House price growth may be slowing, but owning a home is still a daunting task in the UK. If you have a low income or earn benefits, the prospect may seem even more intimidating. However, it is possible to negotiate the process while using benefits.

Can you get a mortgage while on benefits in the UK?

Taking out a mortgage while on benefits is possible, but it can be more difficult. This is because mortgage providers assess your income when judging whether you can afford to take out a home loan, and if your income is low, this may make it more difficult to meet their criteria. Or if your benefits are not guaranteed for a long time, this can hamper the lender’s ability to predict how much income you’ll have in the future.

But it is important to note that lenders are not allowed to discriminate against people who are claiming benefits. The decision must be based on an overall picture of your income and expenses.

Lenders will generally consider benefits such as disability living allowance (DLA), personal independence payment (PIP) to be part of your income. In some cases these could even help your application, since they might be topping up your existing earnings.

But there is a catch. Many lenders will only consider these benefits as part of the household’s income if they are received by the main applicant, so if the person in receipt of the funds is not going to have their name on the mortgage – perhaps a child or an elderly relative – their benefits might not be taken into account.

More on Home Ownership

Other types of benefits, from universal credit and child benefit to carers allowance and pension credits, might be considered as part of a mortgage application. But each lender will have their own rules.

Seeking advice from a qualified mortgage adviser can be helpful if you are trying to find the right mortgage for your situation. They can explain the options available to you, give an overview of the market, and guide you through the process.

How to apply for a mortgage while on benefits

The process for applying for a mortgage is much the same whether you have benefits or not, with the key being to provide a lender with as much information as possible. Gather together evidence of your income, such as payslips and proof of benefit letters, as well as ID.

You should also work out how much you can afford to repay each month, and look for a lender that fulfils the criteria. Make sure to get everything together as early as you can, as you may have to wait several weeks for a decision, and don’t want to miss out on a dream property.

Another important step to take before applying is to check your credit score.

How do credit scores impact mortgage borrowing?

A credit score is a measure of your financial history, including your borrowing and repayment behaviour. Your credit score is used by lenders to assess the risk of lending to you.

If you have struggled in the past to meet the deadlines for repayments on a mortgage, credit card bills, or other loans, this might negatively affect your credit score.

You can check what your score looks like using a credit reference agency such as Experian or Equifax. If you find any errors on your credit report, you can contact the credit reference agency to get them corrected.

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