We are often asked about the financial rules and regulations surrounding whether or not it's possible to take out mortgages for people currently on benefits. While the short answer is yes, there is an awful lot more information required in order to know for sure.
Depending on the type of benefits you are in receipt of, you may definitely find yourself eligible for a mortgage. The key criteria are much the same as for everyone else applying for such a large loan. Firstly you must be able to prove that you can afford not only the mortgage repayments, but also any other debts you have as well as your cost of living.
For people who rely solely on state issued benefits this may be too big an ask. Many people forget to factor in the day to day cost of living into their plans when it comes to formulating an approach to pay off a mortgage, which usually leads to financial problems some way down the line - often ones that can prove to be crippling to your standard of life.
Next, you'll need to be able to prove that your benefits (should they be your main income) are guaranteed to be there in at least three years time. This may be tough to do for some people, but those who find themselves on stable long term benefits should be able to work something out with the government department which provides their money should paperwork be required by the lending institution.
Of course, the type of mortgage sought plays a huge part in whether or not your application will be successful. If you are planning on getting off benefits at some stage in the future, you might have more luck trying for an interest only mortgage, where you pay off nothing but the monthly interest incurred in the deal until you have enough savings put aside to pay for the house itself.
Unfortunately, given the much lower income for those reliant on benefits, the chances are that if you are successful your interest rates will be through the roof. This might make it a more sensible approach to simply rent, as that won't potentially saddle you with huge debts down the line.