Unveiling the Solo Mortgage Surge
The shifting social landscape, marked by more individuals opting for extended periods of singlehood to focus on careers and the rising divorce rates in the UK, has led to a substantial surge in demand for services tailored to solo buyers. Over the past five years, the need for assistance and support for individuals seeking to purchase a property as solo applicants has become more pronounced.
A similar trend can be observed in the travel industry, where the concept of ‘solo travellers‘ has gained popularity. Representing 11% of the market, solo travellers have seen a substantial surge, with Google search terms for solo holidays experiencing a staggering 771% increase since 2016. This demonstrates the growing preference for independence and self-reliance among individuals across various aspects of life, including property ownership.
As more people consider purchasing a property independently, the question arises: Can solo applicants enter the property market successfully? Buying a property as a single individual comes with its own set of challenges and considerations, but it is undoubtedly a viable option for many.
One of the key advantages of solo property ownership is the autonomy it offers. Solo buyers are free to make decisions without the need for consensus, allowing them to select a property that aligns perfectly with their preferences and needs.
However, there are some hurdles that solo buyers may encounter during the property purchasing process. For instance, securing a mortgage as a solo applicant may be more challenging than joint applications. Lenders often assess a borrower’s income and creditworthiness, and for single applicants, meeting the criteria might require careful financial planning and budgeting.
Additionally, solo buyers may face affordability constraints, especially in regions with high property prices. Saving for a deposit and covering other associated costs can be more strenuous without the financial support of a partner.
Nevertheless, solo applicants can successfully navigate the property market with the right approach and professional guidance. Engaging the services of experienced mortgage advisers who understand the specific needs of solo buyers can be invaluable in making informed decisions.
Furthermore, government initiatives and special mortgage products may be available to support solo buyers, such as lifetime ISA and shared ownership options, making homeownership more achievable.
About lifetime ISA
Lifetime Individual Savings Account (Lifetime ISA or LISA) offers unique benefits to solo applicants and first-time buyers. The Lifetime ISA is designed to help individuals save for two specific purposes: purchasing their first home and saving for retirement. For solo buyers looking to enter the property market, the LISA can be a valuable tool to accumulate funds for a deposit.
Here’s how the Lifetime ISA works for solo applicants:
- Saving for a Deposit: Solo buyers can contribute up to £4,000 per tax year into their Lifetime ISA. The government then provides a 25% bonus on these contributions, meaning that for every £1,000 saved, the government adds £250. This bonus is credited annually, making it an attractive incentive for building a deposit fund more quickly.
- Property Purchase: To use the Lifetime ISA for a property purchase, the individual must be a first-time buyer, meaning they have never owned a property before. The property must also be their primary residence, and it must be purchased with a mortgage.
- Withdrawal for a Property Purchase: To access the funds for a property purchase, the Lifetime ISA must have been open for at least 12 months. After this period, the funds can be withdrawn without any penalties, and the government bonus can be applied towards the property’s purchase price.
- Age Limit: Individuals must be aged 18 to 39 to open a Lifetime ISA. Once the account is opened, they can continue contributing until age 50, and the government bonus will continue to be applied during this period.
By taking advantage of the Lifetime ISA, solo buyers can benefit from the government bonus and expedite their savings for a property deposit. Additionally, they can use the Lifetime ISA in conjunction with other mortgage products or government schemes, such as Shared Ownership, to further enhance their affordability and increase their chances of homeownership.
It’s important to note that while the Lifetime ISA provides an excellent opportunity for solo buyers, it’s essential to consider all available options and consult with a mortgage adviser to determine the most suitable approach based on individual circumstances.
Shared Ownership
In the current market, buyers face heightened consumer spending and affordability challenges. Interest rates have risen significantly, reaching levels that are 3-4 times higher than those observed in the first half of 2022. Alongside this, high inflation rates and economic news volatility have contributed to shocking headlines, leading to an atmosphere of uncertainty.
Amidst these challenging conditions, the popularity of Shared Ownership applications has surged. In 2021 and 2022, solo applicants accounted for 56% of all Shared Ownership purchases, demonstrating the increasing appeal of this option for single individuals seeking homeownership. A recent survey conducted by sharetobuy.com also revealed that 57% of respondents were actively looking to purchase a property as solo applicants, further underscoring the growing trend.
As the property market evolves in response to the economic landscape, more buyers are turning to Shared Ownership as a viable pathway to owning a home. This approach allows individuals to purchase a share of the property, often making homeownership more accessible and manageable in the face of rising costs.
With affordability remaining a significant concern for many, Shared Ownership provides a practical solution by allowing buyers to enter the property market without needing substantial upfront capital. Instead, they can secure a share of the property and pay a reduced rent on the remaining portion, enabling them to build equity gradually and potentially buy additional shares over time.
The appeal of Shared Ownership is further amplified for solo applicants, who may find it challenging to meet the stringent financial requirements imposed by traditional mortgages in the current economic climate. By opting for Shared Ownership, solo buyers can overcome some of the obstacles they might encounter in obtaining a standard mortgage and move closer to achieving their homeownership aspirations.
While the property market faces uncertainties, the rising interest in Shared Ownership among solo applicants signifies the increasing adaptability of the property industry. As more buyers explore alternative pathways to homeownership, developers and lenders adjust their offerings to cater to this growing market segment.
With affordability being a major concern due to the prevailing economic conditions, Shared Ownership has emerged as a promising solution for solo applicants seeking to own a home. By enabling buyers to take steps toward property ownership without the need for significant upfront capital, Shared Ownership opens new possibilities for solo buyers and fosters a more inclusive property market. As this trend continues to gain momentum, the real estate industry will likely witness further innovation and growth in Shared Ownership offerings, providing greater opportunities for solo applicants to secure their dream of homeownership.
A need to be a solo buyer
As mentioned, solo applicants are becoming increasingly prevalent in various scenarios, and another such situation arises when the other potential applicant has adverse credit. In such cases, it may be more advantageous for one individual to apply for a mortgage independently to avoid the impact of the other person’s unfavourable credit history.
Adverse credit refers to a less-than-ideal credit record, often resulting from missed payments, defaults, or bankruptcy. When couples or co-applicants apply for a mortgage together, the lender assesses both individuals’ creditworthiness. If one applicant has adverse credit, it can negatively affect the overall mortgage application, potentially leading to higher interest rates, stricter terms, or even rejection.
To mitigate this risk, solo applicants may choose to go alone, leveraging their creditworthiness and financial standing to secure the mortgage independently. By doing so, they shield their application from any adverse credit history that could impact their chances of approval or affect the terms offered by the lender.
While applying as a solo applicant may offer certain advantages in adverse credit cases, it’s crucial to consider the implications of sole responsibility for the mortgage. Solo applicants should be confident in their ability to meet all financial obligations associated with homeownership, including mortgage repayments, maintenance costs, and other related expenses. 
Additionally, solo applicants should know that their income, credit score, and financial stability might influence their borrowing capacity. Lenders will assess these factors to determine the maximum mortgage amount they can afford and ensure that the mortgage remains manageable and sustainable in the long run.
For those facing adverse credit circumstances, seeking the assistance of a mortgage adviser or broker can be invaluable. These professionals can guide navigating the complexities of the mortgage application process and offer insights into suitable lenders that may be more accommodating to solo applicants with adverse credit.
Ultimately, applying for a mortgage as a solo applicant can be a viable solution in situations where the other applicant’s adverse credit history could hinder the mortgage application. By presenting a strong and stable financial profile, solo applicants increase their chances of securing a mortgage on favourable terms, paving the way towards achieving their homeownership goals independently. However, careful consideration and financial planning are essential to ensure that solo applicants are fully prepared for the responsibilities and commitments of owning a home independently.
While the demographic of solo property buyers is on the rise, purchasing a property as a single applicant is indeed feasible with the right preparation, financial planning, and professional support. With the increasing demand for services catering to solo buyers, the real estate market is adapting to meet the needs of this growing segment of property seekers. As the number of solo applicants continues to increase, the property industry will likely see further developments and innovations to support and empower solo buyers on their journey to property ownership.
