Check eligibility for a mortgage on benefits
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Our guide outlines the key things to consider if you’re trying to get a mortgage while receiving government benefits, including which benefits are usually accepted as income, what different lenders’ policies say and what home ownership schemes are currently available.
Yes, you can get a mortgage when receiving benefits. When assessing your mortgage application, a lender’s biggest concern is the amount and stability of your income – and many are happy to consider government benefits as a source of income.
Therefore, as long as you can afford a mortgage, there is no reason why being on benefits should stop you applying for one.
The biggest hurdle for many mortgage applicants is that their benefits are often used to supplement a low income. If you’re in that position, check out our guide on getting a mortgage with a low income.
As well as income from an employer or your own business, many lenders will take government benefits into account when calculating your affordability.
These include the following:
Some mortgage lenders will only consider these benefits as income if you’re also employed or retired. A few won’t consider them at all.
The easiest way to find a lender who will take your benefits into account is to work with a mortgage adviser. These professionals have detailed knowledge of lenders’ individual eligibility criteria and will be able to point you towards the best lender that’s willing to work with you.
Your physical health won’t play a role in a lender’s decision on your mortgage application. In fact, it’s illegal for it to alter its offer based on your health.
However, a lender will place a lot of weight on your income, and this is why a lot of ill or disabled mortgage applicants struggle to secure a deal.
If your health is too poor for you to work, it could be difficult to earn enough to be approved for a mortgage, but it’s not impossible.
Mortgage lenders will make a calculation on the maximum amount you can borrow based on your annual income.
However, not all mortgage lenders will consider disability benefits when assessing your income. Some will flat-out refuse to accept these payments as income, while others will only consider these benefits if you’re also employed or retired.
If disability benefits make up the majority of your income, it’s worth only approaching lenders who will consider these payments.
The easiest way to find these lenders is by using a mortgage adviser. These individuals have specialist knowledge about the inner workings of lenders’ eligibility assessments and will be able to recommend to you the deals that you’re most likely to be approved for.
If you receive disability benefits, there are a couple of home ownership schemes available for you as part of the government’s affordable housing scheme.
There is nothing stopping disabled people from applying for a mortgage through normal means, provided they can afford it. In fact, it’s illegal for lenders to discriminate against applicants based purely on their disability.
Below, you’ll find information from July 2021 about how some major UK banks and building societies can help out mortgage applicants with disabilities.
|Provider||How it can help||Compare|
|Aldermore Bank||Compare with broker|
|Barclays||Compare with broker|
|Coventry Building Society||Compare with broker|
|Halifax||Compare with broker|
|HSBC||Compare with broker|
|Nationwide Building Society||Compare with broker|
|Natwest||Compare with broker|
|Royal Bank of Scotland||Compare with broker|
|Santander||Compare with broker|
|Virgin Money||Compare with broker|
|Yorkshire Bank||Compare with broker|
The government has created a range of schemes to help people with low incomes be able to step onto the property ladder. Taking advantage of these will make it easier to have a mortgage application approved.
1. Work out your income, including any benefits you receive.
2. Research the benefits-related lending policies of different mortgage lenders before you apply.
3. Consider using a mortgage broker if you want to save some research time or explore the wider market.
4. If you can’t get a mortgage to buy a house outright, consider any shared ownership schemes that may be open to you.
5. You could also look at buying a house jointly with someone else to boost your borrowing capabilities (although remember your finances will be linked to theirs if you buy a property together).
It is possible to get a mortgage when you’re in receipt of benefits, although the total amount you can borrow will depend on your overall income, including those benefits and any salary you may have coming in. You can widen your options by looking at any relevant home ownership schemes or by buying jointly with someone else. Different lenders will have different applicant criteria and different benefits documentation they will accept, so it could be beneficial to use a mortgage broker who will have a broader knowledge of lending criteria and access to many mortgage products on the market.
Everything you need to know about how to get on the property ladder by yourself.
If you’re a single parent buying a home, you may be able to use child benefit payments to supplement your income when applying for a mortgage.
Lenders have a range of mortgages available to temporary contract or zero-hour contract workers. Find out how you can maximise your chances of approval and get into a new home sooner.
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