Owning Your Dream Home: A Guide to a DLA Mortgage

Can You use DLA (Disability Living Allowance) for a mortgage? We break down everything you need to know about a DLA Mortgage.

Getting a DLA Mortgage

For many individuals with disabilities in the UK, achieving homeownership can feel like a distant dream. Financial limitations, coupled with the complexities of navigating the mortgage market, can create significant barriers. However, Disability Living Allowance (DLA) mortgages offer a glimmer of hope, enabling individuals receiving DLA to own their own property.

What is a DLA Mortgage?

DLA mortgages, in this context, are specialist mortgages designed for individuals receiving DLA. These mortgages consider your DLA as a reliable source of income when assessing affordability, increasing your chances of qualifying for a mortgage and achieving homeownership.

Can You Get a Mortgage with DLA?

Yes, absolutely! While lenders primarily focus on your overall financial stability, they do consider DLA as a legitimate and stable source of income. This is because DLA is typically awarded for long-term disabilities, ensuring a consistent income stream throughout your mortgage term.

How Do DLA Mortgages Work?

The process of obtaining a DLA mortgage generally follows these steps:

Financial Assessment: A lender will assess your entire financial picture, including your income from employment (if applicable), other benefits, regular outgoings, and credit score. Your DLA will be factored into the income calculation to determine the maximum mortgage amount you can qualify for.
Affordability Test: Lenders will rigorously assess your affordability to ensure you can comfortably manage the mortgage payments over the loan term. This includes considering your essential living expenses and future financial stability.
Mortgage Agreement: Once approved, you’ll receive a mortgage agreement outlining the loan terms, interest rate, and repayment schedule.

Benefits of DLA Mortgages

DLA mortgages offer several advantages for people with disabilities seeking to become homeowners:

Increased Eligibility: Including DLA in your income calculations can significantly improve your chances of qualifying for a mortgage compared to relying solely on salary or other benefits.
Accessibility: DLA mortgages open the door to homeownership for individuals with disabilities who might face challenges securing a traditional mortgage.
Financial Independence: Owning your own home fosters a sense of security and independence, empowering individuals with disabilities to manage their own living space.
Potential for Equity Growth: Over time, as property values rise, you’ll build equity in your home, creating a valuable financial asset.

Things to Consider Before Opting for a DLA Mortgage

While DLA mortgages offer a path to homeownership, certain aspects require careful consideration:

Loan Amount and Term: DLA mortgages may have a lower maximum loan amount due to the nature of the income source. This might limit your property options or lead to a longer repayment term, increasing total interest paid.
Interest Rates: DLA mortgages might come with slightly higher interest rates compared to standard mortgages. However, it’s still crucial to shop around and compare rates from different lenders.
Deposit Requirements: A larger deposit can significantly improve your application’s strength and potentially secure a more favourable mortgage deal.

Is a DLA Mortgage Right for You?

A DLA mortgage can unlock homeownership opportunities for people with disabilities. Here’s how to determine if it’s the right choice for you:

Financial Stability: Assess your overall financial situation. Ensure you can comfortably manage the mortgage payments while covering other essential expenses.
Long-Term Plans: Consider your long-term plans. Do you envision staying in the property for a long time? A longer repayment term might be more manageable, but remember the total interest cost will be higher.
Future Income Security: Evaluate your future income security. Is your DLA likely to remain consistent throughout the mortgage term?

Alternatives to DLA Mortgages

If a DLA mortgage doesn’t align perfectly with your needs, explore these alternatives:

Saving for a Larger Deposit: Focus on saving a larger deposit to reduce your borrowing amount and potentially qualify for a lower interest rate on a standard mortgage.
Joint Mortgage Application: Consider applying for a joint mortgage with a partner or family member who has a strong financial profile. This can improve your application’s strength and secure a better loan offer.
Government Schemes & Grants: Explore government schemes and grants designed to help people with disabilities purchase a property. These programs can offer financial support towards your deposit or provide access to specialist lenders.

Does DLA Count as Income for a Mortgage?

Yes, Disability Living Allowance (DLA) is considered a reliable source of income by lenders when assessing your eligibility for a mortgage. This is because DLA is typically awarded for long-term disabilities, ensuring a consistent income stream throughout your mortgage term. Including DLA in your income calculation can significantly improve your chances of qualifying for a mortgage compared to relying solely on salary or other benefits.

Can Child DLA Be Used For Mortgage?

You can potentially get a Child DLA Mortgage. Obviously an adult has to be the one to take out the mortgage, however, if the child is under 11, or the DLA will continue longer than 5 years you can potentially use it toward a mortgage.

Does DLA Count As Income For A Mortgage?

Whether DLA counts as income for a mortgage will vary depending on the lender. However, some lenders certainly accept 100% of Disability Living allowance (DLA) as income toward your mortgage if it can be proved sustainable. In most cases of DLA people are on this long term, and it is therefore quite a stable form of income.

A mortgage article by Mark Robinson – Mortgage & Equity Release Broker

DLA Mortgage