Which Benefits Do Lenders Accept?
Not all benefits are treated equally by mortgage lenders. Generally, benefits that are considered more stable and long-term are more widely accepted. Here is how different benefits are typically viewed:
- Child Benefit — widely accepted by most lenders as it is a universal, non-means-tested benefit
- Child Tax Credits and Working Tax Credits — accepted by many lenders, though some discount the amount or require evidence that they will continue
- Disability Living Allowance (DLA) and Personal Independence Payment (PIP) — accepted by a number of lenders as these are typically long-term awards
- Universal Credit — acceptance varies significantly; some lenders accept the housing element, child element, or the full amount, while others do not accept Universal Credit at all
Benefits that are considered short-term or variable, such as Jobseeker's Allowance or Employment and Support Allowance in the assessment phase, are rarely accepted as sole income for mortgage purposes.
Income Requirements and Affordability
Most lenders require that benefits are not your sole source of income — they want to see earned income from employment or self-employment alongside any benefit income. However, some specialist lenders and building societies will consider applications where benefits form a significant portion of the total income, particularly if the benefits are disability-related and considered permanent.
When calculating affordability, lenders may apply a discount to benefit income. For example, a lender might include 100% of your salary but only 50% or 60% of your benefit income. This reflects the fact that benefits can change following government policy decisions or reassessments.
Your total income from all sources — employment, benefits, any other regular income — must be sufficient to meet the lender's affordability criteria for the mortgage amount you need. The standard income multiple of four to four-and-a-half times income still applies.
Evidence and Documentation
If you are including benefits as part of your income, you will need to provide evidence of what you receive and that it is likely to continue. Useful documents include:
- Benefit award letters from the Department for Work and Pensions (DWP) or HMRC showing the amount and duration of the award
- Bank statements showing regular benefit payments being received
- A current Universal Credit statement if applicable, showing the breakdown of elements you receive
If your benefits are subject to periodic reassessment, lenders may want evidence that your award is ongoing and not due to expire. Benefits with no review date or long-term awards are viewed more favourably.
Some lenders accept benefit income as evidence of your circumstances but do not include it in their affordability calculation. Check with your broker what each lender actually counts.
Product Transfers for Benefit Recipients
If your income from benefits does not meet a new lender's criteria for a full remortgage, a product transfer with your existing lender is worth exploring. Product transfers generally do not require a new affordability assessment, so your benefit income may not be scrutinised in the same way.
Your existing lender has a record of your payment history and knows that you have been maintaining the mortgage. This track record can work in your favour, even if your income has changed since you originally took out the mortgage.
Contact your lender before your current deal ends to ask about available products. You can usually arrange a product transfer several months in advance, ensuring you do not fall onto the lender's SVR.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.