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Can I get a mortgage if I'm on benefits?
If you're receiving benefits and applying for a mortgage, you might wonder which lenders will be willing to accept your application, or if it's even possible.
You'll be pleased to know that there are many lenders who will accept applicants on benefits!
Your best chance of your mortgage application being accepted is by working with a broker who is experienced in helping clients achieve their goals.
Not only will they be able to recommend the best lenders and find preferential rates, but they will also boost your chances of approval.
How does getting a mortgage on benefits impact my application?
If you're applying for a mortgage on benefits, you can expect fewer lenders than if you were applying with income from employment. Lenders will also want to know more information about your financial situation.
Some lenders may simply refuse applications where your income is solely based on benefits. If this happens, you could have problems finding another lender to approve your application.
This doesn't mean you won't be able to get a loan.
Lenders want to know if you're going to be able to make mortgage payments, on time, and in full.
You need to show how much you earn and how much you spend. Your income should be stable enough to cover your expenses. As a general rule, you can expect to be offered a loan at 4.5 times your annual income.
Can I get a mortgage if I have a low income and receive benefits?
Yes, even if you're on benefits with a low income is possible. There are lenders that will accept people on benefits, however, you still need to be prepared to prove that you have sufficient income to support yourself and make repayments.
Affordability assessment varies between lenders, so make sure you understand your chances of success before submitting an application.
Getting a mortgage with a long term disability or illness
Getting on the property ladder as a disabled person or someone with a long term illness should be no more challenging than for anyone else.
It is illegal for lenders to treat your application any differently. As long as you can afford monthly repayments, you should not suffer because of your disability or health condition.
It's important to remember that, like any other applicant, you will need to meet certain criteria, such as having a good credit score, making regular mortgage repayments, and demonstrating that you will be able to keep up with the repayments.
Home Ownership for People with Longterm Disabilities HOLD
The Home Ownership for People with Longterm Disabilities (HOLD) scheme in England helps people with long-term disabilities to get on the property ladder. The scheme works on a shared ownership basis, whereby you own a percentage of the home and pay rent on the rest.
You can apply for HOLD if existing shared ownership homes don't meet your specific needs, for example, due to access.
To qualify for the HOLD scheme you need to
- Have a long-term disability,
- Have a household income of less than £80,000 (£90,000 in London),
- Be a first time buyer, an existing shared owner, or someone who used to own a home.
You can apply through the Help to Buy: Shared Ownership scheme.
Can a lender discriminate against me because I'm disabled?
Lenders cannot discriminate based on disability.
This means they are not allowed to refuse your application, or offer you a higher rate, just because you have a disability. They must assess you on your ability to manage the repayments of any debt you take out.
They want to know how much you earn, your outgoings, and whether you have any other debts.
Receiving disability benefits should not prevent you from buying a house. However, some lenders may be more willing than others to lend money to people who receive benefits.
Can you get a mortgage on Jobseeker's Allowance (JSA)?
There are a few lenders who will consider applications from people who are receiving Jobseeker’s Allowance (JSA).
However, the longer you've been receiving JSA the more difficult it becomes to get approved. If you've been receiving JSA for over a year, getting approved for a mortgage can be a challenge.
If you already have a mortgage and receive JSA, you might be eligible for Support for Mortgage Interest scheme (SMI).
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Does child benefit count as income for a mortgage?
Child benefit is taken into account by many mortgage lenders when deciding if you're eligible for a mortgage. You should check what your provider says about taking this into account.
You can read more on this in our guide to getting a mortgage on child benefits.
Can I get a Buy to Let mortgage on benefits?
You might be surprised to learn that there are some mortgage lenders who will accept applicants for buy to let mortgages on benefits.
However, not all mortgage lenders will accept people on benefits, and you may find the criteria you will need to meet is more strict than other borrowers.
Can I get a mortgage if I'm claiming Universal Credit?
Yes, there are some lenders who will accept benefit income from universal credit.
However, this varies from lender to lender, and you may find it harder to get a mortgage being on universal credit. Overall, all mortgage lenders will want reassurance that you can afford mortgage repayments, both now and in the future.
The best way to find which mortgage lenders accept benefits, including universal credit, is to work with an experienced mortgage broker.
A mortgage broker will not only help with finding the right mortgage lender, but they can also help with your mortgage application.
Can I get a mortgage if I have bad credit and claim benefits?
Having a bad credit history and receiving benefits can further reduce the amount of mortgage lenders willing to approve your mortgage application.
However, there are lenders may be willing to work with borrowers who have bad credit histories.
People with a bad credit history need to take extra precautions when applying for loans.
Lenders will be concerned about the age and severity of the credit issue when reviewing your application. For example, this means that a recent IVA will be taken more seriously than a historic late payment.
If you can take steps to improve your credit rating before applying that will help to boost your chances of mortgage approval.
Working with a whole of market mortgage broker (like Teito!) is highly recommended in this scenario.
Do you qualify for a government scheme?
Getting approved for a mortgage on benefits is more difficult than it would be otherwise. However, there are schemes and providers out there that may be able to help people on benefits get onto the property ladder.
You should consider whether you qualify for any of these schemes. This could help make getting on the property ladder easier and with mortgage approval.
The Right to Buy scheme
To be eligible for the Right to Buy scheme, you need to have lived in a council-owned house for at least 3 years and use it as a main home.
The Right to Buy scheme allows you to buy your council home at a heavily discounted rate.
The Right to Aquire scheme
Most people who rent homes from housing associations do not qualify for the right-to-buy scheme. However, some people might qualify for the right to acquire scheme instead.
This also gives them the opportunity to purchase their housing association home at a discounted price.
Can I get a shared ownership mortgage on benefits?
You can apply for shared ownership schemes if your income is reliant on benefits. Even if your income is reliant partly on benefits, you can still apply for shared ownership schemes.
You should also check if the lender includes the benefits you receive as part of your affordability calculations.
Should I get independent mortgage advice?
Yes! We fully recommend that you get professional mortgage advice from a whole of market mortgage broker like Teito. This is especially important if you're applying on a mortgage on benefits, including universal credit, tax credit, or disability benefits.
We can find mortgage deals that suit your financial needs and provide the specialist advice you need to get your mortgage approved.
Apply for a mortgage on benefits
Applying for a mortgage doesn't need to be stressful, even if you're applying with benefit income.
Working with an independent mortgage adviser means you'll have access to lenders that are more willing to accept your application.
We work with 90+ mortgage lenders to find the best mortgage options for you. We'll help you find a competitive rate, so you can borrow what you need to pay off your debt quickly.
Start by comparing mortgage deals now and you could get a mortgage offer in minutes!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.