April 2024

Can You Get A Mortgage On Benefits in April 2024

As you begin your search for your dream home, the amount of information available online can seem overwhelming.

In the case that you are in a less stable financial position, have a low income and are claiming government benefits or universal credit, it might seem impossible to get the mortgage loan that you need.

If you are on benefits and looking to take out a mortgage loan, you will probably have more questions than most: it might even seem like there are few mortgage providers lending to people in your circumstances.

This article will endeavour to tell you everything you need to know about getting a mortgage while you are receiving benefit income.

However, this advice is not specific to your circumstances and does not officially constitute financial advice, so if you have more questions, it’s worth consulting a benefits mortgage expert.

You can listen to an audio recording of this page below.

Can I get a mortgage if I’m receiving benefits?

The short answer is yes; it is possible for you to get a mortgage when you are on benefits.

However, not all lenders are likely to be willing to offer you a loan, so there are a few issues that you need to be aware of before you apply.

If you are on government benefits and thinking of applying for a mortgage, it is recommended that you speak to a specialist advisor who can help you to find a mortgage lender who is willing to lend to you.

How does being on benefits impact my mortgage application?

Not all mortgage lenders will even consider your application

Not all lenders will consider applications from people who are on benefits, and this is because they view this as a higher risk group, so they are less likely to offer mortgages to them.

However, certain specialised mortgage providers provide low-income mortgages, so it’s worth looking around to see who would be willing to lend you money.

You will likely be subject to a high interest rate

Some lenders will assess affordability and decide to offer you a loan.

However, if a mortgage company does offer you a mortgage, they are more likely to charge greater interest rates than someone who does not receive assistance. Because they perceive you as a higher hazard client, they must offset this by charging a steeper rate.

You still must have some form of income

Even if you have a low income, in general, mortgage lenders will require you to have some form of income in order to be eligible for mortgage approval. This could be from employment, self-employment, investments or even from benefits.

The reason for this is that the mortgage lender needs to know that you will have enough income to be able to afford the repayments on the loan.

Can I get a mortgage if I am employed and claiming benefits?

If you are employed and claiming benefits, then your chances of being accepted for a mortgage are much higher than if you were unemployed.

This is because most mortgage lenders will see you as being in a more stable financial position to make mortgage repayments and mortgage interest payments, and so they will be more willing to lend to you.

However, you are still likely to be subject to a higher rate of mortgage interest than someone who is not on benefits.

It is also worth noting that the majority of lenders will require you to have been in stable employment for a certain length of time before they will consider your application or give mortgage approval.

Can I get a mortgage if I am unemployed and claiming benefits?

If you are unemployed and claiming benefits, then your chances of being accepted for a mortgage are much lower than if you were employed.

Because the majority of lenders will view you as being in a less secure financial position and therefore liable to be unable to make loan repayments, they will be less inclined to lend to you.

On the other hand, specialist lenders may accept this sort of borrower. It’s worth checking with a few different institutions to see whether any of them are willing to provide you with a loan.

While most lenders do not accept benefit income, in some cases, there are some mortgage lenders that accept universal credit or other benefit income. These include:

If you are receiving any of these as benefit income, then you should also be able to use them as income for a mortgage application. Child Tax Credits are not usually taken into account when calculating mortgage affordability.

Can I get a mortgage if I am on disability benefits?

Yes. In fact, if you are on disability benefits (a Disability Living Allowance or Industrial Injuries Benefit), then your chances of having your mortgage application accepted e are much higher.

If you have a long-term disability, are on disability benefits and want to get a mortgage, many lenders will accept disability benefits payments if you can show that they will last for the long term and fulfil their other conditions.

People with long term disabilities may also be eligible for HOLD, a shared ownership program that is part of the government’s affordable housing initiative. In the case that you have a long term disability, then it is worth finding someone to provide mortgage advice for your specific circumstances.

"If you are on government benefits and thinking of applying for a mortgage, it is recommended that you speak to a specialist advisor who can help you to find a mortgage lender who is willing to lend to you."

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Can you get a mortgage if I am on Jobseeker’s Allowance?

Yes. However, if you are on Jobseeker’s Allowance, then your chances of being accepted for a mortgage are much lower than if you were employed.

Because you will be considered by lenders to be in a less stable financial position, they will likely be less willing to lend to you.

If you are on Jobseeker’s Allowance, seek out a specialist lender who can help with your specific circumstances.

Can I get a mortgage if I’m claiming Universal Credit?

In general, if you are on Universal Credit, then your chances of being accepted for a mortgage are much lower than if you were employed.

However, once again, some specialist lenders do cater for those on universal credit, and so it remains worth researching to see where you might be able to find a loan.

What if I am claiming child benefit?

If you receive a child tax credit or child benefit, you can take out a mortgage. However, the child benefit is unlikely to be taken into account as part of your income for a mortgage application.

Can I get a shared ownership mortgage on benefits?

If you are claiming benefits, you may still be able to get a shared ownership mortgage. This is where you part-buy and part-rent a property from a housing association.

To be eligible for this, you will usually need to have a household income of less than £80,000 per year.

You will likely also need to be able to prove that you have sufficient savings for a deposit on the property.

Nevertheless, if you are on benefits, then your chances of being accepted for a shared ownership mortgage are much lower than if you were employed and claiming benefits.

If I’m on benefits can I get a buy-to-let mortgage?

If you are claiming benefits, you may still be able to get a buy-to-let mortgage.

This is where you take out a mortgage to buy a property that you then rent out to tenants.

You will still need to prove that you have sufficient savings for a deposit on the property as well as enough money to cover any repair or maintenance costs.

In some instances, some buy to let lenders don’t have minimum income requirements and instead base their affordability assessment on whether the rental income is enough to repay the mortgage.

Which mortgage lenders accept benefits?

A number of specialist mortgage lenders will accept benefits income. These include:

The Post Office
Paragon
Together
Platform
Furness Building Society
Keystone
Saffron Building Society
Unity Trust Bank
Metro Bank
Aldermore Bank

These are just a few of the many lenders for whom benefits count as income. It is always worth shopping around to see who might be willing to lend to you.

How much can I borrow if I am on benefits?

The amount you may borrow will be determined by a handful of criteria, such as your income, the kind of benefit you are claiming and the lender to which you apply.

Most lenders will generally lend up to 4.5 times your annual income. So, if you are claiming benefits and have an annual income of £10,000, then you could potentially borrow up to £45,000.

It is worth noting that the amount you can borrow may be less than this if you are seen as a high-risk customer.

How can I improve my chances of getting a mortgage if I am on benefits?

There are a few things that you can do to improve your chances of being eligible for a mortgage if you are on benefits.

Save for a higher deposit

The bigger the deposit, the lower the risk for the lender, and so the more likely they are to lend to you.

Get an Agreement in Principle (AIP)

An AIP is where the lender agrees in principle to lend you a certain amount of money.

This can be useful as it will give you an indication of how much you could potentially borrow and so make it easier to find a property that is within your budget.

Apply with a specialist lender

As has been mentioned above, there are specialist lenders who cater for people who are on benefits.

These lenders will be more likely to accept your mortgage application and so it is worth shopping around to see who might be willing to lend to you.

Improve your credit score

As has been mentioned, lenders will generally look at your credit score when considering your mortgage application.

Therefore, if you have bad credit, it is worth taking steps to improve your credit score before you apply. This might include doing things like making sure that you are on the electoral roll and paying your bills on time.

Have a guarantor

A guarantor is a person who agrees to make mortgage payments or repay the maximum loan if you are unable to do so.

This can be useful as it will reduce the risk for the lender and so increase your chances of being accepted for a mortgage.

Talk to a mortgage advisor

If you are unsure about whether you will be able to get a mortgage, then it is always worth speaking to a mortgage advisor or an online mortgage advisor.

They will be able to give you independent financial advice tailored to your individual circumstances.

Show evidence that you can repay a mortgage

When you apply for a mortgage, the lender will want to see evidence that you can afford the repayments.

This might include documents such as payslips or recent bank statements.

If you are self-employed, you might need to provide tax returns as proof of your approximate annual income.

You may also need to provide evidence of the benefits you are claiming.

Reduce your debt

The less debt you already have, the more likely you are to be accepted for a mortgage.

It is, therefore, worth taking steps to reduce your debt before you apply. This could include things like paying off any outstanding credit card balances and closing any unused accounts.

Consider a different type of mortgage

If you are struggling to get a standard mortgage, you could consider alternative options.

For example, there are certain government schemes designed to help you to take the first step onto the property ladder. Some examples include Help to Buy and Shared Ownership schemes.

Where can I go for mortgage advice if I am on benefits?

If you are claiming benefits and are looking for mortgage advice, then there are a few places that you can go.

You could speak to your local Citizens Advice Bureau or contact a specialist mortgage broker.

Should I talk to a mortgage broker?

A mortgage broker is not a lender but can be a useful option if you are struggling to get a mortgage.

This is because they will have access to a range of different lenders and may be able to find one willing to lend to you.

It is important to remember that you should always compare the fees of different mortgage brokers before you make a decision.

What do I need to do to apply for a mortgage on benefits?

If you are thinking of applying for a mortgage and you receive benefits, then there are a few things that you can do in order to make sure you meet the eligibility requirements and to give yourself the best chance of being accepted:

Check your credit score

Before applying for a mortgage, it is always a good idea to check your credit score. This is because lenders will use this as one of the main criteria when deciding whether or not to lend to you.

If you have bad credit history or a bad credit score, then your chances of being accepted for a mortgage are much lower.

If you have access to the internet, you can check your credit score for free with sites like Noddle and Clearscore.

Shop around for lenders

When you are on benefits, your options for mortgages are somewhat limited. However, it is still important to shop around and compare different lenders before applying.

The reason for this is that each lender has their own criteria for lending, and so some may be more willing to lend to you than others.

Speak to a specialist mortgage advisor

It is also worth speaking to an expert mortgage advisor who can help you to find the best deal for your circumstances.

Provide proof of income

When you are applying for a mortgage on benefits, you will need to provide proof of your income. This is so that the lender can assess whether or not you can afford the repayments on the loan.

Your options for proving your income will depend on the type of benefit that you are claiming.

For example, if you are claiming ESA, you will need to provide a copy of your latest benefit award letter.

If you are claiming JSA, then you will need to provide evidence of your earnings from employment.

You should also be prepared to provide proof of any additional income.

What are the alternatives to getting a mortgage?

If you have a low income and are unable to get a mortgage, then there are a few alternative options that you might want to consider, depending on your personal circumstances.

One option is to apply for a shared ownership scheme. This is where you part-buy and part-rent a property from a housing association.

Another option is to apply for a government Help to Buy scheme. This is where the government provides you with a loan to help you buy a property.

The final option is to rent, and this is often the most affordable option for people who are on benefits.

You can easily find advice about the alternative to applying for a mortgage online.

Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch. I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder. Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

Email – [email protected]

Frequently Asked Questions

Can I get a mortgage if I am employed and claiming benefits?