Getting a mortgage if you're ill or disabled
Being ill or disabled shouldn’t stop you from getting a mortgage, even if you rely on benefits for all or part of your income. Here’s what you need to do when applying.
Your legal rights
If you can afford a mortgage, banks and other lenders are not allowed to reject your application just because you are disabled.
Lenders can’t insist that you pay a larger deposit or make larger monthly repayments than non-disabled customers.
Who does disability legislation apply to?
Anti-discrimination rules might apply to you, even if you don’t think of yourself as a disabled person.
For example if you have a physical condition such as cancer, MS or HIV, or a mental illness such as depression.
Before you start applying for mortgages
If you want to apply for a mortgage – either to buy a new property or re-mortgage – it’s important to make sure you’re well prepared.
Follow these simple steps:
Step 1 – Draw up a monthly budget
Under new rules from 26 April 2014, mortgage lenders must check that you’ll be able to afford your mortgage payments by looking at your income and your regular outgoings.
So before applying you need to draw up a monthly budget of all your income and outgoings.
You can use our Budget planner to do this.
Step 2 – Work out how much you can afford to borrow
When working out how much you can afford to borrow, lenders also look at whether you’d be able to meet your monthly payments if the interest rate went up.
So you need to consider this and also how you would meet your payments if:
- Your circumstances changed – for example if you or your partner lost your job
- Your income fell – for example if your benefits were reduced
To protect yourself against an unexpected drop in income in the future you could:
- Consider taking out mortgage payment protection insurance
- Build up an emergency fund – ideally equivalent to three months’ outgoings
The lender must refuse your mortgage application if you don’t pass their affordability check.
Step 3 – Get your paperwork in order
Gather together all your bank statements and paperwork relating to your income.
If you’re on benefits, don’t forget details of how much you’re receiving or are due to receive.
Getting a mortgage if you’re on sickness or disability benefits
If your income is either partly or mainly made up of benefits, this shouldn’t stop you from getting a mortgage but it can make it trickier.
Some lenders are more likely than others to accept disability benefits as income when doing their affordability checks.
A specialist mortgage adviser can help you find a lender that is more willing to lend to someone in your situation. (See ‘Get specialist advice’ below.)
Help with mortgage interest payments
If you’re claiming a benefit such as income-related Employment and Support Allowance or Income Support you might be able to claim help with your mortgage interest payments.
This is called Support for Mortgage Interest (SMI).
If you qualify for it, you’ll get help paying the interest (but not the capital repayments) on up to £200,000 of your mortgage.
However, there is a 39-week waiting period before SMI payments kick in so you should make your claim as soon as you can.
The money is paid directly to your lender.
You can claim this support even if you’re on benefits when you apply for your mortgage.
However, not all lenders will count Support for Mortgage Interest as income when deciding whether or not to lend to you.
The Department for Work and Pensions (DWP) can reduce the amount of support you get if it deems your home to be too big or in an area that is too expensive.
If this happens to you, you should explain to the DWP why you need:
- A larger home – for example, you have a live-in carer or need to keep lots of bulky equipment at home
- To live in a particular area – for example, you have to be near family or a particular hospital
Find out more about Support for Mortgage Interest on the GOV.UK website
Consider a shared ownership scheme
HOLD – Home ownership for people with a long-term disability
HOLD is a shared ownership scheme for people with long-term disabilities and is part of the government’s affordable housing programme.
The way it works is you buy a share of a property on the open market and a housing association buys the remaining share.
The housing association negotiates with the property vendor and the mortgage lender on your behalf.
My Safe Home
Specialist provider, My Safe Home can help you buy a home if you’re disabled. It works with selected lenders on shared ownership schemes.
Get specialist advice
Make sure you speak to several different mortgage lenders and advisers, as this will help you find the mortgage that meets your needs.
Disabled People’s Organisations (DPOs) operate across England and Wales. DPOs can offer free, independent and confidential information and advice, and are run by and for disabled people.
Speak to an independent mortgage adviser
Independent mortgage advisers offer impartial advice and can also shop around for you. Some charge a fee for their work.
To find out more about independent mortgage advisers and the services they offer, read our guide Choosing a mortgage – how to get the right deal.
Use price comparison websites
Comparison websites are a good starting point for anyone trying to find a mortgage tailored to their needs.
We recommend the following websites for comparing mortgages:
- Comparison websites won’t all give you the same results, so make sure you use more than one site before making a decision.
- It is also important to do some research into the type of product and features you need before making a purchase or changing supplier.
- Find out more in our guide to comparison sites.
Speak to your bank or building society
Contact your bank or building society and ask to speak to their mortgage adviser.
But bear in mind that banks and building societies will only tell you about their own mortgages.
So take the information they give you and compare it with the competition before making a choice.
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