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Home Loans for Pensioners
If your only income is the pension but you're keen to become a homeowner, we've got good news: although it is more difficult, Australian borrowers on pensions can get mortgages.
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Lenders view pensioners as high-risk borrowers for home loans because they are typically older and on smaller incomes. But a lender may be willing to offer a home loan to a pensioner, depending on your individual circumstances.
How can I get a home loan on a pension?
Pensioners who want to apply for a home loan should start by considering the loan from their lender's perspective. What is the most important thing to a bank? Your ability to repay the loan. Therefore, you should consider what your income and financial position looks like, as it will form the basis of getting a home loan or not.
If your only source of income is the pension, then this might limit your options as the pension amount is lower than the income level most lenders require you earn, in order to repay a loan.
However, there are several ways a pensioner can apply for mortgage finance. The best option for you depends on your financial situation.
Apply for a standard home loan
If you have forms of income from other sources or you are only borrowing a small amount, you may be able to apply for a home loan like any other borrower. If this is your situation you might be able to get a competitive interest rate, so be sure to compare your options.
Apply with a specialist lender
There are lenders who specialise in providing finance solutions to borrowers in difficult or unique circumstances. There are even lenders who focus entirely on older borrowers. These types of lenders provide loans known as specialist or non-conforming loans.
Talk to a mortgage broker
Perhaps the best option for pensioners looking for a home loan is to get in touch with a mortgage broker. This is because mortgage brokers specialise in helping borrowers in unique circumstances and they have access to a wide panel of lenders.
A broker can help you look for loans and lenders that match your requirements. Their services are typically free to you because the lender you choose will pay them a commission.
What documents do pensioners need to supply for a home loan?
As a pensioner you will need to provide a few extra documents in addition to the standard documents in a mortgage application. Every lender has their own requirements but you'll generally need to provide the following:
- Evidence of funds to complete the deposit.
- Bank statements showing Centrelink benefits being paid into your bank account (i.e. some lenders require 6 months of recent bank statements).
- Letter from Centrelink confirming the status and nature of your disability pension.
What about borrowers on disability pensions and veterans' pensions?
Disability pensions
Generally, lenders consider a disability pension to be a valid form of income, meaning they treat a home loan application for someone on a disability pension just like any other application.
Most lenders will review your application on a case-by-case basis. Your eligibility for a home loan will depend on the amount of income you receive and how much of this can be used to service a loan.
Other factors including your age, assets and debts will be assessed by a lender on an individual basis.
Veterans' pensions
Many lenders may accept a Veterans' Pension as a source of income for a home loan. This applies if you are receiving:
- War Widow's or Widow's Pension
- Service Pension
- Veterans' Affairs Age Pension
Additionally, lenders may accept the Department of Veterans' Affairs Incapacity Pension as a source of income. In order to demonstrate your pension as a source of income for a home loan application, you'll need either a current bank statement showing your pension payment, or a current Department of Veterans' Affairs statement.
On Centrelink? You could still get a home loan
Other mortgage types for older borrowers
If you're a pensioner who already owns their own home you have some other finance options. Both reverse mortgages and line of credit loans allow you to borrow money against the equity in your home.
- Reverse mortgages. A reverse mortgage allows you to borrow funds using equity from your home as security for the loan. A reverse mortgage can either be paid as a lump sum, a regular stream of income, a line of credit or a combination of these. No income is needed to qualify and for this reason, the interest rate tends to be higher. You must repay the sum of borrowed money when you sell your home, pass away or move into aged care.
- Line of credit loans. A line of credit is a funding line that uses the equity in your home. It’s an approved amount that you can use a bit at a time or all at once. You loan is approved against a security and you can draw on this loan amount at any time. You only pay the interest on the amount that you use. For example, if you get a line of credit of $200,000 and only use $50,000, you only pay interest on the $50,000. These types of loans can be harder to get, and not all lenders offer them.
In the tables below you can compare various finance options, from normal home loans to reverse mortgages and lines of credit. If you're a pensioner and are looking for some expert guidance, contact a mortgage broker for personal advice.
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Ask an Expert
I want to make an appointment to see a mortgage broker please
Hi Tracey,
You can set an appointment by calling the broker or visiting their website. You can visit our mortgage broker page (https://www.finder.com.au/mortgage-brokers) to find a list of brokers.
Cheers,
Sarah
Do you know of any Morgage Brokers that are or have Disability Pensioner Morgage Loans expertise or previous experience with a positive outcome?
Hi John,
Most mortgage brokers can provide you with tailored advise that suits your situation. We don’t have a list that confirms a broker’s specialisation on borrowers receiving disability pension, but you can check out our mortgage broker finder page to find a broker who can help: https://www.finder.com.au/mortgage-brokers
Note that generally, getting a loan when the disability pension is your only form of income can be difficult. There are some lenders who accept Centrelink payments as proof of your income to get a home loan, but if you receive a disability pension, you will often need to show proof of a second source of income, as the pension on its own is not enough to service a home loan.
Your best bet is to contact a mortgage broker to find out which lenders may be able to help you. Their services are free, and they can do the legwork for you to help you find a lender.
Cheers,
Sarah
I’m looking for a lender. Duplex ,one side rented for 315.00/wk other owner occupied price $200.000 dep $ 20,000, borrower on centrelink
Hi Terry,
Thanks for getting in touch! Pensioners can still apply for regular home loans that aren’t specific home loans for pensioners but you should keep in mind you may not be successful if you don’t meet eligibility or income requirements.
Below are the types of home loans you can apply for:
Reverse mortgages
Variable rate loans
Fixed rate loans
Line of credit loans
You can find a list of lenders when you click the type of loan on the left sidebar of this page above. As a friendly reminder, carefully review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy.
Hope this helps!
Best,
Nikki
As a single woman on a disability pension am I eligible and how much could I be eligible for to buy a house?
Hi Jodie,
Thank you for getting in touch with Finder.
Since you are receiving a disability pension, the amount you can be eligible for a loan to buy a house depends on your income. Your chosen lender will review whether the amount of income support you receive is sufficient for you to comfortably repay the loan. I suggest that you speak to a mortgage broker on this matter for further clarification and assistance.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
I’m on disability pension so is my flat mate we are wanting to buy a home as with the rent we pay now cld have brought us a beautiful home .
So we are lookin for some one to loan one of us or the both of us home loan
Hi Michelle,
Thanks for getting in touch!
It’s helpful to know that we are not an approving body for home loans. The information above will pave the way for how to get started on that home loan application and make sure you check the eligibility requirements of a home loan. To help you find the lender that suits you, you can speak to a mortgage broker who can take your personal circumstance into account and offer you a range of borrowing options. Good luck!
Best,
Nikki