Stipend income is a regular sum paid by an employer or organisation to help the recipient with basic living costs whilst working or training. It’s commonly received by charity workers and clergy, or employees who are undergoing training such as a PhD.
If you are on a stipend, you may find it more difficult to get a mortgage, but it’s usually not impossible. There are providers willing to lend to people on a stipend, and an impartial mortgage broker can find out which lenders are likely to accept you before you apply. If you’re on a stipend and you need a mortgage, this guide will help you understand your options.
Can I Get a Mortgage With a Clergy Stipend Income?
If you are on a clergy stipend you’ll have quite a good chance of being accepted for a mortgage as these incomes are generally more stable and long-lasting. If you’re also entitled to housing allowance and mortgage interest deductions these can help to satisfy lenders’ affordability checks. If you’ve received your stipend for less than a year you may have fewer options, but if you can provide written proof from your Diocese that the income will be ongoing this will support your application.
Can I Get a Mortgage With a PhD Stipend income?
If you are on a PhD stipend your choice of lenders will be limited, especially with the high street banks, because these incomes are typically shorter and they offer no guarantee of employment. However, some lenders may consider your application, especially if they believe there’s a good chance you’ll receive employment in a stable profession at the end of your training.
How Do Lenders Decide Whether to Give Me a Mortgage on a Stipend Income?
An impartial mortgage broker who understands the criteria of each lender will be able to assess your situation and find the lenders who are likely to accept your application. Let’s discuss some of the main points your broker will consider before approaching lenders on your behalf.
- Do you or your partner have a 2nd income? Some lenders will only consider a stipend if it’s backed up with a 2nd income, while others may accept a stipend on its own.
- What’s the term of your stipend? Some lenders will want to see that you’ve been receiving your income for some time, perhaps 3 months or more, or that it’s guaranteed for a certain period.
- What type of stipend do you receive? Some lenders will only consider clergy stipends, whereas others may only deal with PhD stipends. Some will consider any type of stipend income.
- What will your stipend lead to? If it’s for training, such as a PhD, some providers will only lend to you if they can see good employment potential once your training is complete.
- How strong is your credit score and general financial situation? If you have poor credit or a lot of debt, you may find it harder to find a lender who is willing to accept your stipend.
How Much Can I Borrow on a Stipend Income?
For those lenders who are willing to consider a stipend, the amount they’ll be willing to lend to you will depend on the points detailed in the previous section. In particular, it will depend on how much your stipend pays and whether or not it’ll be backed up by a 2nd income. For a sole application, you may be able to raise up to four times your stipend with the right lender, but your choices will be limited. For a joint application with a 2nd income, you’ll have more lenders to choose from and you’ll be able to borrow more.
The Bottom Line
If you’re on a stipend you should be able to get a mortgage but your choice of lenders may be limited. Being rejected by a lender can damage your credit score so it’s important you don’t apply to lenders before seeking professional advice. An impartial mortgage broker who understands the criteria of each lender will be able to assess your situation and ensure you only apply to lenders who are likely to accept your application – they’ll also be able to apply on your behalf to save time and hassle.
Book in for your FREE consultation and we’ll help you find a mortgage that suits your needs perfectly. We have access to a wide variety of lenders and mortgage products, including exclusive deals, and we’re duty-bound to offer you the right advice. If you’re happy to proceed, we can apply on your behalf, liaising with estate agents, solicitors and lenders to make it easy for you. We can help you remotely via phone or video call, so book in for your FREE consultation and let’s get you moving. We look forward to helping you!
