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- Can You Get A Mortgage On Disability Benefits?
How to get a mortgage with an illness or disability
Having a long-term illness or disability shouldn’t prevent you from getting a mortgage, but it is more difficult to get a mortgage on benefits alone. Therefore, if your income is solely made up of health related benefits, it can be more difficult to find a willing lender. We’ll look at the legal protections covering a person with disabilities when making a mortgage application, the specialist schemes to help get you onto the property ladder, and how to find the right mortgage for your needs.
Will having a disability or illness affect your mortgage application?
Being accepted for a mortgage is predominantly based on affordability and credit score, so having a long-term illness or disability should have no impact on your application, unless it impacts your finances.
Under the Equality Act 2010, lenders must treat your application fairly, and cannot refuse you a mortgage due to any disability or long-term health issue that you may have. They are also not allowed to insist that you pay a larger deposit or higher interest rates than a non-disabled person would pay for the same mortgage.
Can you get a mortgage on benefits?
It's more difficult for anyone to get a mortgage on benefits, especially if they're exclusively reliant on that income type. If disability benefits are your sole source of income, it could certainly be harder, but of course many people on disability related benefits are also in permanent employment.
However, if your income is mostly or solely sourced through benefit it’s by no means impossible to get a mortgage deal. There are certainly mortgage lenders that accept benefits as countable income.
Does PIP count as income for a mortgage?
Usually, yes. Personal Independence Payments (PIP) are a non-means tested benefit, so are typically given whether or not a person is working or in receipt of other benefits. In fact, PIP could actually boost affordability alongside employed income.
Which disability benefits will mortgage lenders consider?
Not all lenders that accept benefits accept the same types, however, as disability benefits are usually longer term, they are among those accepted by most lenders. This is because the lenders’ main concern is your ability to keep up with mortgage repayments, so those benefits that are expected to last longest are likely to be most favoured.
Longevity of disability-related income can still be difficult to prove due to the frequent reassessment of benefit entitlement. However, those customers with evidence of previous long-term receipt of a benefit, or who have a a disability that's more easily recognised as permanent, will typically find it easier.
You'll almost always need to provide evidence of this benefit related income with an award letter(s) from the DWP (Department for Work and Pensions) or your equivalent government department.
Most lenders will consider the following disability-related benefits:
DLA (Disability Living Allowance)
PIP (Personal Independence Payments)
Adult disability benefit - in Scotland
Most mortgage lenders will only include the above benefits in affordability assessments if they're claimed directly by the main applicant(s). Disability benefits claimed for those who would be living at the property, but not on the deeds, such as children, won't usually be counted - but there are one or two exceptions, so it’s worth speaking to a mortgage broker for guidance.
There are also a whole host of non-disability-related benefits that lenders may consider in support of your application, although not usually as a sole source of income:
Jobseekers Allowance
Universal Credit
Working Tax Credit
Child Benefit
Child Tax Credit
Maternity Pay
Carers Allowance
Widow’s Pension
Attendance Allowance
Pension Credits
Those lenders that accept benefits may not necessarily take the full award into account - some only use 50%-75% and some as little as 30%.
Beverley Building Society and Suffolk Building Society both accept just 50% of Disability Living Allowance (DDA) - or its relevant equivalent. Nationwide, Halifax and NatWest, on the other hand all now consider 100%, whereas some lenders decide on a case by case basis.
Which schemes can help disabled people find a mortgage?
If securing a traditional mortgage proves too difficult, there are a couple of schemes available to help people with disabilities to get onto the property ladder.
A group of specialist lenders offering shared-ownership schemes specifically for people with disabilities in England and Wales. You need to be specifically moving to a new property that's better suited to your needs to qualify.
You'll also need to be in receipt of high or middle rate Disability Living Allowance (DLA) or the equivalent level for Personal Independence Payment (PIP) and one or more of ESA, Universal Credit or Pensions Credit.
Offer similar support in helping those with disabilities, as well as members of the armed forces to find a suitable home.
May be able to provide advice in this area for those in Northern Ireland, although sadly, there is currently no equivalent scheme to those in the rest of the UK mentioned above.
Hold shared ownership scheme is another option for people with long-term disabilities, it helps them access a shared ownership home to meet their needs. This scheme is only available in England and to be eligible you must:
Be unable to buy a home that meets your needs in another Shared Ownership scheme - for example, they don’t have ground floor access or the necessary adaptations
Be a first-time buyer or unable to buy a new home if you have owned one in the past
Have a maximum household income of £80,000 (£90,000 or less in London)
If you're unable to qualify for HOLD, it may still be possible to get financial help for the adaptations you need in your home through a Disabled Facilities Grant.
Mortgage advice for customers with an illness or disability
Using a mortgage broker will typically help people in any circumstances to secure the best mortgage deal available to them. If your disability or illness means that your main source of income is from benefit payments, however, it’s much more important to speak to someone with a broad knowledge of the mortgage market.
They can look at the criteria for all lenders and find those who will accept 100% of your benefit income towards your mortgage affordability calculation. They may also be able to suggest specific products or services that are more suited to your particular needs.
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Disabled People’s Organisation advice
Your local disabled people’s organisation (DPO) should also be able to offer you free, independent advice about finding a specialist mortgage lender who can help you. You can contact your local DPO below:
Scope - England
Citizens Advice Cymru or Disability Wales - Wales
Citizens Advice or Housing Options Scotland - Scotland
Disability Action - Northern Ireland
Having a disability or long-term illness won't directly impact your ability to get a mortgage unless the majority or all of your income is from benefits. An experienced broker can help you explore all of the options available to you, no matter your income type.”Kellie Steed, Mortgage Content Writer
Getting a mortgage when ill or disabled FAQ
Which mortgage lenders accept disabled applicants?
All lenders must accept disabled applicants, as to refuse a mortgage solely on the basis of a disability or long-term illness would be in breach of the Equalities Act.
If you’re looking for a lender to accept disabled applicants whose primary source of income is benefits there will be fewer available. However, there are both high street lenders and more specialist lenders that will consider applicants with an income purely made up of disability benefits.
It’s important to note that not all of these lenders will include 100% of your benefit entitlement in their mortgage calculations. Criteria change all the time, however, so it’s best to speak to a mortgage broker with knowledge of lenders across the market.
Who does disability legislation apply to?
The Equality Act could apply to you even if you don’t identify as disabled, as it protects anyone who has:
‘a physical or a mental condition that has a substantial and long-term impact on your ability to do normal day-to-day activities.’
This anti-discriminatory law could therefore protect you if you suffer from a long-term health condition that is not widely recognised as a disability, such as cancer or depression, or one that you don’t personally consider to be a disability.
Can I get a mortgage if my illness is not covered by the Equality Act?
If you have an illness that's not covered by anti-discriminatory laws, for example, a short-term disability or health issue that you’re expected to make a full recovery from, it can be more difficult to get a mortgage on benefits if they are your only source of income.
This is because it’s more difficult for a lender to assess when a short-term benefit may stop paying out, leaving you unable to continue with your mortgage repayments. In these circumstances you may be better off waiting until your health issues have resolved, especially if you expect to return to work and have a more stable income in the future.
A mortgage broker will be able to advise you of your best next steps if you find yourself in this situation.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
Uswitch makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.