Wondering if you can get a mortgage if you’re on a low income or benefits?

Securing a mortgage under these circumstances is not impossible. With careful planning, research, and expert guidance, you can achieve your dream of homeownership.

Here are some strategies to help you get a mortgage on low income or benefits.

Understand Your Financial Situation If You’re On A Low Income Or Benefits

The first step in securing a mortgage is to have a clear understanding of your financial situation. This involves assessing your income, expenses, and savings. Lenders will scrutinise your financial health to determine your ability to repay the mortgage. Therefore, it’s crucial to have a detailed budget that shows your monthly income and outgoings. If you’re on benefits, ensure you have all relevant documentation that outlines the benefits you receive and their duration.

Improve Your Credit Score

Your credit score plays a significant role in the mortgage approval process. A higher credit score indicates to lenders that you are a reliable borrower. To improve your credit score, ensure you pay all your bills on time, reduce outstanding debts, and avoid applying for new credit in the months leading up to your mortgage application. You can check your credit report for free through various online services and rectify any errors that might be negatively impacting your score.

Save for a Larger Deposit

While it might be challenging, saving for a larger deposit can significantly improve your chances of getting a mortgage. A larger deposit reduces the loan-to-value (LTV) ratio, making you a less risky borrower in the eyes of lenders. Aim to save at least 10% of the property value, but the more you can save, the better. Consider setting up a dedicated savings account and automate regular deposits to build your savings over time.

Explore Government Schemes and Grants For Those On Low Income or Benefits

Several government schemes are designed to help low-income individuals and those on benefits get on the property ladder. For example, the Help to Buy scheme, Shared Ownership, and Right to Buy are programs that can make homeownership more accessible. Research these schemes to understand the eligibility criteria and benefits they offer. Additionally, some local authorities provide grants or low-interest loans to assist with home purchases.

Seek Specialist Lenders

Traditional banks might be hesitant to approve mortgages for low-income applicants, but specialist lenders exist who cater to this market. These lenders consider factors beyond just income, such as your overall financial situation and the stability of your benefits. Working with a mortgage broker who has experience with low-income clients, such as Your Mortgage Shop can help you find these lenders and secure the best possible deal.

Consider a Guarantor Mortgage

If you have a family member or close friend willing to act as a guarantor, you might be able to secure a mortgage more easily. A guarantor mortgage involves someone else – usually a relative – agreeing to cover the mortgage payments if you are unable to. This reduces the risk for the lender and increases your chances of approval. However, it’s important for both parties to fully understand the implications and responsibilities involved in a guarantor agreement.

Budget for Additional Costs

When planning your mortgage, remember to budget for additional costs such as stamp duty, legal fees, and moving expenses. These costs can add up quickly and impact your overall affordability. Having a clear plan for these expenses will prevent any financial surprises and ensure a smoother home-buying process.

Get Professional Advice

Finally, seeking advice from a financial advisor or mortgage broker can be invaluable. They can provide personalised guidance tailored to your financial situation and help you navigate the complexities of the mortgage market. They can also assist with paperwork, negotiations, and finding the best mortgage deals.

While getting a mortgage on low income or benefits presents unique challenges, it is achievable with the right strategies and support. By understanding your financial situation, improving your credit score, saving diligently, exploring government schemes, seeking specialist lenders, considering a guarantor, budgeting for additional costs, and getting professional advice, you can make your dream of homeownership a reality.

Share this story

More news

critical illness cover for mortgage

The Essential Guide to Understanding Benefits as Additional Income for Mortgage Applications

mortgage broker nottingham

How to Get a Mortgage on Low Income or Benefits

The Pros and Cons of an Interest Only Mortgage

3 Essential Insights First-Time Home Buyers Wish They Knew Sooner

At Your Mortgage Shop, we’ve put together  invaluable advice from seasoned first-time homebuyers to help you make informed decisions
when is the best time to get a mortgage

Green Mortgages: Financing Your Eco-Friendly Home Dreams

shine a light on an innovative financial solution that aligns with the values of sustainability and conservation: green mortgages
adverse credit mortgage advisors

How Debt Can Affect Your Mortgage Application: Insights from Your Mortgage Shop

This insight aims to demystify the process, shedding light on how debt can affect your mortgage application
first time buyer mortgage advisor

The Emotional Rollercoaster of Moving House: A Surprising Insight into the British Homeowner’s Journey

Moving house is often considered one of life’s most significant milestones, filled with both excitement and anxiety.
first time buyer mortgage advisor

Dealing with your mortgage during a separation

The Pros and Cons of an Interest Only Mortgage

The Pros and Cons of an Interest Only Mortgage

remortgaging broker

Here’s what you need to know about different types of mortgages

It can be overwhelming to navigate through the various types of mortgages and lenders. That’s where Your Mortgage Shop comes in
applying for a mortgage application process

5 Ways to Avoid Hold-ups When Applying for a Mortgage