Can You Get a Mortgage on Benefits?

June 18, 2024

54
Yes, it is possible to get a mortgage while receiving benefits, although it can be more challenging. Lenders will assess your overall financial situation, including your income from benefits and any other sources. Here’s a detailed look at how it works:

Types of Benefits Considered by Lenders

Lenders have varying criteria, but many will consider the following benefits as part of your income:
  1. Universal Credit
  2. Child Benefit
  3. Disability Living Allowance (DLA) or Personal Independence Payment (PIP)
  4. Pension Credit
  5. Working Tax Credit
  6. Child Tax Credit

Proving Your Income

When applying for a mortgage, you’ll need to provide evidence of your benefits income. This typically includes:
  • Award letters or notices from the Department for Work and Pensions (DWP).
  • Bank statements showing the benefits being paid into your account.

Affordability Assessment

Lenders will conduct an affordability assessment to ensure you can afford the mortgage repayments. They will look at:
  • Total income (including benefits and any other sources).
  • Expenditure, such as utilities, groceries, and existing debts.
  • Credit history, to assess your reliability in repaying debts.

Deposit Requirements

Lenders usually require a deposit, and those on benefits might be asked for a higher deposit than those in full-time employment. Generally, a deposit of at least 10-20% of the property value is standard, but this can vary.

Specialist Lenders

There are specialist lenders who cater to applicants receiving benefits. These lenders understand the nuances of different types of benefits and may have more flexible criteria. A mortgage broker can help you find these lenders and navigate the application process.

Additional Support

If you’re receiving certain benefits, you might be eligible for additional support, such as:
  • Support for Mortgage Interest (SMI): This government scheme helps cover the interest payments on your mortgage. However, SMI is a loan, not a benefit, and will need to be repaid when you sell or transfer ownership of your home.

Steps to Improve Your Chances

To improve your chances of getting a mortgage while on benefits, consider the following steps:
  1. Improve your credit score: Ensure you have a good credit history by paying bills on time and managing debts effectively.
  2. Save for a larger deposit: A larger deposit reduces the risk for lenders and may increase your chances of approval.
  3. Seek advice from a mortgage broker: A broker with experience in handling cases involving benefits can provide invaluable assistance and access to suitable lenders.

Conclusion

While getting a mortgage on benefits can be more complex, it is certainly achievable with the right preparation and support. By providing clear evidence of your income and working with a knowledgeable mortgage broker, you can find a suitable mortgage that meets your needs.

Answered by:

Phil Greenwood

Mortgage and Protection Adviser

Last Updated:

18.06.2024

Answered by:

Phil Greenwood

Mortgage and Protection Adviser

Last Updated:

18.06.2024

More Questions

Answered by:

Senior Mortgage Operations Manager

Posted
25

Answered by:

Senior Mortgage Operations Manager

Posted
23

Answered by:

Senior Mortgage Operations Manager

Posted
27

Answered by:

Senior Mortgage Operations Manager

Posted
25

Answered by:

Mortgage and Protection Advisor

Posted
32

Answered by:

Mortgage and Protection Consultant

Posted
27

Answered by:

Mortgage and Protection Consultant

Posted
29

Answered by:

Mortgage and Protection Consultant

Posted
33

Answered by:

Mortgage and Protection Consultant

Posted
42

Answered by:

Mortgage and Protection Adviser

Posted
39

Contact Us

*Privacy Notice - Any information provided will be treated with confidentiality and will only be accessible within Ascot Mortgages