Due to illness or disability, some people have little choice to but to rely on government benefits as a means of income, either in full or as a supplement to a salary. Unfortunately, this can, for many, make securing a mortgage more difficult. However, there may still a number of options available.
What are the challenges of securing a mortgage on benefits?
Being on benefits in and of itself needn’t be a barrier to getting a mortgage. However, as with any other mortgage application, the lender has a regulatory obligation to be sure you can afford the mortgage repayments. Many people on benefits have a limited income, and this in turn may affect your ability to get a mortgage and the amount you will be able to borrow. In some cases, this may also be exacerbated by past credit problems if you have previously fallen behind with payments on one or more of your credit commitments.
Advice on getting a mortgage on benefits
There are a number of ways you can seek advice on your options if you are ill or disabled and on benefits. These include:
Speaking to banks or building societies directly – Lenders have specialist mortgage advisors who can discuss your needs and options. However, it’s important to remember that bank and building society mortgage advisers aren’t independent – they can only advise you on that organisation’s own products.
Mortgage brokers – Mortgage brokers and independent financial advisers can talk to you about mortgage options from different lenders across the UK mortgage market, usually covering both big high-street lenders and smaller, more specialist lending companies. Mortgage brokers and financial advisers have an obligation to provide impartial advice on your mortgage options.
Impartial financial advice – Independent advisers from organisations such as the government’s Money Advice Service can also provide expert and informed advice about your options for home ownership.
Specialist advisors – If you are long-term ill or disabled, you can also seek independent advice from bodies such as the Disability Information and Advice Line (DIAL UK).
Getting approved for a mortgage on benefits
As with any other mortgage application, lenders will assess an application from a person on benefits rigorously to ensure you will be able to make the payments. They will also take account of your credit rating. There are a number of steps you can take to positively affect your credit rating and improve your chance of being approved for a mortgage. These include:
- Ensuring that you are registered on the electoral roll.
- Obtaining copies of your credit file and checking it for any mistakes.
- Checking your credit file for potentially false or fraudulent entries.
- Managing your existing credit commitments by paying all your bills on time.
- Managing down your existing debt.
- Checking your credit file for financial associations with other parties.
- Avoiding moving between properties too often.
- Seeking independent debt advice for more serious credit problems.
You can learn more on our dedicated page about how to improve your credit score.
Additional help for people on benefits
If you are claiming a government benefit, for example Income Support, Universal Credit or Employment and Support Allowance, then you might be able to claim help towards mortgage interest payments. Support for Mortgage Interest (SMI) covers only the interest charged on the mortgage, not the portion of your payments that goes towards repaying the mortgage. From April 2018, SMI changed from a benefit to a repayable loan.
How Just Mortgage Brokers can help
At Just Mortgage Brokers, we can provide impartial, expert advice on mortgage options, no matter your circumstances. Contact us today to discuss how we can help find the mortgage that’s right for you.