Getting a Mortgage With Stipend Income

If you’re a PhD student, member of the clergy, charity worker, or part of another profession that receives a stipend rather than a salary, you may be wondering whether this income can be used to get a mortgage.

In this article, we’ll answer that question and explain some of the complexities of stipend mortgages that you’ll need to understand before you apply.

Can you get a mortgage based on stipend income?

Yes you can. It’s difficult, but not impossible. There are various factors that will affect your chances of success, including the type of stipend you receive.

Clergy stipend

Clergy members who receive a stipend are considered favourably compared to others as this is seen as a reliable, long-term income.

Your clergy housing allowance and mortgage interest rate deduction will also help with affordability and might increase the amount you can borrow.

PhD stipend

If you are looking to buy a house as a PhD student, lenders will usually want to see evidence that you will continue to receive your stipend for at least the next 12 months.

If you have a guaranteed offer of a full-time position at the end of your studies, your chances of success improve.

If you don’t have a guaranteed offer, lenders might consider typical earnings in your future profession as part of their affordability assessment.

So, your field of study could have an impact on the amount you can borrow.

Other stipends will be considered on a case-by-case basis.

Lenders who offer stipend mortgages

Many mainstream lenders, such as HSBC and Barclays, will not consider stipends as an income type on your mortgage application.

At the time of writing, there are around 20 lenders in the UK who potentially will.

Four of these lenders have a maximum loan amount of four times your income.

Seven will lend at an income multiple of up to 4.5, and two at 4.75. Eight will potentially lend you five times your income or higher, including Halifax and NatWest.

However, you should be aware that some of these lenders will only consider stipend income in certain circumstances.

For example:

• Halifax will only accept stipends as an income type for the clergy, not for other professions
• Beverley Building Society will only accept stipends as a second income
• West Brom and Darlington will consider stipend income if you can supply evidence that it will lead to an enhanced income in the future (e.g. a high-paying profession)

So, there is some skill and patience involved in finding a lender who will lend in your circumstances and who will provide the loan amount you need.

That’s why it’s better to work with a broker, who can handle all of that for you.

How a broker can help

Since stipend mortgages are rare and complex, it is difficult to find the right one without expert help.

You should ideally find a broker who has specific experience in this field and can offer advice, support, and information that’s relevant to you.

There are also some lenders, in addition to those mentioned above, who do not accept stipend income within their policy, but may consider it by exception.

For example, they may consider stipends provided by a prospective employer who is willing to confirm in writing their intention to employ you in the future.

As a direct applicant, it would be impossible to know about all the possible rules and loopholes of every lender.

But the specialist brokers we work with can give you valuable insight that could make the difference between a successful or failed application.

If you get in touch we can arrange for an advisor to contact you directly.

Eligibility requirements

Most lenders who accept stipends as income do so at the discretion of the underwriter.

This means that someone will personally review your case and consider its individual merits. So, it will help if your application is strong in other areas.

The eligibility requirements for a stipend mortgage can differ slightly from the usual criteria.

Deposit

While it can be possible to get a stipend mortgage with a small deposit, a larger deposit will improve your chances of success.

Some lenders will not consider stipends income on applications for mortgages with a loan-to-value (LTV) of more than 80%, meaning your deposit needs to be 20%. An even larger deposit would be considered more favourably.

Income

Several of the available lenders require a minimum income of £13,000, £15,000, or £18,000.

There are others with no minimum income requirement, but you should be aware that if your income is below one of these figures, it will limit your options.

You may wish to speak to a specialist in low-income mortgages.

Credit history

If you have defaults, arrears, or county court judgements (CCJs) on your credit report, it will further limit your choice of lenders.

Some lenders will still consider your application, but it would be wise to apply through a specialist in bad credit mortgages.

Age

Most lenders who offer stipend mortgages have a minimum age of 18, though a handful have a minimum age of 21.

The maximum age limit at the time of application varies between 70 and 84 years. There are five lenders with no maximum age limit.

Speak to a broker experienced with dealing with stipend income

Not all brokers have the experience necessary to help you apply for a mortgage based on stipend income.

But if you work with one who has succeeded in finding mortgages for PhD students, clergy members, or other stipend workers in the past, you’ll know you’re in safe hands.

We offer a broker-matching service to help with situations just like this.

Once you tell us a few details about your circumstances, we’ll find your perfect match from one of the many brokers we work with, based on their relevant experience.

Then, we’ll connect you for a free, no-obligation chat.

To get started today, simply call 0808 189 0463 or contact us online.