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It is possible to get a mortgage if you are unemployed and claiming benefits, but this is very rare and only happens under certain circumstances. Generally speaking, it can be very challenging to secure a mortgage in the UK if you are currently unemployed, and it can be worth also considering some alternatives. Lenders typically require proof of a stable and regular income to ensure that borrowers can afford to repay the loan, so it is not common to get approved for a mortgage while unemployed. 

There were approximately 1.3 million unemployed people in the United Kingdom in the three months to April 2023. If you are among them, it is still however possible to get on the property ladder. This article aims to explain how.


Are There Any Alternative Options For Unemployed Individuals To Obtain A Mortgage?


Yes. While it can seem challenging, some alternative options may be available for unemployed individuals seeking a mortgage. These options include:


Joint Mortgage

If you have a partner or spouse who has a stable income, you may consider applying for a joint mortgage. Their income will be taken into account, increasing the chances of approval.


Guarantor Mortgage

If you have a family member or close friend who is willing to act as a guarantor, they can help strengthen your mortgage application. The guarantor agrees to make the mortgage payments if you are unable to do so.


Savings or Investments

If you have substantial savings or investments that can demonstrate financial stability and the ability to make mortgage payments, lenders may consider this as a positive factor.


Can I Apply For A Mortgage If I’m On Government Benefits?


Yes. Receiving government benefits or Universal Credit does not automatically disqualify you from obtaining a mortgage. Some lenders may consider this as part of your income, but you may still need to provide additional proof of income or meet other eligibility requirements.


How can I improve my chances of getting a mortgage while unemployed?


How Can I Improve My Chances Of Getting A Mortgage While Unemployed?


Improve Your Credit Score

Maintaining a good credit history is crucial. Pay your bills on time, manage existing debts responsibly, and check your credit report for any errors. This makes you look like a less risky lender, so more mortgage products will be available to you.


Seek Employment

Of course, getting a job is easier said than done, but even looking for one can help you. Lenders are more likely to consider your application if you have a job offer or are actively seeking employment. 


Reduce Debt And Manage Finances

Minimise outstanding debts and manage your finances effectively. Showing responsible financial behaviour, such as regular savings, can help strengthen your application.

You can also consult a mortgage broker who specialises in challenging cases and can provide valuable guidance. Brokers have access to a wide range of lenders and can help identify potential options based on your unique circumstances. 

A broker will assess your financial situation, advise on the most suitable mortgage products, and guide you through the application process, increasing your chances of success. Deedle can assess your individual circumstances and suggest the best course of action.


How Long Do I Need To Be Employed Before I Can Apply For A Mortgage?


Lenders typically prefer applicants to have a stable employment history, usually for at least 6 to 12 months. However, some lenders may consider alternative income sources or circumstances on a case-by-case basis, so this is not a fixed rule.


Will My Previous Employment History Be Taken Into Account If I Am Currently Unemployed?


Yes, lenders often consider your overall employment history when assessing your mortgage application. A consistent work history with a good track record of employment stability can work in your favour, even if you are currently unemployed. However, the most recent employment situation is typically given more weight.


What other factors do lenders consider besides employment status?


What Other Factors Do Lenders Consider Besides Employment Status?


Lenders assess various factors when considering a mortgage application in order to ensure that you can afford the monthly mortgage repayments and that the mortgage is a sound investment for both parties. These include: 

  • Your credit score
  • Your financial stability
  • Any existing debts
  • Your monthly expenses
  • The loan-to-value (LTV) ratio


Can I Remortgage My Property If I Become Unemployed After Obtaining A Mortgage?


Yes but if you become unemployed after obtaining a mortgage, it can be more challenging to remortgage your property. Lenders will reassess your financial situation, including your ability to make repayments without a regular income. 


What If I Plan To Return To Work Soon And Want A Mortgage?


If you are currently unemployed but have a confirmed job offer or are actively seeking employment, some lenders may consider your future income prospects and make a decision based on that. They may request a signed job offer letter or proof of ongoing job search efforts.


Can I Get A Mortgage If I’m Unemployed Due To Disability?


Yes, if you’re unemployed due to a disability, you may still have options to get a mortgage. If you receive disability benefits, lenders may consider this as a valid source of income. You will need to provide documentation, such as benefit statements or award letters, to prove the stability and regularity of your disability income.

If you have a private long-term disability insurance policy, the benefits you receive from it may be considered as income by certain lenders. Similar to disability benefits, you will need to provide documentation to support your eligibility.


Can I Get A Mortgage If I’m Unemployed And Have A Low Credit Score?


Yes but securing a mortgage while unemployed and having a low credit score can be particularly challenging. The easiest plan of action would be to take steps to improve your credit score before applying for a mortgage. 

This can include paying off outstanding debts, making sure you pay bills on time, and disputing any errors on your credit report. Over time, these efforts can help raise your credit score and increase your chances of approval.

A larger down payment can help compensate for a low credit score and unemployment. It demonstrates your commitment to the mortgage and reduces the lender’s risk. 


Concluding Thoughts


In conclusion, it is challenging to obtain a mortgage if you are unemployed, but not impossible. Lenders typically require a stable and verifiable source of income to ensure repayment, so you may have to jump a few extra hurdles.

Working with a mortgage expert can make the process smoother. Deedle takes your needs into account, and our expert advisors take the time to match you with the lender who is most likely to approve you for the best rates based on your unique situation. Apply for a free quote today.