Centrelink recipients still have a wide range of choices when taking the step toward owning their own home.
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.
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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 pension | Yes | Age 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 Allowance | Yes | This 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 Support | Yes | You 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 Pension | Yes | If you receive a disability pension you will need to show proof of a second source of income. |
| Family Tax Benefits | Yes | This 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 Allowances | Yes | Allowances for foster care are accepted so long as you are receiving another source of income. |
| Overseas Pension | Yes | Only 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 Pension | Yes | While 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
How does the application process work?
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.
How much can I borrow?
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.
I’m looking into the possibility of buying a unit with my mother but she is receiving the age pension from here and France while I work full time.
Hi Raph,
Thank you for getting in touch with finder.
Even though some lenders view pensioners as being high-risk borrowers, there are still lenders willing to offer home loans to individuals receiving pension benefits. You may also consider checking out this page since you want to apply for a home loan with your mother.
Since you mentioned that you work full time and you believe you can meet lending requirements, it might be a good idea to discuss your position in person with your financial provider or mortgage broker to successfully get a home loan.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
Hi. My question is in regard to loans for my son who is on a carers pension. He lives with his disabled brother, and the home they live in has been made suitable for a person with disability. The home is currently owned by my partner. Is there any way that my son could buy half of the property from my partner.
Would that be possible.
Hi Vanessa,
Thanks for your inquiry.
There could be lenders who might offer your son a loan so he can buy half of your partner’s property. He must show another source of income though aside from his disability pension. I suggest that he reach out to a mortgage broker who can offer him a range of lending options based on this circumstance.
Cheers,
May
Hi,Susan and I would like a $100,000 mortgage ,we have a $750,000 deposit and would like to purchase a home worth $850,000 house we have $60,000 in savings and $20,000 in super.Susan is on a age pension and I’m on a disability pension.I am 55 years of age
Hi Robert,
Thanks for your inquiry
It looks like you’re already on the right page for comparing options on Home Loans for Centrelink Recipients. Please note that we are not affiliated with any of the lenders we feature here on our site. Both your benefits are accepted as a secondary form of income. However, you will need to provide proof of a primary source of income in order to qualify for a loan.
You may want to reach out to a mortgage broker to get a professional assessment of your situation and to make sure everything is taken into consideration. Please check out this short tutorial on how to find a mortgage broker in your area.
Hope this information helps
Cheers,
Arnold
I am a single stay at home mum with a 2 year old. I have a great deposit. Would I be able to get a home loan as I do not work
Hi Trudi,
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 unemployed, receiving a pension or government benefits, or have a bad credit rating you could still get a home loan. You can get helpful info and compare your options on this page.
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.
Best regards,
Rench
how can i find a lender who does pensioner home loans. I have looked on the compare loans web sites but none say anything about small pensioner loans?.
Hi Steve,
Thanks for reaching out.
Income is the biggest factor when it comes to home loans, but there are lenders that consider different kinds of financial sources when evaluating an application. Aside from having a job, receiving rental income, or regular government payments, lenders also look into allowances such as Centrelink payments. You may visit this page to compare lenders and at the same time view tips on how you can increase your chances of loan approval.
Cheers,
Joanne
Hi I am 72yrs and my Wife is 63yrs.
I am receiving an age pension and my Wife is on a Disability Pension, I also receive a small British Pension ,$170 every 4 weeks, my Wife also receives a Carers Pension.
My Wife and I had a house 12yrs ago but lost it when I was off work for 4 months with a Heart Attack. We are currently renting for $250 a week. Is it possible for us to get a Home Loan for $250,000.
Regards,
Tony
Hi Tony,
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.
The amount that you can borrow 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. I suggest contacting a mortgage broker to find out which lenders accept Centrelink benefits as your sole source of income. You may also get more helpful info on this page on how to get a home loan for pensioners.
Best regards,
Rench
I have a friend on disability payments from centrelink that is struggling to keep up with her mortgage repayments. she has had the house valued at $250,000 and owes $133,000, is there a way that she can refinance the loan to reduce that fortnightly repayments.
Thanks
Hi Dwane,
Thanks for contacting finder, a comparison website and general information service. I hope all is well with you today.
You may find a list of options on this page. You may also read this guide to learn more on how to calculate the costs of refinancing a home loan. On the other hand, this guide discusses about its risks and benefits.
This page has the best refinancing deals too.
It would also be good if you would reach out to lenders about this for you to compare them.
I hope this helps.
Best regards,
Judith
My husband works full time and I stay at home with our three sons (aged 3 yrs, 2yrs and 2 months), I receive a parenting payment from Centrelink but not the full family tax A and B because of our choice to not vaccinate our children… Would this potentially count as a source of income?
Hi Jessica,
Thank you for your inquiry.
Family Tax Benefits Part A and B is generally accepted by lenders but having supplementary income would help with your application.
You may want to review this guide on Loans For People on Centrelink Payments.
Before applying, please ensure that you meet the eligibility criteria and requirements and to read the details, as well as the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.
Best,
Maria
I’ve inherited some money from the passing of my parents,I’m 55 years old and I’m on a Disability Pension and a Army Pension which is $246 per fortnight,I have $40,000 and I went to the Anz Bank and approved $150,000 which isn’t enough to buy a place needing $350,000 paying $500 per week in rental ,can you give me some helpful information,thanks
Hi Steven,
Thank you for your inquiry.
Usual deposits tend to be around 20% of the property value, but in some circumstances, your deposit can be as small as 5%. There are some loan providers who can consider your current income source upon application. We have listed some loan options such as low-doc loans, which pensioners could usually take advantage of. Moreover, we have a step guide on how to get a home loan if you’re a pensioner.
Alternative income sources such as Centrelink payments may also be considered, but it is important that you tap the right lenders who count on them as a valid income. Sometimes, if you reach the traditional lending application, it will be more challenging to get a loan due to lack of paycheck.
Should you need a more comprehensive of your options and your finances, you may send an inquiry to a broker of your choice.
Hope this helps.
Cheers,
Jonathan
Just let me know about home loan, I’m interested about it.
Hello Mohan,
Thank you for your inquiry.
These pages may help you understand how home loans work, how to compare them and what are the recommended home loans for 2017.
Alternatively, you may consult a mortgage broker who will consider your personal circumstances for a specific advice.
Hope this helps.
Cheers,
Jonathan