Home loans for Centrelink recipients

Rates and Fees verified correct on December 10th, 2016

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.

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 best 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.

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

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 is currently studying 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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64 Responses to Home loans for Centrelink recipients

  1. Default Gravatar
    helen | November 25, 2016

    Hi there. I am a 38 yr female on a disability pension due to multiple sclerosis. I own my home outright and owe nothing on it. I need some renovations to make my life easier. Could i get a loan to assist with renovations

    • Staff
      Harold | November 25, 2016

      Hello Helen,

      Thank you for your inquiry.

      There are providers that offer loans for house renovation.

      1. Before you compare different providers that offer loans for house renovation you may want to read this article for your guide to successful home renovations.

      2. Here are your options for where you can review different providers that offer loans for house renovation.

      I hope this information has helped.

      Cheers,
      Harold

  2. Staff
    Anndy | November 14, 2016

    Hi Dorothea,

    Thanks for your question.

    If you are receiving Centrelink pensions, please note that not all Centrelink benefits will be considered by a lender as an acceptable form of extra income. Kindly refer to our list above to know if your benefit is accepted by lenders.

    You can then compare home loans here.

    You may also consider getting advice from a mortgage broker who will consider your personal circumstance in finding home loan options.

    Cheers,
    Anndy

  3. Default Gravatar
    Mary | November 5, 2016

    Hi,
    I’m a single mother of one and earn a reasonable income. I’m wondering about going for a mortgage with my mother who is in receipt of an age pension. She lives with us already. Would a lender take account of her pension in determining how much money we could borrow?

    Thanks

    • Staff
      Jason | November 6, 2016

      Hi Mary,

      Thank you for your inquiry.

      Some lenders will treat age pension as an acceptable form of extra income and that may also be taken into account to determine how much you can loan from the loan provider. Please note that each lender has their own lending policy which will take into account a range of factors, including income, assets, debts and liabilities to decide the amount that they can lend to you.

      It would be good idea to speak to a mortgage broker for this concern. A broker will compare your options and suggest the best loan for you, and will usually not cost you anything, as they receive a commission from your lender. They can also help with the paperwork.

      I hope this helps.

      Cheers,
      Jason

  4. Default Gravatar
    Maggie | November 5, 2016

    Hi, I have a tricky situation and would love expert advice. I am a sole trader running my ckeaning business for last 15 years. My daughter turned 20 and I put 150k in her account and applied for home loan in her name. Bank asked if she earns any income and I told them she is a full time student. They told me to show her as my employee and make salary slips in her name and attch with loan application. Long story short, bank approved loan. I bought house in her name and leased it out.

    Now the question is, my daughter receives youth allowance from centerlink where they know she is full time student and is not employed anywhere. I need to update them about property but will centerlink investigate the bank how she got her loan approved?

    • Staff
      May | November 15, 2016

      Hi Maggie,

      Thank you for contacting finder.com.au – a financial comparison website and general information service designed to help consumers make better decisions.

      Generally, Centrelink conducts income and asset tests when determining one’s eligibility and how much the applicant can get. So most likely, in your daughter’s case, as she is getting a Youth Allowance, this test will also be done and they may find that there is a mortgage in her name. It would be best that you seek legal advice about this issue before Centrelink discovers your daughter’s mortgage during their investigation.

      Hope this has helped.

      Cheers,
      May

  5. Default Gravatar
    Cp | September 28, 2016

    Hi
    I’m a single mum of 3 looking to buy a house. I am unemployed but have a deposit of $70,000. Because I have a deposit does that make a difference as to whether I can get a home loan or not?
    I have no credit cards and have had a joint mortgage woth ex husband for 12 years up until last year when we sold and I’ve been renting since, does that count as a credit rating?

    • Staff
      Anndy | September 29, 2016

      Hi Cp,

      Thanks for your question.

      If you are looking to buy a house, our guide on how a single parent can afford a home may help you.

      Having a deposit could help when it comes to paying the required deposit and home loan fees. However, it will not guarantee your approval.

      If you intend to apply for a home loan, you may want to get in touch with a mortgage broker who will consider your personal circumstances into account and offer you a range of home loan options.

      Moreover, if you want to know your credit score, you can get it for free here.

      I hope this helps.

      Cheers,
      Anndy

  6. Default Gravatar
    vicki | August 16, 2016

    I own my home outright but am now unemployed I need a loan for renovations that are urgent is there any lender that would lend me money to do that is Australia?

    • Staff
      May | August 19, 2016

      Hi Vicki,

      Thank you for your inquiry.

      Having a stable source income is crucial for you to be approved for any form of loans as lenders would have to generally assess your ability to repay for the loan. Nevertheless, you can take a look at our guide here and check the options that might be available for you. It might be helpful to speak to a mortgage broker or a financial advisor if you’re thinking of getting a home loan to be used for your home renovation.

      I hope this could help.

      Cheers,
      May

  7. Default Gravatar
    Nan | May 26, 2016

    Hi, i use to have my own home but when I moved to the city for another job I rented my home but unfortunately not long after I got sick and now I live on disability pension.
    I still owe 42.000 on my home and I am paying rent in the city my bank charge me 5.34% plus $7.oo monthly fee .i find this is very high and I am unable to get them to reduce the interest or take off the fee.
    I need to live in the city close to family and treatment .
    Is any chance another bank can help me, my credit rate excellent.

    • Staff
      Marc | May 30, 2016

      Hi Nan,
      thanks for the question.

      You’ve come through to finder.com.au, a comparison site. To speak to a broker about your situation please click the green ‘enquire’ button for any brokers you’re interested in the table. This will take you to a table which you can fill out to get in touch with a broker.

      I hope this helps,
      Marc.

  8. Default Gravatar
    Grant | May 26, 2016

    Hi I am a single dad with 2 kids who live with me full time I am on Centrelink payments witch I get $1800 every fortnight and I don’t work
    Just wondering if it’s possible to get a loan to buy a house I can afford to pay off a loan I have a bad credit rating I’m just hoping you can help me
    Thanks grant

    • Staff
      Marc | May 30, 2016

      Hi Grant,
      thanks for the question.

      Please note that each lender has their own lending policy which will take into account a range of factors, including income, assets, debts and liabilities to decide whether or not to approve your home loan. It may be a good idea to speak with a mortgage broker to find out what may be available to you. You can compare mortgage brokers in the table on this page and click the green ‘enquire’ button to fill out a form and speak to a broker.

      I hope this helps,
      Marc.

  9. Default Gravatar
    Janice | May 3, 2016

    Hi I have been paying my home loan for 3 years and just realised it was put under an investment home loan (variable , no fee)
    I’ve always occupied the home
    What are the steps and how easy is it to get it changed to a standard home loan

    • Staff
      Marc | May 4, 2016

      Hi Janice,
      thanks for the question.

      Your lender should be able to switch you to the correct rate with a simple call.

      I hope this helps,
      Marc.

  10. Default Gravatar
    Aaron | April 7, 2016

    Hi. I am a contract worker currently paying off a home loan but I lost my full time job and now work casual just making enough to scratch through leaving me with $100 on average to eat and pay fuel etc. Is there help available?

    • Staff
      Belinda | April 8, 2016

      Hi Aaron,

      Thanks for getting in touch.

      If you’re struggling to meet your mortgage repayments, you may want to consider refinancing to a new lender that offers a better rate or minimal ongoing fees. Alternatively, you could ask your current lender for a repayment holiday which will give you time to get your finances in order. There are also financial counselling services offered on the Australian Securities and Investments Commission (ASIC) website.

      You can learn more about home loans for casual employees on this page where you can enquire with a mortgage broker who may be able to help.

      To improve your chance of being approved for a refinance home loan, try to minimise any existing debt that you have and get into a habit of depositing funds into a high-interest savings account as this will demonstrate to the lender that you have financial discipline.

      You may want to consider approaching non-bank lenders as they may have more lenient eligibility criteria.

      All the best,
      Belinda

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