Mortgage on Benefits: What are our chances?

JReacher1

As you’re mortgage free it seems like once you’ve sold your house you only need a mortgage of about £50/60k to buy a house for £210k. That’s quite a low mortgage so if your OH gets a job in the new year would expect after six months you may be able to get a mortgage for that amount. 

Unfortunately at the moment with you both being in benefits think you’ll struggle. 

MFWannabe

I would shelve the idea until at least one of you are working.
is there a desperate need/requirement to move? 

AnnieB2018

How much are you saving each month? If you can show that you have been putting away £500-600 each month for a few years then that would look good to show that you can afford a small mortgage of £200-300 each month easily. It doesn’t matter much but would look better than just nothing…

ducksintown98

1616six said:

ducksintown98 said:

1616six said:

Without sounding nosey, when you say you’re both on benefits - is this your sole income or do you both work but also claim other benefits which amount to 11k each?

If your current status is both unemployed and presumably on UC, a combined income of £22k and no employment is I would confidently say going to make it extremely difficult to get any kind of lender on side with.

When you mention your current house - are you mortgage free at the moment? 

Hiya.  Thanks for delivering the bad news.  We're both unemployed but the other half is looking for work and to stop claiming benefits.  This will most likely happen in the new year.

We're mortgage free at the moment, yes.

I think it’s one of those where you have to look at it from the lenders point of view too. You may see yourself as a low risk but the lender won’t. 

There are stories daily of people in long term employment who save for years and still get declined, being completely open with you I just can’t see a lender looking at this case and seeing two individuals on 11k each per year with no other income, no current mortgage to evidence clear payments, no guaranteed income at all either. As I’m sure you know, benefits can be sanctioned at the drop of at hat.

If you’re currently mortgage free then I’d personally just shelve the idea until you’re in a better position - when you mention you are both unemployed, is it just a temporary unfortunate situation that will soon change for you both? As mentioned above, if there’s more to it and you’re medically not working and receive PIP, it can be a different story. 

Hiya.  I'm in College at the moment, and not looking for any form of part-time work. I claim UC and PIP, which comes out at around £850 a mo.

My other half claims UC, PIP, Tax Credits, and quite a few other things so I'd have to check.  Due to unforeseen circumstances, she had to stop working, but she's hoping to get back into the world of work soon.

ducksintown98

AnnieB2018 said:

How much are you saving each month? If you can show that you have been putting away £500-600 each month for a few years then that would look good to show that you can afford a small mortgage of £200-300 each month easily. It doesn’t matter much but would look better than just nothing…

Hiya.  We both have around £10,000 in savings each.  A lot of my money per mo goes into savings, same with the other half.
We could probably get my other half working again, but would we have to wait a certain amount of months since finding work until she would be considered mortgage-worthy?  I know the market has tightened quite significantly, so worth asking.

housebuyer143

ducksintown98 said:

AnnieB2018 said:

How much are you saving each month? If you can show that you have been putting away £500-600 each month for a few years then that would look good to show that you can afford a small mortgage of £200-300 each month easily. It doesn’t matter much but would look better than just nothing…

Hiya.  We both have around £10,000 in savings each.  A lot of my money per mo goes into savings, same with the other half.
We could probably get my other half working again, but would we have to wait a certain amount of months since finding work until she would be considered mortgage-worthy?  I know the market has tightened quite significantly, so worth asking.

Doesn't 16k of savings make you ineligible for UC? 

powerspowers

Are you currently living together? You mention benefits separately but if you were to move in together the UC would be a joint claim so your joint income would decrease. 

I think you’d need to speak to a specialist mortgage broker. 

OhWow

ducksintown98 said:

1616six said:

ducksintown98 said:

1616six said:

Without sounding nosey, when you say you’re both on benefits - is this your sole income or do you both work but also claim other benefits which amount to 11k each?

If your current status is both unemployed and presumably on UC, a combined income of £22k and no employment is I would confidently say going to make it extremely difficult to get any kind of lender on side with.

When you mention your current house - are you mortgage free at the moment? 

Hiya.  Thanks for delivering the bad news.  We're both unemployed but the other half is looking for work and to stop claiming benefits.  This will most likely happen in the new year.

We're mortgage free at the moment, yes.

I think it’s one of those where you have to look at it from the lenders point of view too. You may see yourself as a low risk but the lender won’t. 

There are stories daily of people in long term employment who save for years and still get declined, being completely open with you I just can’t see a lender looking at this case and seeing two individuals on 11k each per year with no other income, no current mortgage to evidence clear payments, no guaranteed income at all either. As I’m sure you know, benefits can be sanctioned at the drop of at hat.

If you’re currently mortgage free then I’d personally just shelve the idea until you’re in a better position - when you mention you are both unemployed, is it just a temporary unfortunate situation that will soon change for you both? As mentioned above, if there’s more to it and you’re medically not working and receive PIP, it can be a different story. 

Hiya.  I'm in College at the moment, and not looking for any form of part-time work. I claim UC and PIP, which comes out at around £850 a mo.

My other half claims UC, PIP, Tax Credits, and quite a few other things so I'd have to check.  Due to unforeseen circumstances, she had to stop working, but she's hoping to get back into the world of work soon.

Tax Credit was replaced by Universal Credit, so your OH can't be claiming both.

https://www.gov.uk/universal-credit

As said, when you move in together, you will be partners and  will need to make a joint claim for Universal Credit, but you have too much savings to be able to have Universal Credit. To be able to have UC, you must "have less than £16,000 or less in money, savings and investments". https://www.gov.uk/universal-credit/eligibility

You can use a benefit calculator to see how much your benefits will reduce when you live together. https://benefits-calculator.turn2us.org.uk/

While you are still single, your UC payments reduce each month when you reach £6,000.00.

"Any capital/ savings you have under £6,000 is ignored.

Any capital/ savings you have between £6,000 and £16,000 is treated as if it gives you a monthly income of £4.35 for each £250, or part of £250, regardless of whether it does or not. So if you have £6,300 in a savings account, £6,000 of it will be ignored and the other £300 will be treated as giving you a monthly income of £8.70.

If you have capital/ savings over £16,000 as a single claimant or as a couple you will not be entitled to Universal Credit."

https://www.turn2us.org.uk/Benefit-guides/Universal-Credit-income-and-capital/Capital-Savings

Are you reporting the change in your savings/circumstances to UC, as you are required to do to avoid an overpayment? https://www.gov.uk/universal-credit/changes-of-circumstances

ManekiNeko

Hey,

Others have covered a few points I was going to ask about, so I'll stick to sharing my personal experiences with this topic.

I'm on disability-related benefits - UC with LCWRA element, as well as PIP. I've been off sick for a couple of years now.

My income is roughly 16k a year (the benefits cap doesn't apply because of my disabilities, I believe - something like that anyway).

I got a DIP last January, a mortgage offer last February, and completed last June on my apartment. I used a broker who said there were a couple of lenders who would consider 100 per cent of benefits as income (not all do). I got my mortgage from a high street lender. If relevant, I have an excellent credit history.

I borrowed between 4 and 4.5 times my income - one lender said they'd do 4.5, the other said they'd offer me a bit less. I borrowed £67,500 in the end, actually with the lender who'd lend me less, as I felt safer with their terms which allow me to take a lodger if I need to.

I read an article from Online Mortgage Advisor before I started the process - I think it might have been this one:

https://www.onlinemortgageadvisor.co.uk/income-types/mortgage-on-benefits/

I used a broker who was comfortable dealing with benefits applications. I talked with a couple of different ones, which I found largely through the site above, before going ahead with the one I felt most comfortable with.

So, my advice in a nutshell is to get a broker - it will massively raise your chances of acceptance. In theory, you could borrow up to 4 or 4.5 times the £22k, although beware because if you move in together, you'll both get less, and lenders may take this expected drop in income into account.

As a side note, if you're getting UC and PIP, maybe look into whether LCWRA element of UC would apply to you. Could help to up your income.

1616six

One part that I note is you state you already live together, so surely you either don’t have as much in the way of savings as you state, or they’re not declared? 

As others have said, combined you’re over the threshold for UC if you have that much in savings?