Housing Benefit and Mortgage Application

PhillipHenry

Is it true that some providers will not grant a mortgage if you have received Housing Benefit?

I ask as my daughter has a mortgage in principle from preferred mortgages and has also recently applied for Housing benefit. So if she gets the benefit while they are checking the application will the application be declined?

Can anyone help please?
I can't think why Housing Benefit should exclude anyone from a mortgage?

Thanks for any help...Henry

Madjock

The lender would be concerned that she cannot afford to pay the mortgage if she is receiving housing benefit. If she can prove that she is currently paying her rent without recourse to benefit then that should be ok, but I would wait for a mortgage advisor to pop along to this thread too.

PhillipHenry

Thanks Madjock, are there any mortgage advisors who can advise me please??

Henry

JoeK_3

I would have thought that the mortgage application would be under written based on the income submitted on the application form.

If the income is sufficient for the lender, they will proceed without the knowledge of any benefits applied for.

JoeK

nik_k

Why even bother declaring that she's applying for HB?

MortgageMamma

why is she applying for a mortgage whilst she's applying for housing benefits? surely if she cannot afford to live unsupported now she will struggle with the mortgage. does she have a partner that she does not currently live with who will be party to the mortgage or something?

PhillipHenry

thanks for the responses.

My daughter is living with a partner and young baby. Her partner is the wage earner, she is currently unemployed. They are managing to pay £500 a month rent and are looking at a mortgage that will be £360 a month, so I have no doubt that they will afford the mortgage.
It does look like a bit of trap if they apply and receive housing benefit that the chances of a mortgage affected.

The major lenders are not interested as her partner only earns approx £16k plus O/T and has two dependants, Preferred Mortgages seem to work on outgoings as a percentage of gross pay, problem with Preferred is a set up fee of £1500.

In the guide on Prefered's website they make a point that any Housing Benefit payment will result in an application being rejected.
I think it best if my daughters partner checks this with the broker.

I just wondered if anyone had come across applications being rejected in the basis of previously received Housing Benefit??

Thanks again...Henry

Madjock

If they are paying rent to a private landlord then they may be able to get away with it. Sometimes lenders will accept bank statements showing rent payments, and sometimes if it is a private landlord then they will waive any need for proof of rent payments.

It would really depend on the lender's disposition and whether your daughter pays her rent by DD or SO so she can prove full payment without any housing benefit showing.

Some lenders will say if you can pay a month, or sometimes 2 or 3 months rent without the support of housing benefit then they will accept the application.

yes i have seen applications rejected where applicants receive housing benefit currently.