Can home loans and Centrelink benefits go together?
- Yes, it is possible to get a home loan on Centrelink benefits.
- A successful home loan application will depend on your total income.
- A home loan broker can help find the right finance solution for you.
What’s the great Australian Dream? Owning your home, of course!
Owning your home brings security, comfort and peace of mind to you and your family. And being able to hang a picture without the permission of your landlord is a plus, too.
If you’re ready to start owning your home, you’ll need to start shopping around for a home loan.
For some people, this is easier said than done. If you have a bad credit history or receive a Centrelink benefit, obtaining a home loan can seem like an insurmountable challenge. Where do you start? Will you be knocked back? Is it even possible?
Well, thankfully we are here to answer those questions. Yes, it is possible to get a home loan while receiving Centrelink benefits. However, it will depend on a number of factors including the type of benefit, your additional sources of income as well as your employment and credit history. You may even be able to get a home loan with bad credit history.
If you are unsure about whether you can receive a home loan while receiving Centrelink benefits, check out Rapid Finance. We may be able to assist you with your query and discuss the steps for applying for a home loan on Centrelink.
What Centrelink benefits are accepted by lenders?
The key to whether or not you can get finance comes down to your ability to pay the mortgage—that is, how much total income you receive.
Can you get a loan when on Centrelink benefits? Some Centrelink benefits are considered a source of income, while others are not. In most cases, to be accepted for a home loan, you will need to have another primary source of income in addition to a Centrelink benefit.
Common Centrelink benefits
| Type of Centrelink Benefit | Accepted? | Conditions |
|---|---|---|
|
Age Pension |
Yes |
You will need another primary source of income |
|
Child Support |
Yes |
You will need another primary source of income |
|
DSP |
Yes |
You will need another primary source of income |
|
Family Tax Benefit |
Yes |
This applies for both Family Tax Benefit A and B. Other tests may apply. |
|
Veterans Affairs Pension |
Yes |
You will need another primary source of income |
|
Pharmaceutical Allowance |
No |
This benefit is for a specific purpose and is not considered part of your income. |
|
Newstart Allowance |
No |
Home loans are not available to jobseekers. |
How to maximise your chances of getting a loan
If you receive a Centrelink benefit in addition to another source of income, you may be closer to a home loan than you think. There are a number of factors that a lender will take into consideration when reviewing your application.
Making sure you tick all the boxes is a good way to maximise your chances of successful home loan application, even if you are receiving a Centrelink benefit.
Save up a good-sized deposit. As a general rule, the bigger the deposit, the better. A healthy deposit reduces the risk for the lender, so they will be more likely to consider your application. A deposit of 20% or more of the value of the home will also reduce the cost of repayments, as you will not have to pay for Lenders Mortgage Insurance.
Have a healthy saving habit. This point is related to the point above. A lender will be on the lookout for proof that you have the ability to service your mortgage payments. If you have managed to save a deposit, then the chances are you have developed a good saving habit too! A credit history littered with bad habits is a big red flag for lenders, and they may stay away from your application!
Keep steady employment. The key to getting a home loan—even if you receive a Centrelink benefit—is proof that you can hold down a steady job. If you have a patchwork employment history, with long periods of unemployment or irregular employment, a lender will see you as a risk. Lenders are looking for borrowers who will be able to make regular payments on their mortgage for many years ahead.
Don’t ‘over-apply’ for loans. When you apply for a loan, this activity is marked on your credit history. ‘Over-applying’ (applying to many lenders) leads to your credit history taking many hits at once and hurts your chances of securing a loan. A home loan broker will take a targeted approach to applying for home loans, which can reduce unnecessary hits to your credit history.
Check out some more tips on how to finance a home loan with bad credit or see what other Centrelink loans may be available to you.