Some mortgage lenders like Halifax, Nationwide, Coventry Building Society, and others consider state benefits as part of the income assessment when you apply for a mortgage. However, acceptance of benefits can vary significantly between lenders, and it often depends on the type of benefit received. Commonly accepted benefits may include:
- Child Benefit
- Universal Credit
- Disability Living Allowance (DLA) or Personal Independence Payment (PIP)
- Pension Credits
- Working Tax Credits / Child Tax Credits
Key Considerations
Type of Benefit:
Lenders typically look for income that is stable and likely to continue; thus, they may prefer certain types of benefits over others. For example, long-term benefits such as Disability Living Allowance or Pension Credits might be more readily considered than temporary benefits.Proportion of Income:
Some lenders might only accept benefits as a portion of your total income. They may require you to have other sources of income, such as employment or self-employment income.Documentation:
You will likely need to provide evidence of your benefits, such as award letters from the Department for Work and Pensions (DWP), to prove the amount and duration of the benefits you receive.Lender’s Criteria:
Each lender has its own criteria and policies regarding which benefits are considered and how they are assessed as part of your total income. Some may apply a multiplier to your benefit income, while others might take a more conservative approach.Tips for Applying
Research:
Look for lenders known to be flexible with income assessments or who advertise their willingness to consider applicants on benefits. Independent financial advice can be invaluable here.Speak to a Mortgage Advisor:
A mortgage advisor or broker can help navigate the market to find lenders likely to consider your application. They’ll have up-to-date information on which lenders accept benefits and under what conditions.Prepare Your Documentation:
Have all relevant documentation ready, including benefit award letters, bank statements showing the benefits being paid, and any other proof of income.Consider Specialist Lenders:
Some lenders specialise in mortgages for people with non-traditional income sources, including benefits. These lenders may offer more flexibility but could charge higher interest rates.Final Thoughts
While it’s true that some lenders accept benefits as part of the income assessment for a mortgage, the specifics can vary widely. It’s crucial to approach the application process well-prepared and to consider seeking professional advice. A mortgage broker can help identify the most suitable lenders based on your individual circumstances, potentially saving you time and increasing your chances of a successful application.
Answered by:
Alison Gibson
Mortgage and Protection Adviser
Last Updated:
18.06.2024
Answered by:
Alison Gibson
Mortgage and Protection Adviser
Last Updated:
18.06.2024
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