Which Mortgage Lenders Accept Tax Credits?

This blog post aims to explore which mortgage lenders accept Tax Credits as a source of income when they review applications for mortgages. For a detailed view of the topic, we will also discuss how one can apply for a mortgage while claiming Tax Credits as well as review other sources of financial support for Tax Credits claimants seeking mortgage lenders. 

Which Mortgage Lenders Accept Tax Credits?

Mortgage lenders that accept Tax Credits as a source of income regarding mortgage payments by an applicant include the following:

  • Accord
  • Aldermore
  • BM Solutions
  • Kensington
  • Kent Reliance
  • Mortgage Trust
  • Paragon Mortgages
  • Platform
  • Precise Mortgages
  • Principality
  • TBMC
  • The Mortgage Works
  • The Woolwich
  • The West Brom

In addition to this, banks that offer mortgage lending services to low-income groups also accept Tax Credits as an income. These include the following:

  • Abbey National 
  • Alliance & Leicester 
  • Barclays 
  • Bradford & Bingley 
  • Co-operative Financial Services Group 
  • Clydesdale & Yorkshire Banks 
  • First Direct 
  • Halifax 
  • HBOS 
  • HSBC 
  • Lloyds Bank 
  • NatWest 
  • Northern Rock 
  • Royal Bank of Scotland 
  • Scottish Widows 
  • Tesco Bank 
  • Ulster Bank
  • Virgin Money 
  • Yorkshire Bank 

Building societies that offer mortgage lending services and accept Tax Credits as an income include the following:

  • Chelsea Building Society
  • Coventry Building Society
  • Darlington Building Society
  • Furness Building Society
  • Hanley Economics Building Society
  • Hinckley and Rugby Building Society
  • Leeds Building Society
  • Manchester Building Society
  • Market Harborough Building Society
  • Nationwide Building Society
  • Newcastle Building Society
  • Nottingham Building Society
  • Skipton Building Society
  • Tipton & Coseley Building Society

However, this is not an exhaustive list and can be updated periodically; depending on the change of policies by any financial institution that may choose to accept welfare benefits such as Tax Credits as a source of income for mortgage payments or refuse to do so.

The reason why many mortgage lenders are willing to accept Tax Credits as a source of income is mainly that they are seeking proof of steady earnings of an applicant. Whether an applicant is completely relying on benefits income or partially dependent on work-related wages to pay their mortgage payments, mortgage lenders will be satisfied with an applicant’s ability to make payments as long as they meet the specific criteria outlined by them.  

How Can I Apply For A Mortgage On Tax Credits?

You can apply for a mortgage by choosing a mortgage lender that best suits your needs and ability to make payments. You may need to discuss the payment schedule and your financial situation with each one as you proceed with your application.

If you are claiming Tax Credits or on a low income for any other reason while seeking a mortgage lender, you may find the following tips useful:

  • You may find that filing a joint application with a partner may prove to be more financially feasible than applying individually. The reason is that when you are applying with a partner both your income and ability to make mortgage payments will be taken into consideration. 
  • It is advisable to borrow a lower amount to increase the chances of having it approved since you are on a low income and the lender would prefer to minimise their risk.
  • You should try to reduce your current liabilities. Mortgage lenders will not only look at the sources of your income when they consider your application but will also assess your financial stability by reviewing your liabilities. With a reduced cash outflow, you will be in a better position to make regular and timely mortgage payments.
  • Being on a low income, your chances of having a mortgage application approved can increase if you offer to pay a larger deposit. It will also show the lender how well you have planned this financially by saving money for the deposit. This will also help you in borrowing less money, which subsequently reduces your future payments.

However, certain situations may create obstacles to your mortgage application being approved. Some of these are:

  • you have a bad credit history
  • you are either unemployed or on a low income
  • a previous application filed by you has been rejected
  • you are about to lose your benefits claim
  • more than half of your income is from benefits

If you wish to get personal assistance and professional advice on the matter, you may consider contacting an Expert Mortgage Advisor.

What Other Help Can I Get To Pay Mortgage From Tax Credits?

You can get help in the form of Support for Mortage Interest (SMI); a repayable loan of up to £200,000 from the Department for Work and Pensions.

To be eligible for the loan, you should be able to meet the following conditions:

  • claim a qualifying welfare benefit such as Universal Credit for at least 9 months
  • use the amount to pay interest and not the principal amount of your mortgage 

Being a loan, you will be required to pay back the SMI (with a 1.4% rate of interest) when you sell your property. However, you should keep in mind that since Tax Credits (among other legacy benefits) are being replaced with Universal Credit across the UK, you will need to move to Universal Credit from Tax Credits (if you haven’t done so already) before filing a claim.

You can check if the transfer applies to your area by getting in touch with your local council office or Jobcentre Plus office. Alternatively, you can call the Universal Credit helpline at 0800 328 5644, from Monday to Friday between 8 am to 6 pm.

Whether or not you qualify for an SMI, Universal Credit is bound to replace Tax Credits by 2024. If you are already claiming the benefit, you can continue to do so until Universal Credit formally replaces it or you can use an online and independent benefits calculator to check whether you will be better off claiming Tax Credits or moving to Universal Credit by applying for it earlier. 


The above discussion has helped in concluding that there is an elaborate list of mortgage lenders that offer services to applicants claiming welfare benefits such as Tax Credits. However, an applicant may have to check with them individually or seek the help of a financial adviser before applying.


Can you get a mortgage on benefits?

Mortgage Lenders that accept benefits – Citizens Advice

How to get a mortgage on benefits

Mortgage on benefits: The lenders that accept benefits