Getting a mortgage if you're disabled

This content applies to Scotland only.

Housing laws vary between Scotland and England. This page applies to Scotland only. Get advice relating to England

Many disabled people have to rely on benefits to make up their income. However, this needn't prevent you getting a mortgage to buy your own home. This page looks at the kind of things you'll need to consider when applying for a mortgage and how you can get help to pay your mortgage interest.

What do I need to think about?

When you are thinking about getting a mortgage, the first thing you need to do is work out how much you can afford to repay each month.

A mortgage is a big financial commitment. Most mortgages are paid off over 25 years, which is a long time to keep making regular payments. It's important to think about how your circumstances may change in the future, and to account for this when making your financial plans. For example, if you are working, you will need to consider whether your ability to work will decrease later on. In this case, you may be able to get benefits to help pay your mortgage interest (see 'what if I'm on benefits' below).

Unfortunately, many banks and building societies turn down mortgage applications from disabled people because they don't think you'll be able to keep up the repayments. Therefore it's important to be well prepared when you go to the bank to apply for a mortgage. See 'will I have any problems getting a mortgage' to find out how you can prepare.

Who can I talk to?

You can get information and advice about mortgages from various sources. Most banks and building societies have a mortgage adviser who will be happy to discuss your mortgage needs with you. All lenders are obliged to produce information about their mortgages and other related services in Braille or other accessible formats, and they should be able to make home visits if you're not able to come into a branch.

However, bank and building society mortgage advisers can only give you advice about their own products. If you would prefer someone to shop around for you, get in touch with an independent financial adviser (IFA), mortgage broker or other specialist. They may be able to find a deal that's suitable for you. IFAs and brokers may charge a fee for their services, but this is often paid by the bank and then included in your mortgage. You can also get help from a money advice centre - you'll find a list of these at the Money Advice Scotland website.

Bear in mind that mortgage advisers at banks and building societies, mortgage brokers and IFAs probably won't have specialist knowledge about buying a home if you are disabled and reliant on benefits (see 'what if I'm on benefits' below). They may therefore mistakenly believe that it is not possible for benefits to be used to buy a home. For specialist advice, contact DIAL or Ownership Options.

What if I'm on benefits?

If you rely on benefits for your main source of income but you want to buy a home that is more suitable for your needs as a disabled person, you may be able to get help to do this. If you receive or are eligible to receive income support, income based jobseeker's allowance or pension credit (guarantee element), you should be able to get help paying the interest on your mortgage. This applies even if you are already receiving benefits when you apply for your mortgage.

Housing cost payments can be used to pay for:

• the interest on your mortgage loan
• interest on any other loans which you take out to carry out repairs or adaptations to your property to make it more suitable for your needs
• service charges.

Are there any restrictions?

The following restrictions apply:

• You can only get help with the interest on mortgage loans of up to £100,000, plus the cost of any adaptations.
• The amount you receive may be restricted if the Department of Work and Pensions (DWP) decides that your home is too big for you or is in an unnecessarily expensive area. In this case, you may only receive the amount of money the DWP believes is reasonable for your needs. You should explain to the DWP if:
  • you need a larger home, for example, because you have a live-in carer, or
  • you need to live in a particular area, for example to be near your family, or a hospital or medical centre where you receive treatment.

Your housing cost payments may be mistakenly restricted if:

• you were previously living in rented accommodation and claiming housing benefit, and
• you have now bought your own home and are applying for housing cost payments to pay your mortgage interest.

In this case you may only get the same amount in housing cost payments as you previously received in housing benefit. However, this restriction should not be applied if you are buying a house more suited to the needs of a disabled person than the one you currently live in.

It's important to remember that housing cost payments only pay the interest on your mortgage. You must pay off the capital yourself.

How do I apply?

When you apply for income support, income based jobseeker's allowance or pension credit, you will need to include information about your mortgage and housing costs in order to get the extra payments. You will have to provide proof of your income, details of your financial situation and any related paperwork. Your lender will have to complete some of the forms confirming the details of your loan. The section on benefits has more on how to apply.

If you are already receiving these benefits but are not getting any extra payments towards your housing costs, contact your local Jobcentre Plus office or the Pension Service and ask them to send you a form. Call the Benefits Enquiry line on 0800 882 200 or textphone 0800 24 33 55 for general advice or to ask for leaflets and claim forms.

When you receive your first housing cost payment, it will be backdated to the date you first applied. This payment will be made straight to your mortgage lender. Make sure the mortgage lender understands that this will happen, and that they don't charge you an early redemption penalty for paying too much into your mortgage!

If you're not sure whether you're eligible for housing cost payments or if you have any problems with your claim, speak to an adviser at a Citizens Advice Bureau or DIAL centre, or contact Ownership Options.

How do I repay the capital?

If you are claiming housing cost payments or have an interest only mortgage, you will still need to consider how to pay back the capital sum. This is the original sum of money you borrowed to purchase your home. You may do this by:

• paying into an endowment or ISA fund
• using wages, benefits or contributions from your parents or other family members.

You should seek specialist benefits advice to make sure that the money you save to repay the capital does not effect your benefit entitlement.

Will I have any problems getting a mortgage?

Unfortunately, the bank or building society may well turn down your request for a mortgage if you are not receiving a regular wage and rely on benefits for part of your income. This may be because they exclude certain benefits as a source of income, or because they don't know how benefits for disabled people (such as housing cost payments) work.

Mortgage lenders often ask disabled people to provide extra information about their income and expenditure. They may then use this information to turn your application down on the grounds of affordability, because they don't think you can afford to make the mortgage repayments.

How can I prevent my mortgage application getting turned down?

Make sure you are well prepared when you approach the bank or building society to apply for a mortgage, and have worked out how you will be able to make your mortgage payments. Draw up a budget listing all your sources of income and all the things you regularly spend money on and show how you will fit your mortgage repayments into this budget. If you need help preparing this, contact Ownership Options.

What if my application is still turned down?

If one mortgage lender turns you down, try a different one. Be persistent. However, if you think a lender is turning you down specifically because you are disabled, this is discrimination, and you may be able to take action against them.

What are my rights under disability discrimination law?

Under the Disability Discrimination Act (DDA), banks, building societies and other financial institutions must take steps to ensure that you can access their services. This may mean:

• making their premises physically accessible, for example by installing a ramp or lift
• providing information on their services in alternative formats, such as Braille or large print, or through an accessible website
• arranging for someone to interpret for you using British Sign Language
• helping you with written forms
• allowing you to submit information to them in a convenient format, for example by email or over the phone if you have problems coming into their office.

If you have enough income to afford a mortgage, the bank or building society cannot refuse you a mortgage purely on the grounds that you are disabled. This is against the law. If you are offered a loan, lenders cannot insist that you accept extra terms that they wouldn't expect a non-disabled applicant to accept. For example, you shouldn't be asked to pay a larger deposit, or to make larger monthly repayments.

Mortgage lenders are allowed to turn down an application if they believe that the applicant is incapable of understanding the nature of the contract and the responsibilities it entails. However, lenders can't refuse or restrict their services to anyone acting legally on the disabled person's behalf, such as a relative or partner.

What can I do if a lender discriminates against me?

If you think a mortgage lender is discriminating against you, you can take action under the Disability Discrimination Act. You will need to prove that the reason the lender turned you down or treated you badly was specifically linked to your disability and was not, for example, to do with financial instability. Ownership Options can help you make your case.

You can find out more about dealing with disability discrimination here.

What if I can't afford to buy a home?

If you can't afford to get a mortgage, you may be able to get a grant or loan to help you. Alternatively, you could consider purchasing a share in a home through a shared ownership scheme.

Will I be able to get insurance?

When you take out a mortgage, you may also want to take out mortgage protection insurance. There are several different kinds of protection you can get:

• Life assurance will pay off your mortgage if you die, so it's important to get this if you have a partner, children or other dependants.
• Accident, sickness and unemployment insurance (ASU) covers you if you are unable to pay your mortgage due to illness or redundancy.

When you are taking out insurance, take care to read all the small print and make sure it will cover you. Many insurers will not pay out if you become ill due to a condition or disability that was already in existence when you took out the policy, while other insurers may not cover you at all, or may charge much higher premiums.

However, there are special rules governing when an insurance company is justified in refusing to provide cover for a disabled person, or when they can charge a higher price. The insurer's reason for doing this has to be based on medical evidence about you as an individual, not on stereotypical assumptions about disabled people. Therefore if you have an illness, the insurance company should get medical evidence about how this impacts upon you and make any decision based on that evidence and any actuarial data about your condition and the real risks involved.

If you are having problems getting insurance, an IFA or insurance broker should be able to help you find a suitable policy, although they may charge a fee for this.

What if a member of my family is a disabled person?

If a member of your family is a disabled person and you want to move to a new home that is more suitable for your needs, you should be able to claim housing cost payments to help pay your mortgage interest, provided you are eligible for income support, income based jobseeker's allowance or pension credit (guarantee element).

Where can I find out more and get help and advice?

The page on buying a home if you're disabled has more information on things you need to consider, and lists useful organisations that can help you.