Home loans for Centrelink recipients

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Centrelink recipients still have a wide range of choices when taking the step toward owning their own home.Home loans for centrelink recipients

Obtaining a home loan through a traditional bank is challenging for those receiving Centrelink benefits. If you do your research, however, you will find that receiving Centrelink benefits doesn’t necessarily mean you have to give up the dream of owning your own home.

You'll need to do some research or contact a mortgage broker to find out which lenders accept Centrelink benefits as your sole source of income.

It’s important to note that some payments are considered more permanent than others by lenders, and can help you build a case for your home loan application.

How does a mortgage for people on Centrelink work?

A home loan that is designed for a Centrelink recipient works in the same basic way as a home loan offered to other Australians, in that money is borrowed and paid back with interest. One of the major differences is that the application process may be more difficult, because you’re trying to find a lender who understands your situation. These lenders will allow certain Centrelink benefits to be counted as income. Other types of information will be used by the lender to decide whether the applicant will be capable of making timely monthly repayments.

A Centrelink recipient will need to be specific about which benefits they are receiving and for how much. Centrelink recipients who already own a home can also use this type of loan to refinance their current home loan.

Jane is currently receiving Centrelink benefits and applies for a home loan

Jane is a divorced mother of two children, who in addition to income from her job receives Centrelink benefits in the form of Child Support. After saving for five years she felt confident that she had the money needed for a deposit and began to investigate home loan lenders who would be willing to consider her Centrelink benefits as a reliable source of income.

Jane calculated what she could borrow based on her income alone and found that she would only be able to look at homes that cost around $396,000. Once she added the additional $200 she received weekly through her Centrelink benefit that number jumped to over $415,000. Since her children were still young, she was able to find a bank that met her in the middle and allowed her to borrow $400,000 to purchase a new home.

What are the risks?

  • Overapplying. Be sure that you do your research before you begin applying for a home loan if you are including Centrelink benefits as income. Too many rejected applications will further damage your credit history.
  • Ensure you can make your loan repayments. While the idea of owning a home may be enticing, you should first make sure you're able to take on that type of financial commitment. It may be a good idea to try smaller personal loans at first to help build your credit and possibly qualify for a loan with lower rates later on.

Pros and cons of getting a home loan while receiving Centrelink benefits

Pros
  • Accessibility. A home loan that has been structured for Centrelink recipients gives them an opportunity that many lenders are not willing to afford them.
Cons
  • Harder to qualify for. Lenders will be strict about which types of Centrelink payments are considered income. For example, if you receive rent assistance, that cannot be considered as the funds are designated for a specific payment and are not disposable income. See below to find out which types of Centrelink benefits lenders will accept.

Is your Centrelink benefit accepted by lenders?

Not all Centrelink benefits will be considered by a lender as an acceptable form of extra income. Those that are designated for a specific purpose, such as for pharmaceuticals, will not be added to your monthly earnings. Others may be considered, but only under certain conditions. The information below is a general guide only. Please remember that each lender might treat the below benefits in different ways:

Age pensionYesAge pension will only be considered as a secondary form of income. You must have another source of earnings in addition to the benefit.
Carer’s AllowanceYesThis type of benefit will require that you have an additional source of income. Earnings from a job would be your primary source, while the allowance is considered supplemental.
Child SupportYesYou will need to provide documentation including the Family Law Court Order, bank statements showing a steady deposit history, a letter from your solicitor and a letter obtained from the Child Support Agency (CSA).
Disability PensionYesIf you receive a disability pension you will need to show proof of a second source of income.
Family Tax BenefitsYesThis applies if you are receiving Family Tax Benefits part A and B. Lenders will look at the age of your children before deciding if this is an acceptable form of income.
Foster Care AllowancesYesAllowances for foster care are accepted so long as you are receiving another source of income.
Overseas PensionYesOnly in the event that your pension is coming from one of the following countries: Austria, Belgium, Canada, Chile, Croatia, Cyprus, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Korea Republic, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Slovenia, Spain, Switzerland or the United States of America.
Veterans and Widows PensionYesWhile there are typically no conditions to be met, your application will be better received if you have another form of income as well.

If the benefit you receive from Centrelink is not listed on the chart above, then it may not be considered by lenders as a genuine form of income. In this case it might be best to speak to a lender directly about your options and eligibility.

Don’t let the pension get in the way of getting a loan
 

What you should look for in a home loan

You have many options available to you in a home loan, even if you are receiving Centrelink benefits. To ensure that you are getting the right home loan for your circumstance make sure that you are comparing the criteria and what is being offered by different lending institutions.

  • Eligibility criteria. Certain lenders will only accept applications if you are only receiving Family Tax Benefits, while others may count a large family supplement. You will need to look at the restrictions very carefully before applying for a home loan if you are receiving Centrelink benefits. Many lenders will even look at the age of the children in your household and base part of their assessment on that information.
  • Lender. Make sure you choose a lender that you think will be understanding of your situation. You’d want a lender to look after you from the start of your mortgage to the end. In the event that you can’t make your repayments, you’d want your lender to understand why, and to know if they offer a repayment holiday.
  • Employment. In most cases, Centrelink benefits will only be considered as a secondary form of income. Check to see if you have to be employed as well. If you're filling out a joint application, make sure you determine if your partner needs to hold a steady job.
  • Interest rates. Due to your unique circumstances, lenders may attempt to take advantage by offering home loans at a higher rate. Compare rates from lender to lender to make sure you are getting the best deal.
  • Extra fees. A lender may impose extra fees for the paperwork involved in considering Centrelink benefits as a second form of income. Read the fee charts carefully and calculate what yours will be for each lender that you are interested in.

Need help? A mortgage broker can find specialised loans for borrowers in difficult circumstances

Frequently asked questions about taking out a home loan with Centrelink benefits

First you should get in touch with a few lenders or a mortgage broker to discuss your options and eligibility. After you’ve found a lender who is willing to assist, you can proceed with the regular application process. Note that you will need to provider extra information about your income.

This will depend on your income, combined with the income from your Centrelink benefit. Your other expenses will also be considered. You can use our borrowing power calculator to give you an indication.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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96 Responses

  1. Default Gravatar
    RuvanAugust 9, 2017

    Me and my husband are paying rent for nearly 18 years. Our son is also living with us. We know how to manage our income. We did not have a problem in paying rent or manage bills. Now, 2 of us is getting $3000 per month. We would like to apply for a home loan with insurance.

    • Staff
      RenchAugust 9, 2017Staff

      Hi Ruvan,

      Thanks for reaching out to us. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      If you’re on a pension/Centrelink benefits, you can also have a look on this page and compare your options.

      Please click the name of your preferred lender to find out the details and the minimum eligibility. You may then click the green “Go to Site” button to submit your loan application online.

      Kind regards,
      Rench

  2. Default Gravatar
    LisaJuly 24, 2017

    We need a home loan relatively quickly and have been told that it’s ok. We need a personal loan for $60000 for a deposit and don’t know where to get it. I have had a part 9 but that has been paid out approx 18 months ago. We can’t go to Homestart as they only loan up to 5 acres and we need more because we have disabled foster children and one has horses. We would love any help you could give us.

    • Staff
      RenchJuly 27, 2017Staff

      Hi Lisa,

      Thanks for reaching out to us. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      You may compare your options on this page and get helpful information. You may click on your preferred lender to see more details then you can click on the ‘Go to Site’ button to submit an online application.

      Hope this helps.

      Best regards,
      Rench

  3. Default Gravatar
    ZacsMumJuly 19, 2017

    Hi! I am on Single Parent Pension FTB A + B from Centrelink which is around $1200 per fortnight and my newborn son is 8 weeks old. I have no debts at all, I do not pay for rent or living expenses and have a deposit of $100,000. Would that qualify for a home loan? Would they accept my Centrelink as my only source of income? Thanks so much. :-)

    • Staff
      RenchJuly 20, 2017Staff

      Hi Kimberly,

      Thanks for reaching out to us. Congratulations to you and your newborn baby. Wishing you and your newborn many years of good health, love, and happiness.

      You’re actually already on the correct page for helpful information on home loans for Centrelink recipients. You can also find this page helpful and you may compare your options from there.

      Please click on the name of your preferred lender to see more details and their eligibility criteria. Then you may click on the green ‘Enquire Now’ button to get in contact with them.

      Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.

      Hope this helps.

      Cheers,
      Rench

  4. Default Gravatar
    ninaJuly 16, 2017

    Is it possible for an age pensioner with no other assets to apply for a loan for home ?

    • Staff
      JhezelynJuly 16, 2017Staff

      Hi Nina

      Thanks for your comment.

      There are still lenders willing to offer home loans to individuals receiving pension benefits even if some lenders view pensioners as being high-risk borrowers. You may refer to this page to get information on how to get a home loan if you’re a pensioner.

      Regards,
      Jhezelyn

  5. Default Gravatar
    July 14, 2017

    Presently have a property 50% tennants in common and friend wishes to leave.
    When I bought her out for $145000 would only have about $25000 left and was wondering if I could get a $40000 home loan mortgage even though I am on aged pension $875 per fortnight.
    I understand CBA would consider a 30 year loan .
    Do I have any other options .
    David

    • Staff
      JonathanJuly 27, 2017Staff

      Hello David,

      Thank you for your inquiry today.

      You can check our full-guide in regards to home loans for pensioners. Alternative is you can also discuss your personal circumstances with a mortgage broker who can help you organize your financing needs.

      Hope this helps.

      Cheers,
      Jonathan

  6. Default Gravatar
    July 11, 2017

    Is it possible to borrow for a loan for a unit (online business from home) at 60 years of age using superannuation as deposit -either small business loan or home loan?

  7. Default Gravatar
    rosiebJune 26, 2017

    My 43yo daughter is on a disability pension. She has 2 children at home. 19 and 12. She has been offered a house to buy for $175000. She currently pays $180pw rent. Are there any lenders who would finance a home loan in country SA under these circumstances and if so what deposit will she need. Council rates are only $650pa. Rainwater only so no water rates and property has solar to help with power bills. Can you recommend a lender?

    • Staff
      DanielleJune 27, 2017Staff

      Hi Rosieb,

      Thank you for contacting finder.com.au. We are a comparison website and general information service, we’re more than happy to offer general advice.

      You may refer to this page for options that may suit your needs. ​You may review and compare the offers available on the table. Once you have selected one, you may proceed by clicking the green “Go to Site” button.

      I hope this helps.

      Cheers,
      Danielle

  8. Default Gravatar
    TracyJune 25, 2017

    Hi, I have a Centrelink debt, two children, a deceased ex husband and still receiving tax benefits A and B. Do I have to declare the Centrelink debt?

    • Staff
      JonathanJune 25, 2017Staff

      Hi Tracy!

      Yes, you still need to declare them as they form part of your existing liabilities which is taken into consideration when applying for a loan.

      Hope this clarifies.

      Cheers,
      Jonathan

  9. Default Gravatar
    TaniaJune 20, 2017

    Hi, I’m currently getting newstart allowance and have a deposit to put down. Am I able to get a loan to purchase house?

    • Staff
      LiezlJune 23, 2017Staff

      Hi Tania,

      Thanks for reaching out.

      As a comparison company, we cannot comment on whether you will be approved for a home loan as most lenders will treat these types of applications on a case-by-case basis. Lenders generally assess your eligibility based on a range of factors including any other income or benefits you receive, your assets, liabilities and credit score. It’s a good idea to speak to a mortgage broker who can help you find a lender that will most likely accept your application.

      Best regards,
      Liezl

  10. Default Gravatar
    BreeJune 16, 2017

    I’m on Centrelink benefit family tax A and B. I pay 800 a month in rent for a housing commission.

    • Staff
      RenchJune 17, 2017Staff

      Hi Bree,

      Thanks for your inquiry.

      You can still apply for a home loan even when you are receiving Centrelink benefits. Please visit this page to get helpful info and compare your options. You can also make use of our loan calculator from there to give you an idea on how much you can borrow. Please click the name of your preferred lender to find out the details and the minimum eligibility of the lender. You may then click the green “Go to Site” or “Enquire Now” button to submit your loan application online.

      Before applying for any loan, please ensure that you meet the eligibility criteria and requirements of the loan option or lender and make sure to read the details, as well as the relevant PDS/ T&Cs of the loan option before making a decision and consider whether the product or option is right for you.

      Hope this helps.

      Best regards,
      Rench

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