AIBU to think you cannot get a mortgage if disabled and claiming PIP and UC/ESA?

[Rosesandstars]

Just that really.

I'm disabled and unable to work. I am in receipt of PIP and ESA and currently have no savings but would love to slowly save up for a deposit. AIBU to think that getting a mortgage on disability benefits is not possible?

I am pretty certain at one point you could, but now it is not considered a stable income due to the fact that it is dependent on the whims of the current government.

It might be possible to look at shared ownership, which is designed for people on low income. As a form of social housing they are more flexible.

unfortunately not. It’s very difficult to get a mortgage these days even if not on benefits. Although you could try querying with mortgage brokers? They’ll probably have experience of getting mortgages for people on benefits and will tell you if it’s not possible.

Is it income related ESA? Would you be able to save a deposit? Don't they reduce it as your savings increase then cut off if they get over a certain amount?

When I became disabled (9 years ago and unable to work) I needed to sell my unsuitable house and move (5 years ago i finally did). I struggled to find a provider who would accept the benefits (a financial advisor couldn't find any). I went directly to barclays in the end. When the mortgage fix term ended I ended up remortgaging with barclays because I wasn't sure I'd get another mortgage with someone else so I'm not on the best deal. I was lucky to have a bit of equity from my previous house.
Also I was limited more than normal to what they'd lend meaning to house me and dc I had to move areas and buy a house that needed a lot of work.
The problem you'll also have is reduced uc as your savings increase which will mean you'll struggle to save. It does feel the current government want to keep those unable to work in their place sometimes. It's not impossible but going to be difficult.

I have no idea how anyone could save much on just contributions based ESA and PIP, I suppose maybe if living with parents or whoever. If on income related ESA which is generally more generous if you get an sdp added then I guess you could save but as it's means tested you would be penalized for any savings over 6k ( I think). I think unless someone was gifting you a substantial deposit then that might be the only way but obviously you wouldn't get any help from benefits to pay a mortgage like you would get help with rent.

It would be difficult to save a deposit if income based. It used to be possible, particularly before the new loan smi came in. We had one before the rule changes and paid a chunk off due to the interest being paid. (One there for the frothers)

It's possible on tax credits atm as there's no limit on savings but once everyone changes to uc you won't be able to save enough for the deposit

You can use the HOLD scheme if it's permanent

https://www.ownyourhome.gov.uk/scheme/hold/

It most certainly is possible to get a mortage on benefits. In fact the law says the mortage company can't turn you down because it will be paid off from benefits - as long as it is affordable. I know this for a fact because my daughter who is on ESA/PIP has one! I am pretty sure she got it about 3 years ago. It's not a massive mortgage - but it is a mortage and she hasn't worked for about 11 years. I found a mortgage broker that got one with Natwest I think - but then she went direct to Nationwide and that's who she signed up with.

But would a mortgage company actually lend to someone with no income other than benefits? I mean I can understand it is someone already had a mortgage and then became disabled and reliant on benefits and could access SMI, but not if they are totally reliant on benefits before even getting a mortgage. I just don't see how it would be possible. But yes like your case I have known people have their mortgage basically paid off through being on pension credits in the past.

@Babyroobs https://www.suffolkbuildingsociety.co.uk/mortgages/mortgages-for-disabled/

Edit - Nvm, didn't notice the "less".

I highly doubt you’ll get one. I get PIP and it wasn’t taken into consideration when we applied for our mortgage. The mortgage company would only assess based on our full time jobs. I guess it may be because PIP can be taken away at any time although that’s a little unfair given that you could be made redundant/sacked at anytime 🤷‍♀️

Yes I appreciate some lenders will take disability benefits into account but that would not be enough to secure a mortgage unless you had a huge deposit also or a partners earnings as well. Even highest rates of PIP and contributions based ESA would come to little more than 1k a month to pay for everything if you did not have a partner. Many disabled people claiming PIP do work so I can see why it would be taken into account as income.

I have two friends that got mortgages within the last 2-3 years that only have UC and PIP as income so its certainly quite possible.

Tbh you wouldn't be able to save for a decent deposit even if they would give you a mortgage without having money deducted from your benefits. It's an awful system. If anyone would give you a mortgage you would likely need a huge deposit.

Thanks @Willyoujustbequiet. Do each of them have partners and/or additional sources of income?

But how would you save anything like enough for a deposit, and how would you pay the mortgage once you had it?

Disability benefits are not generous and the cost of living is high. If you rent, and have no income other than benefits and no assets, your rent is covered by benefits (HB under old system, or housing element of UC under new system). But you wouldn't get any help with your mortgage for a while - and then it's just an SMI loan, not full help.

It doesn't seem at all doable to me.

As soon as you saved up to a certain point, you would become ineligible for UC. I think £16k is the threshold, which in most parts of the country would not be enough for a deposit (especially once you off solicitor's fees, surveys and whatnot)

No they are both single mums.