Mortgages

Mortgages for disabled people

If your income consists solely of benefits, it will be difficult to secure a mortgage. You must pass strict Mortgage Affordability Tests when you apply. Your lender will also assess how vulnerable you are to income shocks such as a rise in interest rates.

Loan for Mortgage Interest rates of interest are based on gilt rates. You have to repay the loan, when you are able to return to work or when you sell the property. If there's no equity left in the property when it's sold and all other charges are repaid, the debt will be written off.

Home Ownership for People with Long-term Disabilities (HOLD)

HOLD is not a separate product but is a route into shared ownership. It’s available in England only. You can only apply for the HOLD scheme if other shared ownership schemes do not suit your needs. You can apply for affordable home ownership through your local Help to Buy agent (LHBA). You must meet the agency’s general eligibility criteria.

  • You will need to be a first-time buyer (or be defined as being in housing need)
  • Your household income is £80,000 a year or less outside of London or £90,000 a year or less in London.

There are only a few lenders offering mortgages for this scheme. My Safe Home has a specialist shared ownership product but it has complex eligibility criteria. It’s not suitable for disabled people in employment. There are charges involved with this product that add to the costs.

Mortgages things to consider

Choosing a mortgage

A lot depends on how much you want to borrow and how long you want to borrow for. You must pass strict Mortgage Affordability Tests when you apply and in the future. Various stress tests apply to see how vulnerable you would be to income shocks or a rise in interest rates.

The best way to find out if there is suitable mortgage product for you is to talk to a mortgage broker. The broker will search the market for you to find a product which is suitable for your circumstances. You can find local independent financial advice from Unbiased or from Your Money Advisor.

Check your credit report before applying for mortgages. Make sure there are no issues with your credit file. It was also give you an idea of your credit score. There are some organisations offering free credit reports.

Usually the higher the lending risk, the more expensive the mortgage. The interest rate could be higher and the arrangement fees could also be higher too. You should always get independent financial advice before taking on a mortgage.

Income from children's benefits

Lenders will generally not consider any income from benefits you receive as a carer for children. This can also include Child Tax Credits and Working Tax Credit.

Council right to buy

The lender will still assess affordability. It’s unlikely that even borrowing less would mean that you could access a mortgage if your income is solely made up of benefits.

Affordability

The chances of getting a mortgage when your income consists solely of benefits are very low. If you have a partner who is working, or you are also working, lenders will consider your benefits as part of the household income. The change from Disability Living Allowance (DLA) to Personal Independence Payment (PIP) could trigger a stress point in your ability to sustain your mortgage. Lenders will consider Employment Support Allowance (ESA) awards (ideally Support Group with an award of at least 3 years). This varies from lender to lender.

Extra costs of home buying

You’ll need to factor in a deposit too and then all the extra costs, such as legal fees, stamp duty and insurances. Life insurance can be a problem and it’s essential when taking on a mortgage. You may have difficulties finding affordable cover when you have pre-existing conditions. You may need to contact several insurers to find a suitable product. The British Insurance Broker’s Association (BIBA) has a database you can search for local brokers.

Remember, as a homeowner you will be responsible for the maintenance and repairs to your home. These costs can be considerable so plan for unexpected costs, such as your boiler breaking down or the roof leaking.

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