, it will indicate to lenders that you will solely focus on their repayment.
3. Location, Location, Location.
The location where you wish to purchase a home is of serious importance and will affect the price you will have to pay for your house. This is a vital factor especially if you’re buying a house with low income. Are you willing to relocate in order to buy your new house? If you’re serious and you really want to know the realistic ways of how to afford a house with low income – location is key!
- Check out the areas which are least expensive to buy in around the UK. This is a list of the cheapest areas to buy a house in if you have a low income, according to Zoopla.
- If you’re keen to live in London – the prices for the more affordable houses in the capital city are almost triple than the list shown above.
- Working in London? Look for a commuter town within an hour travel of London. These houses will be more affordable especially if you’re looking to buy a house with low income.
4. Helping Hands
Do not shy away from help and advice when trying to get a mortgage on low income. House prices are increasing each year and it’s becoming harder, year by year, to purchase a house. Here are some ways you can get help with buying a house with low income:
- Parents. If one of your parents is in a better financial position than you, and is willing to help you buy a house, you could ask them to be your ‘mortgage guarantor’. However, this means that they will be liable if you are unable to pay your mortgage payments – so only use this option if you know that you are unlikely to put them in this position.
- Buy with somebody. Buying a house on your own can be a huge financial strain. If you’re looking to buy a house with low income, why not buy together with a friend, partner or sibling? This will mean that both of your incomes will be taken into account and consequently, your ‘borrowing power’ will be increased immensely.
- The government. The ‘Help to Buy ISA’ is a programme provided by the government to help those who want to buy a home with a low income. This affordable home-ownership scheme is recommended by many who needed help with buying a house.
- Yourself. If you are keen on buying a house on minimum wage and are struggling to afford the sky-high housing prices - why not try and secure a part-time job on the side to get some extra income? Working weekends as well as your 9-5 job during the week may seem daunting – but if you take advantage of your weekends and fit in some extra hours for some extra cash, you may be one step closer to saving up enough money to buy your dream house.
All these tips should help with buying a house. A low income doesn’t need to prevent you from buying your home, just make sure you always factor in the various costs of moving. If you try these ‘how to afford a house with a low income’ tips, you will certainly see gradual results. Be prepared to take risks and make sacrifices when buying a house with low income.
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