Getting a Mortgage if you are Disabled

When you’re trying to get a mortgage and you claim disability benefits, the process can be daunting. You may find it difficult to access lenders who are willing to approve you or the deals available might have higher interest rates that make it unaffordable.

In this guide, you can get all the information you need to help you understand what’s possible and gain access to mortgage lenders who accept disability benefits as declarable income.

Read on to learn more about:

Can you get a mortgage if you’re claiming disability benefits?

Yes. It’s possible to get a mortgage on disability benefits but your chances of approval will likely hinge on whether you have other sources of income as well. Some lenders will let you declare your benefits, but only as supplemental income, combined with other capital.

You might find that the pool of lenders you can choose from is smaller. Some treat benefits as declarable income and not others, and certain lenders will cap the percentage of your benefits that can be used in the affordability check, hence why other income sources could also be required.

There are exceptional circumstances where getting a mortgage on income made up entirely on benefits, such as if the borrowing only needs a small mortgage or they have wealth tied up in assets.

What types of benefits can be declared

There are different types of disability benefits and not all mortgage lenders accept every type. A broker who specialises in helping customers get a mortgage on benefits will be able to advise you about which lenders are likely to be able to help you in your specific situation.

Long term

Long term benefits that can sometimes be declared on a mortgage application include Personal Independence Payments (PIP), Disability Living Allowance (DLA, being replaced by PIP) and Employment and Support Allowance (ESA). If you are eligible for long term benefits, you should be able to get a mortgage with some lenders who offer loans to those on benefits.

When you apply for a mortgage on disability benefits, lenders will ask for paperwork relating to your disability payments to ensure that you will be able to afford the repayments long term.

In addition, you can apply for the Help To Buy scheme and there is a specific scheme called HOLD (home ownership for people with long-term disabilities) which can assist you to buy a property under a Shared Ownership model. However, there are only a few lenders who will offer a mortgage under the HOLD scheme so this may not be accessible to you.

A further scheme for people who are disabled and on benefits is the My Safe Home scheme which is aimed at people with complex and profound disabilities.

A specialist mortgage broker will be able to advise you on which lenders to approach.

Short term

It can be more difficult to get a mortgage if you’re only receiving disability-related benefits for the short term (I.e. you expect to be able to return to work at some point in the future), but are relying on the extra income they’re bringing in to qualify for a mortgage.

Lenders are unlikely to approve a mortgage application based on short-term benefits because of the uncertainty over your income in the longer term. Their decision to lend will be based on how likely you are to be able to afford the mortgage in the long term once the short term benefits are no longer being paid. Again, your mortgage broker will be able to search the market and find out if there’s a lender willing to help you in these circumstances.

Irrespective of whether you receive short or long-term benefits, you can increase your chances of getting a mortgage if you have other sources of income that can be taken into account during the affordability check.

Other benefits that can be considered

If you receive other benefits, some mortgage providers might allow you to declare them alongside your disability allowance for the affordability check.

Benefits that mortgage lenders typically accept include:

• Attendance Allowance
• Carer’s Allowance
• Child Benefit
• Incapacity Benefit
• Industrial Injuries Benefit
• Maternity Allowance
• Pension Credit
• Universal Credit
• Widow’s Pension
• Working tax credit

However, not all lenders will accept all types of benefits and it can be time-consuming to search the market yourself.

Which mortgage lenders accept disability benefits?

There are several high street banks and building societies that accept applications where the primary source of income is benefits. These include…

• Barclays
• Nationwide
• HSBC
• NatWest
• Santander

In addition to these high street lenders, there are many other smaller, less well-known lenders who will lend to people on disability benefits.

It’s vital to shop around as there are some lenders that will accept 100% of your disability benefits such as NatWest and others such as Santander who will accept only 65% and Teachers Building Society that accept only 60%. Lenders can vary their criteria at any time, so this could change in the future.

Approaching a lender direct can be time-consuming and it may be hard to locate the right lender to suit your needs. Moreover, approaching the wrong lender could mean ending up with unfavourable rates, or in a worst case scenario, being rejected and ending up with marks on your credit report.

Using the services of a mortgage broker who specialises in getting a mortgage on disability benefits will ensure that you get access to the entire market and find the best deal possible.

Applying for a mortgage

Applying for your mortgage on disability benefits is really no different than applying if you have another income source. There are three main actions you need to take to get ready to apply:

1. Documentation

You’ll need proof of address, proof of income (including all of the paperwork relating to your disability benefits) and three months’ bank statements showing your income and outgoings. A full list of the paperwork you need to submit can be found in our complete guide to mortgage applications.

2. Credit checks

Getting your credit history in order before you apply for a mortgage can take some time, so be prepared to start this process at least six months before you make your first mortgage application. Check for any outdated information or errors and ask for them to be removed. You can access your credit report via our dedicated credit reports hub.

3. Get specialist help from a broker

The advantages you gain from using a broker who specialises in arranging mortgages for people on disability benefits include…

• Help understanding your options for getting a mortgage on disability benefits,
• Help completing the application forms
• Increased chance of a successful application first time,
• Access to better rates and deals not available to the public
• Help dealing with any queries that your lender may have, saving you time and frustration with the process.

Get matched with a broker who specialises in mortgages for the disabled

It can be more difficult to get a mortgage if you are on disability benefits and need to declare them for affordability purposes, but you can get help to make it a reality.

To maximise your chances of being accepted for a mortgage, it’s essential that you talk to a mortgage broker who is an expert in mortgages for people on disability benefits. They will provide the right advice and find you a mortgage deal that suits your own individual financial circumstances.

We offer a free broker-matching service that will take your needs and financial situation into account to pair you with the specialist mortgage broker who’s best placed to help you. Call 0808 189 0463 or make an enquiry and we’ll arrange a free, no-obligation chat between you and them today.