Moving home isn’t cheap. Not only is there the cost of removals, estate agents and conveyancing, but also the extra money needed to get your new house ready for living in. So, if you’re on a low income, moving house can be an incredibly stressful and daunting process.
But, don’t fret! If you’re claiming benefits, you might be able to get some help with your moving costs. Being on benefits shouldn’t stop you from moving to your dream home, so in this guide, we’re going to explore how being on benefits could affect your house move, and what help you might be entitled to when moving house on benefits.
Official government statistics reveal that just over five million people claimed housing benefit in 2013-2014. It is an essential payment that helps people on low incomes, or who are out of work, pay rent and keep a roof over their heads. However, the amount of housing benefit paid depends on the local housing allowance set down for each local authority, and is broadly based on the market value of rental property in that area.
Therefore, if you move to live in a different council area, your housing benefit will change. For example, if you move to an area where rent is either higher or lower, the amount of housing benefit you receive will alter accordingly. For this reason, when you move to a new local authority, your housing benefit claim will end and you’ll likely have to claim Universal Credit rather than housing benefit after moving.
Additionally, if you’re moving from rented accommodation and buying your own house, you will be able to continue claiming other government benefits, but not usually Housing Benefits. In order to claim Housing Benefit, you have to:
Have a low income or be claiming other benefits
Be at least 16 years old
Have less than £16,000 in saving
Yes, you can claim benefits if you own a house and have a mortgage. If your house is mortgaged, you can claim benefits to help you cope with the costs of owning your house.
For example, you might be able to claim for benefits such as the Support for Mortgage Interest (SMI). This benefit is actually a loan which accrues interest and is repayable. To get the SMI help, you will need to already be claiming other benefits, such as Pension Credit, Income Support, Jobseeker’s Allowance or Employment and Support Allowance.
If you do qualify for an SMI loan, you can get help paying the interest on up to £200,000 of your loan or mortgage. The amount you get is based on a set rate of interest on what’s left of your mortgage. This is paid directly to your mortgage lender. You will need to repay your SMI loan back, with interest, when you sell or transfer ownership of your home.
Yes, you can claim benefits if you own a house through the Shared Ownership scheme. You will be able to claim Housing Benefit or Universal Credit Housing Costs element for the rent and any service charges which are part of your monthly repayments. You might also be able to claim a Support for Mortgage Interest loan to help with the mortgage interest on your loan.
Yes, you can claim benefits if you own a house outright. For example, you might still be able to claim benefits, such as Income Support and Jobseeker’s Allowance, but you won’t be able to claim any Housing Benefit.
You will also be able to claim Support for Mortgage Interest as this benefit covers the interest costs of not only mortgages, but also:
Also, if you own your house or are living with a partner who owns their house, and you are eligible for Universal Credit, you will continue receiving Universal Credit payments which can be put towards your home. Your Universal Credit payment can go towards:
Yes, you can certainly get a mortgage while on benefits under the right circumstances. The chances of your mortgage application being approved are likely to hinge on whether you have other income or assets in addition to the money you’re receiving through benefits.
It’s also important to find the right mortgage lender as some might only accept a capped percentage of your benefit income, and others none at all.
The best way to determine whether you’re eligible to get a mortgage based on your benefit income is to speak to a mortgage broker who specialises in this type of application. They will be able to provide advice and help when it comes to moving house on benefits.
Not only will they be able to tell you which lenders will accept you, they’ll also negotiate the best rates on your behalf, help you with paperwork and offer tips on how to make your income stretch further.
If you’re moving house on benefits, getting a mortgage might be a little trickier. For starters, your choice of approachable lenders might be fewer and you can expect more scrutiny around your income. When lenders assess a mortgage application, one of their biggest concerns is your affordability and the stability of your income.
Regardless of whether you’re claiming benefits or not, as long as you can prove that you can afford to keep up with your loan repayments over the specified term, there’s no reason why you shouldn’t be able to get a mortgage.
You should note, though, that mortgage lenders tend to cap the loan amounts at 4.5 times your annual income. So, if you earn £18,000 a year from employment and receive an additional £3,000 in Disability Benefits, the maximum loan most lenders will offer you is £94,500.
Yet, mortgage lenders are not allowed to discriminate if you’re receiving benefits. If you’re disabled for life or suffering from a long-term illness, they can’t legally decline your mortgage application, offer higher interest rates or insist on a larger deposit on those grounds alone. So, don’t let the fact you claim benefits put you off applying for a mortgage and moving house.
Even if you’re claiming benefits and have bad credit, there’s still a chance you’ll be able to get a mortgage. However, this is likely to be more difficult since the number of approachable lenders will be even smaller. Mortgage providers tend to treat prospective borrowers with a history of bad credit with caution already, so if you add benefit income into the equation as well, the need for help when moving house on benefits is even higher.
But, don’t let that deter you – there are bad credit mortgage lenders who can be super flexible. It largely depends how long ago the instance(s) occurred and/or the severity of the issue.
Yes, people on Disability Benefits can get a mortgage, but they should expect the mortgage lender to be stringent with their affordability checks.
Disability Benefits ensure that people who find it difficult to obtain paid employment because of their disability are supported by the state. This is a very important benefit that helps claimants enjoy an acceptable standard of living, with more than 3.2 million people claiming it in the UK.
So, it’s essential that any delay in receiving Disability Benefits when moving home is kept to a minimum. To ensure there is as little delay as possible, you will need to contact the DWP before the move, giving them as much notice as possible. You may also be able to claim Disabled Facilities Grounds if changes need to be made to the property to facilitate your disability.
When it comes to getting a mortgage on Disability Benefits, many lenders will accept benefit payments as income as long as you can prove that they will continue for the foreseeable future, and provided you meet their other requirements.
It can be slightly more challenging to secure a mortgage if you’re suffering from a short-term illness or disability and are using benefits to supplement your income on a mortgage application. This is because lenders have no guarantee of your long-term affordability – they don’t know how long these benefits will last, or when you’ll be returning to work. Therefore, they have no idea how that could impact your finances and your ability to pay your monthly payments.
If you have a long-term disability, you could also look into HOLD, a Shared Ownership scheme which is part of the government’s affordable housing programme.
Yes, you can get a mortgage if you’re claiming Jobseeker’s Allowance. For starters, you might be eligible for Support for Mortgage Interest (SMI) if you own your own home, which to buy your own home, or are part of a Shared Ownership scheme.
This is a great option for homeowners claiming Jobseeker’s Allowance as, although the DWP will charge you interest, this is likely to be at a cheaper rate than many alternatives. You will need to repay the loan, but usually only once you have sold it or give the property to a family member.
Yes, in many circumstances, mortgage providers will take Child Benefit into account when assessing your affordability for a mortgage. But not all lenders will.
The money you receive from claiming Child Benefit could be included in the decision as to whether a lender will approve your application. However, you’ll need to pass other criteria too and have enough income to give the lender confidence that you can afford your monthly mortgage payments.
Yes, you can get a Shared Ownership mortgage when claiming benefits. However, most lenders won’t let you declare those benefits on your mortgage application, so you’ll likely need to have other incomes too.
Not only can you get a mortgage in most circumstances if you are claiming benefits, but you might be able to get extra help to move house too.
If you’re on a low income, you may be able to get help with the costs of moving house on benefits. There are a number of options available if you need some extra help to move:
There is no obligation for social landlords to offer any financial help to you if you’re moving via the Seaside and Country Homes scheme. Neither is it mandatory for social landlords to offer help if you’re chosen to request a move, either directly or through a transfer.
However, if you’re residing in a large Social Housing property and want to downsize, you could be in luck. Many housing associations and councils will offer a financial incentive if you’re under-occupying, so it’s definitely worth checking with your landlord to see if they could help cover the costs of moving house on benefits.
One of the most costly parts of moving house is the deposit, or the first month’s rent. If you’re struggling to save for a deposit, you should get in touch with your local council. Many boroughs offer a bond deposit initiative – an agreement between the council and landlord that covers any deposit deductions due to damage or non-payment of rent.
Some local authorities hold a small budget to help people on low incomes move home. When the Community Care Grants and Crisis Loans fund was abolished, it was replaced with Local Welfare Assistance. This money allows councils to spend it how they see fit – and that could be to help with home moving costs.
There are a number of potential loans, advances and grants available if you need help moving house on benefits. Although these might not be free handouts, they could allow you to spread relocation costs into a more manageable repayment sum, giving you some peace of mind about your financial circumstances when moving.
To be eligible for a budgeting loan, you need to have been receiving income support, pension credit, income-based jobseeker’s allowance of income-related employment and support allowance for a minimum of 26 weeks.
The size of the loan will be dependent on your individual circumstances and ability to make repayments, but sums start from £100. In addition to using the loan to cover the costs of advance rents or removal expenses, you can also use it to pay for household equipment and furniture.
An advantage of taking out a budgeting loan is that they’re interest free – so you only pay back what you borrowed. This usually needs to be completed within two years of taking out the loan, and your repayments might be deducted from any benefits you have.
Another option to get help with moving house in benefits is to apply for a benefit advance. These are only available, though, if you’re receiving a means-tested benefit like Universal Credit. But, this option needs to be considered carefully as repayments will be taken from later benefits, reducing your income for weeks or months at a time.
Discretionary Housing Payments (DHPs) are available if you already qualify for Universal Credit or Housing Benefit. They can be awarded in special cases to those who need more financial help with housing expenses, such as deposits, shortfalls in rent and moving costs.
To ensure you receive the right kind of help when moving house on benefits, it’s important to plan thoroughly. The most important thing to remember is that you need to inform the local authority and the DWP that you’re moving as soon as you have your new address.
Don’t wait to notify them after you’ve actually moved in – there may be delays in receiving benefits caused by your move.