Can you get a mortgage on benefits?


If you receive benefits such as universal credit, disability allowance or child benefits, you may be wondering how that can affect your ability to be approved for a mortgage. 

The good news is that at Barlow Irvin, we’re here to help you find the best deals, no matter what your financial circumstances are.

Are benefits counted as income for a mortgage?

Yes, depending on the amount of benefits income you receive, your benefits can be used towards your income and affordability assessment in mortgage applications.

If you are unemployed and receiving benefits, being accepted for a mortgage may be difficult as many lenders aren’t willing to lend to unemployed applicants, even if your benefits allowance is enough for a mortgage.

However, there are specific lenders who will consider your application.

Do mortgage companies accept universal credit?

Yes, it is possible to get a mortgage with universal credit, but there are some factors that will influence a lender’s decision. 

These factors include:

  • Whether you have additional income or assets that support your application;
  • Your deposit amount (Deposits of 20% or more will help with your application);
  • Dependence on universal credit. Lenders may question your ability to repay the mortgage;
  • If you’re claiming any other benefits, this may help your application, but only with lenders that include income from benefits;
  • The type of mortgage you’re applying for – Mortgages like buy-to-let are easier as lenders don’t usually have a minimum income requirement.

What benefits can be used for a mortgage?

Mortgage on Universal Credit

If you’re claiming universal credit, it’s likely that you have a low income or are unemployed, which can make getting a mortgage difficult. However, it is still possible. 

To improve your chances of getting a mortgage, we suggest speaking to one of our mortgage advisors who will assess your current financial situation in greater detail. 

We can search for any potential lenders who are suitable for you, as you will likely be classed as a high risk applicant.

Mortgage on Jobseeker’s Allowance

There are lenders who will accept applicants receiving Jobseeker’s allowance. However, if you have been claiming a Jobseekers allowance for over a year, becoming accepted for a mortgage may become difficult as you can appear dependent on the income you receive from benefits. 

If you already have a mortgage, the Department of Work and Pensions can offer support for mortgage interest. 

Mortgage on Disability Benefits

There are mortgage providers who will supply mortgages for those on disabled benefits, but you can expect the mortgage lenders to be stringent with their affordability checks.

If you’re suffering from a long-term disability, many lenders will accept the benefit payments as long as you can prove they will continue for the foreseeable future. 

For example, Personal Independence Payments (PIP) are accepted as they provide extra living costs if you have a long-term physical or mental health condition or disability. 

It can be slightly more difficult to secure a mortgage if you’re suffering from short-term illnesses or disabilities as lenders have no guarantee of your long term disability benefits. 

Mortgage on Child Benefits

In some circumstances, mortgage providers will take child benefits into account when assessing your mortgage affordability. Not all mortgage lenders will do this though.

The money you receive from child benefits could be included in the decision to approve your application, but you will need to pass other criterias and have enough money to give the lender confidence that you can afford your monthly mortgage. 

Does child tax benefit count as income for a mortgage?

This depends – although there are mortgage providers who will consider including child tax credits when they assess your affordability for a mortgage, it very much depends on how old your children are and how many children you have. 

Some lenders only consider these benefits as a percentage of the whole income, rather than excluding the full amount of the benefit you receive.

How do benefits affect a mortgage application?

Having an income which is either partly or fully made up of benefits can make the application process slightly more difficult than normal. Some lenders are more likely than others to accept benefits as income when carrying out affordability checks. 

However, don’t let this deter you from applying for a mortgage, as there will be lenders who are willing to provide you with a mortgage offer.

Can I get a mortgage on benefits?

Yes, but the number of mortgages available will be reduced.

The application process won’t be as easy compared to those who are employed with benefits, but there is certainly an increased amount of mortgage lenders who are willing to consider applicants on benefits.

How much can I borrow for a mortgage on benefits?

The amount you can borrow depends on the lender you’ve applied with as each lender has their own affordability system. 

Other factors may affect the amount you’re able to borrow, such as poor credit scores and deposits you have. 

With that in mind, most lenders will offer a maximum amount which ranges between three to five times your annual income. 

It can be tricky as some lenders will only use a capped percentage of your benefit income, and other lenders simply do not include income from benefits at all.

FAQs about Mortgages on Benefits

Can I get a buy to let mortgage on benefits?

Yes, some buy-to-let lenders will base a mortgage application on a person’s ability to pay back, which is calculated by examining all sources of income, including benefits. 

Although, they do tend to have stricter affordability requirements.

In general, the more indefinitely sustainable your benefit income is, the higher chance you have of being approved. 

Can I get a mortgage while on benefits and with bad credit?

Yes, this is possible but it can be more difficult since there will be a smaller pool of approachable lenders. 

Mortgage lenders approach applicants with poor credit scores with caution, and throwing benefits into the equation can cause a barrier and the need for specialist help.

However, bad credit mortgage lenders can be flexible when it comes to customers in this situation.

About the author 

Gary Oxborough

Gary is the Founder and Director of Barlow Irvin Financial Services Ltd. He has been in the Finance industry for over 20 years and has specialised in Mortgages since 2003. As well as running the firm, he is still actively involved in advising clients.

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