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.
Housing Benefit is a government benefit designed to help people on low incomes cover their rent. Official government statistics reveal that there were 3 million housing benefit claimants in the year 2020. So, while it is an essential payment for many, the amount of Housing Benefit paid depends on the local housing allowance set for each local authority and is largely based on the market value of rental properties in the area.
This means that if you move house, out of your current council area, your Housing Benefit will be influenced, whether positively or negatively. For example, if you move to an area where the market value of rental properties is higher, the amount of Housing Benefit you receive will increase accordingly. As a result, your Housing Benefit will claim when you move to a different council area. However, once moved, you will be able to apply for Universal Credit instead, so you won’t be left out of pocket.
Additionally, it should be noted that if you are buying your own house for the first time and moving from rented accommodation, you won’t usually be able to continue claiming Housing Benefits, but you should be able to claim other government benefits. To qualify for Housing Benefit, you must:
Yes, you can claim benefits if you own a house and have a mortgage. If you have purchased your own house and have a mortgage, you can claim benefits to help you cope with the costs, such as the mortgage interest.
One government benefit you might be able to apply for if you own your house is the Mortgage Support Interest (MSI) benefit. To qualify for the SMI benefit, though, you must already be claiming other benefits, such as Jobseeker’s Allowance, Employment and Support Allowance, Pension Credit or Income Support.
If you are eligible to claim SMI benefit, it means you qualify for help paying up to £200,000 of your loan or mortgage. How much you receive depends on a set rate of interest on what remains of your mortgage. This is paid directly to your mortgage lender.
While this benefit can help cover the costs of owning a house, claimants should be aware that it is actually a loan which accrues interest over time and will eventually need to be repaid. You will be required to pay back your SMI loan, with interest, when you come to sell your home or transfer ownership.
Shared Ownership is an affordable housing scheme which allows first time buyers or those struggling to save for a deposit to get their foot on the property ladder. Despite being a government scheme, you can still claim other benefits if you own a house through Shared Ownership.
The rental element of Shared Ownership can, in certain circumstances, be covered by Housing Benefit or Universal Credit Housing Costs. In addition, you might be able to claim a Support for Mortgage Interest loan to help you keep up with the costs of the interest on your Shared Ownership mortgage.
Yes, under certain circumstances, it’s certainly possible to get a mortgage while on benefits. However, the likelihood of your mortgage application being approved will largely be dependent on whether you have another source of income or assets besides the money you receive through benefits.
As a result, it’s essential that anyone trying to get a mortgage on benefits finds the right mortgage lender. Some lenders might only accept a capped percentage of the income received through benefits, while others might not accept any benefit income at all.
To find out whether you’re eligible to get a mortgage based on your benefit income is to speak to a mortgage advisor who specialises in these types of applications. They’ll provide you with the right advice and help you when it comes to moving house on benefits. A mortgage advisor will tell you which lenders are most likely to accept you but they’ll also be able to negotiate the best rates for you, help with paperwork and give you tips on how to make your benefit income stretch further.
It’s true, if you’re moving house on benefits, getting a mortgage might be a little trickier. This is because when lenders assess a mortgage application, whether they accept it or not is largely dependent on your affordability and the stability of your income. As a result, when moving house on benefits, you can expect more scrutiny around your income and might find you have less choice when it comes to approachable lenders.
But as long as you can prove that you can afford to pay your monthly payments over the specified term, there’s no reason why you shouldn’t be able to get a mortgage on benefits. Mortgage lenders aren’t allowed to discriminate against you just because you’re receiving benefits. So don’t let the fact that you’re claiming benefits put you off applying for a mortgage and moving house.
Yes, usually mortgage lenders will take the fact that you’re receiving Child Benefit into account when assessing your affordability for a mortgage. However, not all will, which is why it’s so important to find the right lender for your situation.
While lenders will consider the money you receive from Child Benefit when deciding whether to accept your application, you will need to pass other eligibility criteria too and reassure the lender that you will be able to afford your monthly loan 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 additional incomes on the side.
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:
In most cases, Housing Association or Council landlords are not responsible for providing financial help to tenants. However, Councils and Housing Associations do often have incentive schemes for tenants who are downsizing. So if you’re planning on moving from a larger property into a smaller one, check if you can apply for help with the costs of moving house on benefits.
Many local authorities have a budget set aside that they can use to help people on very low incomes with essential needs, sometimes including the costs of moving home. For example, if you’re struggling to save for a deposit (often the hardest part of moving house), you should get in touch with your local council and see if they can offer any help.
A Budgeting Loan is additional money on top of your existing benefits that helps pay for certain essentials such as furniture and household equipment, advance rent, removal costs and maintenance and security needs.
To qualify for a Budgeting Loan, you need to have been receiving the following benefits for a minimum of 26 weeks:
The size of the loan you receive will depend on your individual circumstances and your ability to make repayments. Although you have to pay back a Budgeting Loan, they are interest-free which means you only pay back what you initially borrowed. This usually needs to be repaid within two years of taking out the loan.
Another option to get help with moving house on benefits is to apply for a short term benefit advance (STBA). An STBA could help if:
An STBA is paid as a loan which must eventually be paid back. Before choosing this option to help you move house on benefits, though, you must consider the knock-on effects. Most importantly, your repayments will be taken from later benefits, reducing your income in the following weeks or months until the advance is repaid.
If you already qualify for Universal Credit or Housing Benefit, Discretionary Housing Payment (DHP) might be a good option to help you with moving house on benefits. DHP is a payment received at the discretion of your local authority, which can help towards housing costs. These are only awarded in special circumstances, though, to those who require help with things like deposits, moving costs or shortfalls in rent.
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.