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Can You Get a Mortgage On Benefits?

Looking for Mortgage on Benefits? Our mortgage advisors are here to help you secure the right product for your needs, whatever your circumstances.

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Why Get a Mortgage on Benefits?

With all the issues, why would people look to get mortgages if they’re on benefits? Homeownership helps you build your equity, and if you get the right deals, the monthly cost may be cheaper than renting.

Of course, you have to do the maths before you decide to secure a debt against your home. A mistake could increase the total amount you have to pay. It might even lead to repossession. 

This is when a mortgage advisor or broker becomes invaluable. With the proper guidance from When the Bank Says No, you’ll be able to save money and be in the best situation to afford to meet your mortgage repayments.

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Advantages of Benefits on Mortgages

Here’s why getting a mortgage may still be a good idea if you’re on benefits:

  • Benefits add to your primary source of income and boost your borrowing power. 
  • Benefit income is usable in mortgage affordability assessments.
  • You can lessen financial stress as benefits help increase affordability.
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Are you looking to buy a house, but you’re on benefits? There’s no need to be ashamed! 

With up to 52% of households in the UK receiving some form of state support in 2021 (source: Statista), it’s no surprise that many people apply for mortgages even if they’re receiving assistance from the government. It can be a tricky situation, but it’s still possible to secure a mortgage when you are on benefits. 

With our help and experience, you’ll be able to find a mortgage lender willing to lend to you so you can secure your dream home.

The Issue With a Low-Income Mortgage Application

It can be difficult to get a mortgage on a low income. Lenders examine your income, total budget and expenditure, and the size of the mortgage before they’ll grant you a loan. 

Mortgage lenders have to be sure that you can afford to pay your bills and living costs on top of your mortgage repayments. Plus, saving for a deposit can be hard when you’re on a low income. Some people may be unable to follow through with all the payments at the first sign of an interest rate increase.

Will Banks Accept Benefits as Income?

Yes, most banks and lenders will accept benefits as a source of income. However, each lender has different rules and assessments depending on the borrower’s situation.

Some lenders will consider 100% of the benefits as an additional income. Others only do 50% or 60% of the benefit income.

Many lenders don’t accept benefits as income at all. Our mortgage brokers know which banks will give you the best chance of having your application approved.

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When you think you’ve hit that brick wall and have all but given up hope of finding mortgage finance, When the Bank Says No are here to turn your ‘No’ into a ‘Yes’. We have access to a range of specialist lenders who are willing to help those that the High Street banks just won’t touch. Get in touch today and see how we can turn your dreams into a reality.

How to Get a Mortgage on Benefits? Tip 1-3

Here are some tips that can help you secure a mortgage on benefits.

Go For Stability

Fluctuating income can be a big issue when it comes to mortgages on benefits. There are many types of benefits, and not all of them are consistent as a source of income. 

For example, child benefits stop at age 16. Most lenders will no longer accept this type of benefit if your child is 11 years old and above. The reason is that a mortgage will last for 25 years or more. 

Consequently, if you have a benefit from a permanent disability, lenders could see it as a stable source of income. 

To increase your stability, it’s best to have an inflow of cash from a job. Including the benefit, you should be making at least £25,000 annually. It also helps if you’ve had the benefit for at least six months before you apply for a mortgage.

Pay Off Debts

Lenders will check if you have outstanding balances on your utility bills and credit card bills. You should know your credit score and increase it if it’s too low.

Increase Your Deposit

Normally, you can get mortgages at a 5% to 10% deposit. However, if you’re on benefits, you will likely be expected to have a deposit of at least 20%.

You can do this by saving up for the deposit before you apply for a mortgage. Moreover, mortgage lenders will accept deposits gifted by your close relatives.

How to Get a Mortgage on Benefits? Tip 4-7

Consider Buy-to-Let Mortgages

If you’re on low income, you might want to consider buy-to-let mortgages. What this means is you purchase the property to rent it out to tenants. 

Lenders don’t need a minimum annual income if you’re getting a mortgage for this purpose. Instead, they base it on how much rent you plan on collecting from your tenants. 

Note that you can’t live in the house while you have an ongoing buy-to-let mortgage on it. However, the property is yours after you’ve paid everything off. 

We believe that it could be a good secondary source of income. Plus, you can get one even if you’re on benefits!

Get an Agreement-in-Principle

An agreement-in-principle or AIP is a certificate proving that you’ve talked to a mortgage broker. The AIP indicates they agreed that you’re eligible for a mortgage.

It’s easy to get an AIP. All you need is a 20-minute discussion with a broker. He’ll assess your financial situation and you could get invaluable advice on what you need to do. 

Having an AIP will signal to banks that you can keep up with monthly payments. It can help when you’re looking for a mortgage on benefits.

Gather Evidence

Getting a mortgage on benefits means that you have to prove to lenders that you can meet their criteria for borrowers. Doing this means that you need to gather your evidence.

You should have records of all your payslips and bank statements. You can use any assets or savings to aid you in securing a mortgage as well.

Get a Broker

This is the best advice we can give you. A broker like When the Bank Says No will help you immensely in your quest to get a mortgage on benefits. 

We have multiple connections across many banks and lenders, many of whom are willing to accept benefit income in their calculations. We know which ones will accept people who are on benefit and we are aware of each lender’s rules when it comes to the type of benefit as well. 

With a broker, you remove any unnecessary hassle, work out a budget, and reduce your chance of getting declined. That’s important, since a rejection could affect your eligibility to apply for another mortgage! 

Frequently Asked Questions

What Benefits Will Banks Accept?

Universal Credit 

Universal credit is for low-income UK citizens aged 18 to 65. It includes elements like support for housing, childcare, people with disabilities, and carers. In this case, the allowance you can get depends on how much you’re making at work. 

Lenders accept allowances from universal credit, but they might reject some elements. For example, housing benefits end once you get a mortgage.

Child Tax Credit and Working Tax Credit

A child tax credit is a benefit that you can claim from HMRC if you’re responsible for any children. You can get up to £2,935 annually per child and it’s possible to use this as an added income when you’re applying for a mortgage. 

You can apply for a working tax credit only if you have a child tax credit. How much working tax credit you can claim will depend on how many children you have.

However, both of these benefits are short-term sources of income. That’s because they’ll end after your child turns 16. Some banks may even reject this benefit depending on your child’s age.

Disability Living Allowance 

A disability living allowance or DLA is a benefit for adults and children that need help with mobility and care expenses. You can get a mortgage with a DLA and your chances increase if it’s a permanent disability.

Maintenance Payments

Maintenance payments happen when one parent doesn’t live in the same household. This parent must make payments directly to you or through the child maintenance service.

It’s possible to use maintenance payments as an additional income when applying for a mortgage. It’s applicable regardless if it’s court-ordered or not.

Jobseeker’s Allowance

A jobseeker’s allowance is a benefit for people who don’t have work or who have part-time jobs. Some lenders will consider this benefit, but you may have trouble if you’ve been unemployed for a year or more. 


People on pension can get a mortgage on certain conditions. This is mainly due to the fact that some lenders have a maximum age that they accept for mortgages. 

Since pension begins at the age of 66, you’ll have to meet the lender’s deadline and finish paying the mortgage off in a shorter amount of time. 

To calculate the maximum amount you can borrow, take the sum of all your sources of income, including benefits. Next, multiply the amount by 3 or up to 4.5.

In most cases, people can borrow £75,000 up to £250,000 if they’re on benefits. The amount you can get may vary depending on how well your broker can match you with a lender.

Yes. There’s a help-to-buy scheme where the government pays 20% to 40% of your deposit. You still have to pay 5% of the deposit, but it’ll help you access better interest rates. 

Note that you still have to pay the government back for their initial contribution to your deposit. There’s also a yearly deadline for this scheme, so it’s best to ask your trusted mortgage advisor about it.

If your sole source of money comes from benefits, you should reconsider before applying for a mortgage. There are a few lenders who’ll accept, but you might encounter a lot of issues. 

Instead, you need to have benefits as your secondary source of income. 

If you’re in a situation where you’re dependent on benefits, it’s best to consult with a professional.

Yes! Everyone has the right to own a home. Even those with low income can get mortgages on benefits. 

However, some lenders may decline and it’s up to mortgage brokers like When the Bank Says No to help you find a lender that’ll cater to your circumstances.

The amount you can get will depend on the type, frequency, and sustainability of the benefit.

Benefits can get recalculated as your situation changes. There are no set rules on how much lenders will grant you. That’s why you may want to get a broker to assess your financial situation and help you find the best deals.

Mortgage on Benefits Summary

You may encounter more than a few issues with getting a mortgage on benefits. 

Certain banks and other lenders can reject government assistance as a source of income. Yet, it is still possible to find lenders who are willing to accept benefits income and work with you as long as you meet their criteria. 

Contact us today for no-fuss advice so you can secure a mortgage on benefits at an affordable rate.

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