When applying for a mortgage, understanding what constitutes additional income can be crucial in determining your eligibility and the amount you can borrow.

Many people are unaware that certain government benefits can be considered as additional income. This guide will break down the various benefits that can be included and how they impact your mortgage application.

Benefits That Count as Additional Income

Several benefits can be considered as additional income when applying for a mortgage. These include:

These benefits can significantly bolster your income, making it easier to qualify for a mortgage and potentially increasing the amount you can borrow.

Universal Credit and Its Impact on Mortgage Applications

For most people, the following benefits are now provided as part of your Universal Credit payments and also count as additional income:

  • Income-based Job Seeker’s Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Working Tax Credit
  • Child Tax Credit
  • Housing Benefit

If you are eligible and receive any of the above, they will now be provided as one lump-sum payment through Universal Credit instead of separate payments. This can simplify your finances and assist in demonstrating a stable income stream to lenders.

Long-term vs. Short-term Benefits

It’s worth considering that lenders will likely favour long-term government payments over short-term ones that could end at any time. Long-term benefits provide a more reliable source of income, which is more appealing to lenders. This stability can improve your chances of being approved for a mortgage and might even lead to more favourable terms.

Government benefits can play a significant role in your mortgage application by serving as additional income. Understanding which benefits are considered and how they are evaluated can help you present a stronger case to lenders.

Always ensure to provide accurate and comprehensive information about your benefits when applying for a mortgage to maximise your chances of approval. If you are receiving Universal Credit, the consolidation of various benefits into one payment can simplify the process and provide a clear picture of your financial situation to potential lenders.

By being informed and proactive about how your benefits can impact your mortgage application, you can take steps to improve your financial standing and secure the home loan you need. Always consult with a mortgage advisor to understand how your specific benefits and financial situation will be assessed.

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