Mortgages for Borrowers with a Disability
Looking to get a mortgage while claiming disability benefits? Read on to find out if this is possible.
Firstly, have you received benefits in the last 6 months?
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If you’re ill or disabled and claim disability benefits, you can still get approved for a mortgage. The process may be more drawn out and potentially more complicated, but it’s still entirely possible to secure financing for your home.
In this guide, we explain everything you need to know about getting a mortgage with a disability, including the type of benefits lenders will consider and how a broker can help you.
Read on for more information or jump to the section that’s relevant to you via the links below…
Can you get a mortgage if you’re claiming disability benefits?
Yes, if you claim disability benefits you can still be approved for a mortgage. But be prepared. The process is unlikely to be straightforward.
Anti-discrimination laws prevent lenders from turning you down on the basis you’re ill or disabled. Lenders are also not allowed to charge you more for a mortgage via a larger deposit, higher monthly repayments or a higher interest rate. They must treat you the same as any other applicant.
That means assessing you based on their standard criteria, which includes your financial situation.
If you rely fully on disability benefits for your income, you may struggle to get a mortgage as lenders will be concerned you won’t be able to afford your repayments if your benefits stop or interest rates rise. It’s not impossible to get approved, however. Some specialist lenders will still consider your application.
If your income comes only partially from your benefits, you should have less trouble getting approved, although your choice of lender may be a bit more limited as not all mortgage providers accept disability benefits as declarable income.
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Which disability benefits will mortgage lenders consider?
Most lenders consider Disability Living Allowance (DLA) or Personal Independence Payment (PIP) as acceptable sources of income for affordability purposes. This is because these are benefits awarded to people with a long-term physical or mental health condition or disability so recipients will likely receive them throughout their life.
(NB: PIP is gradually replacing DLA for people aged 16 and over.)
Lenders will also consider a range of other benefits including:
- Jobseekers Allowance
- Universal Credit
- Child Benefit
- Child Tax Credit
- Widow’s Pension
- Working Tax Credit
- Attendance Allowance
- Maternity Pay
- Pension Credits
- Carers Allowance
You can read more about declaring the above on a mortgage application in our guide to getting a mortgage on benefits.
If you have a short-term illness or disability that you’re expected to recover from and, therefore, are relying on short-term disability benefits for your income, you’ll find it trickier to get approved for a mortgage. This is because lenders can’t be assured how long this extra income will last and whether you’ll be able to afford your mortgage when the additional payments stop.
How to get a mortgage on disability benefits
Your first step should be to speak to a mortgage broker who specialises in helping borrowers on disability benefits. Make an enquiry with us and we will match you with an advisor who has these credentials for free.
Your handpicked mortgage broker will guide you through the following steps:
- Preparing all of your paperwork
- Downloading your credit reports and optimising them
- Finding the right lenders and securing the best rate for you
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Which lenders will let you declare this type of income?
A large number of mainstream and specialist lenders accept disability benefits as a declarable source of income.
These include big names such as Barclays, NatWest and Halifax, as well as specialist lenders such as Together, Foundation Home Loans and Pepper.
Some challenger banks will also let you declare disability benefits, including Tandem Bank and Virgin Money.
Are there any grants or schemes you could use?
If you’re struggling to afford a mortgage and you have a long-term disability, you could consider HOLD – Home ownership for people with a long-term disability.
This is a Shared Ownership scheme available in England. The way it works is you buy a share of a property, typically 25%, and then rent the remaining share from a council or housing association. If and when you can afford it, you can buy more shares in your home, which is known as staircasing. The more of the property you own, the less rent you pay.
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Get matched with a broker experienced in dealing with benefits income
Getting approved for a mortgage if you claim PIP or DLA can be tricky. However, you can boost your chances of getting approved and finding a competitive deal by speaking to an experienced broker.
Our broker matching service can connect you with an expert who specialises in helping borrowers on disability benefits buy a home.
Give us a call on 0808 189 2301 or make an enquiry and get matched with a broker for a free initial conversation.
Speak to an expert
Maximise your chance of approval with a dedicated specialist broker
If you are out of work or have reached State Pension Age, you may be able to claim Support for Mortgage Interest (SMI). This is a loan that will need to be repaid when you sell or transfer ownership of your home.
You can only use the loan to pay off the interest on your mortgage, not the capital borrowed and you must receive one of the following benefits to qualify: Income Support, Jobseeker’s Allowance, Employment and Support Allowance, Universal Credit or Pension Credit.
If you become disabled and will struggle to pay your mortgage, the first thing you should do is inform your lender. There are a number of options they may consider, depending on the circumstances.
For example, they may let you have a break from paying your mortgage, let you pay less for a certain period of time, let you repay your mortgage over a longer period or let you switch to a cheaper mortgage.
You should also find out what benefits you’re entitled to.
Yes, you can still get a mortgage if you’re claiming disability benefits and have bad credit. It may, however, impact the range of deals available to you.
It may be worth seeking advice from a broker who specialises in securing loans for people with adverse credit. There are advisors in our network with experience in people with complex income and bad credit, so we can help you find a broker who’s the perfect fit for a case like this.
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