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purchasing a mortgage on D.L.A????

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sherry76 | 21:43 Fri 04th Jan 2008 | Business & Finance
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Hi, please could anybody tell me if it is possible for my mother to get a small mortgage on disability living allowance? she has been offered her council home and I would'nt want her to miss out. She has had a horrible life and I just wish she could have something for herself.
Any tips would be gladly appreciated!
Thankyou..sherry

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The tip is work out for her whether she can really afford it. If DLA is her only source of income then I doubt it, though you gave us no numbers to work with. The Government baseline for a single person living on income support is somewhere just around �110 per week, I think. Being in receipt of DLA presumably gives her more a bit more than that.
I can't see any council offer a house at less than �30k these days (a pure guess). A mortgage of �30k would cost nearly �40 per week (interest repayment only). OK so one can deduct the cost of the rent she is paying now, but I'll bet that isn't more than a tenner (net), because of the income support. Can she afford that sort of money from her existing income?
Just to add (and I know it's a few days late) aside from a mortgage, owning your own place brings so many other expenses that you may not have when renting, such as property insurance, maintenance, etc, etc. It all adds up over time, and if you are on a fixed income it can be too much - I'd stick with renting.
We've moved house twice in the last two years and I know that on the mortgage application forms it said that benefits do NOT count as income.
I don't know if this is a rule all lenders have.
As an alternative, would it be possible for someone in the family to loan her the money to buy the house?
You could also "buy" the house for her. Your mum would have take out the loan/mortgage and you would stand as Guarantor. You could then either pay the mortgage and charge your mum "rent" or she could pay the mortgage in replace of the rent she was paying.

We did this for my mother in law. Although she can't afford the full mortgage she pays us less than she did when she rented it and the house has been left to OH in her will. We will benefit from the eventual value of the house and she benefits from the reduce rent. She is not well off at all and she now feels that she has been able to do somehting for her son.

Obvioulsy you run the risk of losing the house if your mum dies within 3 years (I think it then reverys back to the council). The house could be transferred to you after the 3 years.

However...

We are all quite close and trust each other implicitly. If that isn't the case with your family (please don't take offence) you could run the risk of

a) You paying all those years only for a sibling to stake a claim of your mother's estate on her death (that happened to a friend)
b) If she transfers it to you you could kick her out and she would become homeless
c) You falling on hard times, your mum not being able to pay the mortgage either - the house being repossessed.
d) If its in your mums name, even tho you are paying the mortgage, she could sell it from under you

However, we have never regretted it. Mum in law has years and years to go yet but we knew it would be a long term investment.

Good luck to you and your mum, whatever you decide!!

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