Can you take out a mortgage if you are on benefits? This the question Darren Polson is tackling in his latest Ask the Expert column and his answer may well surprise you…
The Question
I am looking for a first-time mortgage to buy a house. I am only on benefits and would like to use this for to fund my mortgage repayments. How do you go about it?
Darren’s Answer
Securing a first-time buyer mortgage while relying solely on benefits can be challenging, but it is not impossible. Many lenders understand that benefit income is a legitimate source of revenue and are willing to consider it when assessing mortgage applications.
The key is to identify lenders who accept benefit income and understand how much of it they will consider.
Some lenders may take 100% of your benefit income into account, while others might only accept a portion. This varies widely, so it’s crucial to find a lender that aligns with your specific financial situation.
To start the process, consulting a mortgage broker is highly recommended. A broker has access to a broader range of mortgage products and can search the market for lenders that are more lenient with benefit income.
They can help you gather the necessary documentation and present your financial situation in the best possible light. This might include proof of consistent benefit payments, any additional income sources, and details about your financial commitments.
Additionally, you might want to explore government schemes designed to assist first-time buyers. These schemes often come with specific criteria and may offer more favourable terms for those on lower incomes, including those receiving benefits.
It’s important to approach this process with a clear understanding of your budget and the types of properties you can realistically afford. Ensuring that you have a solid financial plan in place, which includes managing any existing debts and maintaining a good credit score, will also enhance your chances of mortgage approval.
Budgeting accurately and knowing your limits can prevent overextending financially and help you choose a property that fits your means. Moreover, having a good credit score demonstrates to lenders that you are a responsible borrower, further boosting your application’s credibility.
In summary, while obtaining a first-time buyer mortgage on benefits can be complex, thorough preparation, professional advice, and leveraging available support schemes can significantly increase your chances of success.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
