Can PIP be used in a joint mortgage?

Lexale

Hi There,

I was just wondering how income is considered when applying for a joint mortgage. I’m currently receiving PIP (Personal Independence Payment) due to a severe foot injury that occurred a few years ago which due to my mobility issues has led to me developing agoraphobia. I get about £5,900 a year from that. As far as I understand, PIP can be used towards a mortgage in most circumstances but often as a single applicant, not as a sole income source (even if you were only borrowing £25k, falling under the 4.5x limit).

My partner on the other hand is in good health and is able to work full-time. We’re both at uni at the moment (me doing mine remotely due to issues aforementioned) and when she’s finished, she wants to work full-time minimum wage so we can get a joint mortgage. Crux of my question is basically whether I would be able to get on a joint mortgage with her given my only income in the worst-case (if my foot never recovers) would be PIP. We both have Lifetime ISA’s so need a mortgage to buy somewhere and use the money saved in them.

Just to check, £25k is the minimum for a joint mortgage isn’t it (and to fulfill the requirement of the LISA)? We’d be borrowing it over 35-40 years. I saved a decent amount while I was working prior to my injury so a larger mortgage would be great but not necessarily needed if buying a 1 bed flat or something. Theoretically we could borrow up to £110k (£18.5k for her + £5.9k for me) x 4.5, but I’m not sure we’d pass an affordability assessment on that, even if it falls inside the 4.5x income limit due to energy prices & interest rates.

I'd like to add; my proportion of the deposit would be much larger than my partners (around 3x larger) but obviously she would have an income of roughly 3x more than me. Unsure if this would affect things? Given we're both legally liable to repay the mortgage if the other person can't, would this act as a reason for a lender to not lend given my situation? This would be in spite of our LTV being around 30-40%, as we'd have around 60-70% deposit on a small flat. The property value would have to fall a tonne (well over half) for the lender to have any risk of losing money if they repo'd the property in the event of default. 

I’m aware this may be lender specific but I was just wondering all this as a general guideline to see if I’m being stupid or not. 

Thanks in advance for the advice! 

K_S

@lexale The policy towards DLA/PIP (and other benefits) and what % will be considered for affordability will vary across lenders and your specific circumstances. Based on the limited information in your post there should be options for a joint mortgage. Your deposit being most of it with partner's income being 3x yours will not make any material difference to your chances.  

You can google "<lender name> for intermediaries", and go through the published criteria for different lenders to see what they say about benefits income. It might not always be clear but you should at least be able to get a flavour of the different ways lenders look at it.

 Lexale said:

Hi There,

I was just wondering how income is considered when applying for a joint mortgage. I’m currently receiving PIP (Personal Independence Payment) due to a severe foot injury that occurred a few years ago which due to my mobility issues has led to me developing agoraphobia. I get about £5,900 a year from that. As far as I understand, PIP can be used towards a mortgage in most circumstances but often as a single applicant, not as a sole income source (even if you were only borrowing £25k, falling under the 4.5x limit).

My partner on the other hand is in good health and is able to work full-time. We’re both at uni at the moment (me doing mine remotely due to issues aforementioned) and when she’s finished, she wants to work full-time minimum wage so we can get a joint mortgage. Crux of my question is basically whether I would be able to get on a joint mortgage with her given my only income in the worst-case (if my foot never recovers) would be PIP. We both have Lifetime ISA’s so need a mortgage to buy somewhere and use the money saved in them.

Just to check, £25k is the minimum for a joint mortgage isn’t it (and to fulfill the requirement of the LISA)? We’d be borrowing it over 35-40 years. I saved a decent amount while I was working prior to my injury so a larger mortgage would be great but not necessarily needed if buying a 1 bed flat or something. Theoretically we could borrow up to £110k (£18.5k for her + £5.9k for me) x 4.5, but I’m not sure we’d pass an affordability assessment on that, even if it falls inside the 4.5x income limit due to energy prices & interest rates.

I'd like to add; my proportion of the deposit would be much larger than my partners (around 3x larger) but obviously she would have an income of roughly 3x more than me. Unsure if this would affect things? Given we're both legally liable to repay the mortgage if the other person can't, would this act as a reason for a lender to not lend given my situation? This would be in spite of our LTV being around 30-40%, as we'd have around 60-70% deposit on a small flat. The property value would have to fall a tonne (well over half) for the lender to have any risk of losing money if they repo'd the property in the event of default. 

I’m aware this may be lender specific but I was just wondering all this as a general guideline to see if I’m being stupid or not. 

Thanks in advance for the advice! 

in_my_bumble_opinion

Go to a broker.

Lexale

K_S said:

@lexale The policy towards DLA/PIP (and other benefits) and what % will be considered for affordability will vary across lenders and your specific circumstances. Based on the limited information in your post there should be options for a joint mortgage. Your deposit being most of it with partner's income being 3x yours will not make any material difference to your chances.  

You can google "<lender name> for intermediaries", and go through the published criteria for different lenders to see what they say about benefits income. It might not always be clear but you should at least be able to get a flavour of the different ways lenders look at it.

 Lexale said:

Hi There,

I was just wondering how income is considered when applying for a joint mortgage. I’m currently receiving PIP (Personal Independence Payment) due to a severe foot injury that occurred a few years ago which due to my mobility issues has led to me developing agoraphobia. I get about £5,900 a year from that. As far as I understand, PIP can be used towards a mortgage in most circumstances but often as a single applicant, not as a sole income source (even if you were only borrowing £25k, falling under the 4.5x limit).

My partner on the other hand is in good health and is able to work full-time. We’re both at uni at the moment (me doing mine remotely due to issues aforementioned) and when she’s finished, she wants to work full-time minimum wage so we can get a joint mortgage. Crux of my question is basically whether I would be able to get on a joint mortgage with her given my only income in the worst-case (if my foot never recovers) would be PIP. We both have Lifetime ISA’s so need a mortgage to buy somewhere and use the money saved in them.

Just to check, £25k is the minimum for a joint mortgage isn’t it (and to fulfill the requirement of the LISA)? We’d be borrowing it over 35-40 years. I saved a decent amount while I was working prior to my injury so a larger mortgage would be great but not necessarily needed if buying a 1 bed flat or something. Theoretically we could borrow up to £110k (£18.5k for her + £5.9k for me) x 4.5, but I’m not sure we’d pass an affordability assessment on that, even if it falls inside the 4.5x income limit due to energy prices & interest rates.

I'd like to add; my proportion of the deposit would be much larger than my partners (around 3x larger) but obviously she would have an income of roughly 3x more than me. Unsure if this would affect things? Given we're both legally liable to repay the mortgage if the other person can't, would this act as a reason for a lender to not lend given my situation? This would be in spite of our LTV being around 30-40%, as we'd have around 60-70% deposit on a small flat. The property value would have to fall a tonne (well over half) for the lender to have any risk of losing money if they repo'd the property in the event of default. 

I’m aware this may be lender specific but I was just wondering all this as a general guideline to see if I’m being stupid or not. 

Thanks in advance for the advice! 

Hi K_S,

Thank you very much for your advice, I'll take a look at what you suggested and try to sharpen my knowledge a little. I'm speaking to Barclays and a few other banks (I'm members of several) to get an idea of what their current policies are as well in the near future. Based on what you said I'm feeling reassured

Thank you  

Lexale

in_my_bumble_opinion said:

Go to a broker.

Hi there,

I will be when the time comes, just going to ring round a few banks to get an idea of their policies as it's free and I'm members of loads thanks to MSE bank switches, the house purchase is quite a while into the future yet! 

Thanks

Neilos9

banks policies change......
so wait till the future becomes closer....

housebuyer143

Lexale said:

in_my_bumble_opinion said:

Go to a broker.

Hi there,

I will be when the time comes, just going to ring round a few banks to get an idea of their policies as it's free and I'm members of loads thanks to MSE bank switches, the house purchase is quite a while into the future yet! 

Thanks

You are best to read their lending criteria online as detailed above. You will find it significantly quicker than calling them all..

BigBoss

housebuyer143 said:

Lexale said:

in_my_bumble_opinion said:

Go to a broker.

Hi there,

I will be when the time comes, just going to ring round a few banks to get an idea of their policies as it's free and I'm members of loads thanks to MSE bank switches, the house purchase is quite a while into the future yet! 

Thanks

You are best to read their lending criteria online as detailed above. You will find it significantly quicker than calling them all..

I can co-sign both the lending criteria and calling them and asking. Calling banks about mortgages seems to yield far better results than calling them about issues one's your credit card (for example).