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Is there any way it is possible to get a mortgage in my circumstances.

Replies

  • vfrcrazyvfrcrazy Posts: 3Member
    Hi recently applied for the right to buy our council property, but being told by all mortgage lenders that it will be impossible to secure a mortgage:

    A; because it is a right to buy mortgage and therefore can not sell for 3 years
    B; Because my only income is from benefits

    Is there any way it is possible to get a mortgage in my circumstances. I get income support because I have cared for my son for 25 years.I get disability living allowance for myself for life as this has now led to my own ill health. I get carers allowance for caring for my son, and also child benefit.
  • Debbie_ScopeDebbie_Scope Posts: 947Member Pioneering
    Hi vfrcrazy and Parent1001,

    I'm really sorry for the delay in responding to your posts. I've been away for a few weeks but I'm back now and working on answers to your queries. I'll post them as soon as I can.

    Best wishes
    Debbie
  • Debbie_ScopeDebbie_Scope Posts: 947Member Pioneering
    Hello vfcrazy,
    I’m so sorry for the long delay in replying to your question.
    I’m afraid that the news isn’t good.
    Since the financial crisis back in 2008, mortgage lenders have tightened up lending considerably. In April 2014 new mortgage affordability tests were introduced. The idea of the tests is to measure the sustainability of mortgage payments not only at the time of taking the mortgage on, but later on in the future. Lenders will apply ‘stress tests’ to see how an applicant’s finances would be impacted by various different stresses. A very quick example of these tests is how would the applicant manage the mortgage payments if the interest rates were to rise to 7%? They would look very closely at the applicant’s income and expenditure looking for any potential stress triggers. There is a guide to responsible lending from the Financial Conduct Authority and this is available through the following link and I hope that you will find it useful. https://www.handbook.fca.org.uk/handbook/CONC/5.pdf
    Benefits are now much less stable than they once were, particularly disability benefits which are now subject to regular reviews and can be suspended very quickly. Welfare Reform changes have impacted quite significantly and this has all added to the risk.
    So, with lenders tightening up it has become pretty much impossible for people to get mortgages if their sole income consists of benefits. For joint mortgages where one applicant is on benefits and the other is working, you can check the lender’s lending criteria to check which benefits they will accept when assessing joint income. This information can usually be found on the individual lender’s website.
    Another factor to consider is that you are normally required to take out life insurance to cover the mortgage should something happen to you. It could be even more difficult to get insurance if you are disabled or have a long term health condition/s. It all adds to the risk.
    The positive in this is that you have a secure council tenancy and providing you don’t breach the terms of your tenancy agreement, you will have a home for life. You also don’t have to worry about major repairs at the property like fixing the roof or replacing the boiler, all of these things can be very expensive.
    I hope that this has provided you with some clarity. Mortgage lenders will often tell you that you can’t get a mortgage but rarely do not go into the details of why. I hope that this has explained things and the issue is a bit clearer for you.
    Best wishes
    Debbie
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