Those on benefits may find it more difficult to get a loan, but there are still various options available if they are in need of funds.
Is It Possible To Get a Mortgage on Benefits?
If you are receiving benefits it is still possible to get a mortgage under the right circumstances. This will depend on many different factors including credit history and alternative sources of income.
You are more likely to have your mortgage application approved if you have a regular source of income or assets in addition to the money you are receiving through benefits.
The biggest concern for lenders is proving that a borrower is financially stable enough to meet the mortgage payments. For that reason, many lenders have no problem accepting benefits as a source of income as long as their monthly income is sufficient to meet payment obligations.
It should be noted that not all lenders will accept benefits so it is worth doing your homework before putting in a loan application. If the majority of your income is made up of benefits, it may be worth seeking a specialist mortgage lender.
Which Benefits Are Accepted by Mortgage Lenders?
Not all benefits will be accepted by lenders and eligibility may vary between lenders. Here are just some of the benefits that mortgage lenders tend to accept:
- Attendance Allowance benefit
- Carer’s Allowance benefit
- Child’s benefit
- Disability Living Allowance (DLA)
- Maternity Allowance benefit
- Pension Credit benefit
- Widow’s Pension benefit
- Working tax credit benefit
Within this, lenders may accept certain benefits but only as a proportion of income rather than as the full amount of proof of income. Certain lenders may have additional specific criteria that you will need to meet before they accept your benefit.
Can You Get a Mortgage When on Universal Credit?
You can often get assistance with mortgage payments if you are on Universal Credit but only if you have been claiming it for more than 39 weeks with no breaks and no evidence of earned income within that time.
You will not be eligible for help with mortgage payments on your home if you have received earned income at any point.
Can You Get a Mortgage if You Are Unemployed?
It is possible to apply for a mortgage without an income or a full-time job. However, this will limit the amount of mortgage lenders available to you. The majority of lenders usually ask for a minimum income per month.
That being said, some mortgage providers recognise benefits as a source of income. If that is the case, your lender may approve you for a mortgage while you are on benefits as long as your monthly income is sufficient.
More traditional lenders may only value full-time employment as a source of income and means of proving the affordability of the mortgage.
Which Mortgage Providers Accept Benefits?
Many mortgage providers across the country accept benefits as a valid source of income. However, the list is constantly changing and you should always check first. Working with a mortgage advisor can help find the best mortgage deal to suit your personal needs.
The following banks are among some of those offering mortgages to individuals on benefits:
The mortgage lenders that accept benefits include:
- Abbey
- BM solutions
- Co-operative Bank
- Darlington Building Soc.
- First Direct
- Halifax
- HSBC
- Leeds Building Soc.
- Manchester Building Soc.
- Mortgage Trust
- Nationwide Building Soc.
- Natwest
- Santander
- Scottish Widows Bank
- TBMC
- The Mortgage Works
- TSB
- Virgin Money
Is It More Difficult To Get a Mortgage on Benefits?
It is generally harder to get a mortgage if you are receiving benefits, especially if these benefits make up most of your income. This is because you will need to demonstrate to the lender that you are able to reliably meet payments.
However, if you have a good credit rating and can show that your monthly income is greater than your monthly outgoing payments, this will all support your case and show you to be a reliable borrower.
Claiming benefits will not affect your credit score so from that point of view it will not affect your mortgage application or applying for any future loans. Although, if you are claiming benefits, this is likely due to low income. So, for that reason, the mortgage becomes more difficult to get.
