Shared Ownership for Disabled Homebuyers
In Britain there are over 10 million people living with a limiting long-term illness or disability, making it 18% of the whole population. Many of these people are not able to work and have to rely on welfare but that shouldn’t stop them from having the opportunity to buy a home of their own. Family Mosaic is talking to David Abbey of MySafeHome - mortgage advocates for people with disabilities - about how this all works.
What is it that MySafeHome is doing?
We help disabled people with complex needs to purchase their own homes, typically through Shared Ownership, using a unique government-approved housing model known as HOLD (Home Ownership for people with Long-term Disabilities). These properties can come from the ‘open market’ via a traditional Estate Agent or be purpose-built by a housing association. We help people with a full spectrum of needs, including people with learning disabilities and mental health issues. To qualify for our help, these people need to be on the more complex end of the spectrum, permanently unable to work and in receipt of disability benefits.
What types of benefits do the disabled people need to receive to qualify for MySafeHome mortgage?
In terms of eligibility, they need to be on the highest or middle rate of Disability Living Allowance – recently renamed Personal Independence Payment (PIP). The PIP equivalent of these would be the Enhanced or Standard Rate of Daily Living.
They also need to be in receipt of Employment Support Allowance (ESA). There are two groups within the ESA: the 'support group' - where the severity of your disability means that you will not be able to take up any work now or in the future, and the 'work-related activity group' which means that even though you have a disability, you will be expected to work with Jobcentre Plus over the next year or two with the aim of finding paid employment.
Disabled people who fall into the latter group would follow the standard route of finding employment, saving up for a deposit and applying for a mortgage with one of the high-street mortgage lenders.
Our clients fall into the former group - the Support Group ESA - where welfare benefits are the sole source of their income and they will not be able to work in paid employment now or in the future.
What kind of deposit do they need to put down?
They need to provide 5%-10% deposit to qualify for a HOLD mortgage depending on the lender. That money usually comes from one of three sources: savings that the individuals have themselves, inheritance or – like a lot of first-time-buyers that you’re working with at the moment – the Bank of Mum and Dad would put that deposit down.
What other affordability criteria do they need to meet?
They will have to satisfy a credit check, which can be tricky as most people who come to us don’t have any loans or debt. Some of them have never even had the ability to take out a credit card. We still have to go through their affordability assessment to make sure that all their disability benefits belong to them and that they can then use those to live on and to pay a little bit towards their mortgage.
Benefits income is not very secure, what happens if their benefits get cut in the future?
This brings me to the second part of our job: once we’ve done the eligibility assessment, they’ve found a property, got the mortgage, and they’ve moved in, we then continue to check that the mortgage payments are being made and their benefits are still in place. If the benefits stop for some reason we help them to reinstate them and to sort out any arrears with the lender.
That's one of the hardest things that we do - and that's what sets us apart from other high-street mortgage advisers. We offer ongoing support, making sure that their home ownership remains safe, secure, and sustainable. This is not a large-scale conveyor-belt type of operation - we’ve only done 1,300 of these mortgages since we started in 1999. It’s not for everybody but the people it works well for it really does work well. In fact over 80% of our buyers are still living in the same property today.
Unlike mortgage brokers, whose job ends once they've secured a mortgage, we are mortgage advocates and we enter into a relationship with our clients that may last the next 30, 40, or 50 years.
What if the person in question has bad credit – as can happen with some types of mental health conditions?
This is not a solution for people with poor credit. If their credit score is poor, we unfortunately are not able to help them. On the other hand, we have a lot of clients who do not have any sort of credit to their name as they might not have applied for any loan products or credit cards in their lives. This is less of a problem and in most cases we are then able to secure a mortgage for these people.
Some people with severe learning disabilities or severe mental health diagnosis may not be able to represent themselves, would their guardians be able to approach you on their behalf?
I would say that 80% of people who contact us are acting on the behalf of a disabled person. They could be parents, family members, but also they could be their care co-ordinators or their advocates; for example people working for charities like Mind, Scope or Mencap.
Can you tell us more about the process you go through to help disabled people get a mortgage?
The process does two things: it checks the eligibility for the mortgage and that’s based on the level of disability benefits they are in receipt of. The other thing that we then have to check for is the permanency of that disability. We also have to do credit checks as well.
In situations when the people who come to us don’t have the mental capacity to even understand what a mortgage is, we then have to go through another process whereby we go to the courts and get somebody to be appointed as their deputy or a legal guardian. The mortgage would still be in the name of the person with the disability but the legal guardian will be the person who signs the mortgage application to make it lawful.
All this takes quite a bit of time, so it's very important to come to us and initiate this process well before a property is chosen. Properties come off the market rather quickly and there will not be enough time to complete the eligibility process. If the client comes to us first, we can set them up so they're ready when the right property comes along.
In your experience, would you say that it is difficult to find a home for a disabled applicant?
Not when the preparation stage is completed correctly. The hardest part of our job is working with housing associations and their sales teams to say “if somebody comes to you and they’ve got a profound disability, they only have state disability benefits to live on, we may be able to secure a mortgage for them, so please don’t turn them away”.
The way we work with disabled applicants, we make sure that they don't get turned away when they apply for a property. This is due to our detailed application process - which I mentioned before. We start off with a telephone interview, whereby we go through 12 qualifying questions to see if they're eligible and we then send the full application out. Once this has been submitted, we invite them to meet with us.
One of the powerful things that we equip them with is something called an ‘Agreement in Principle’(AIP) – which is a letter from a mortgage provider saying that they should be accepted for a £100,000 or £200,000 mortgage – or whatever the figure is – and that makes them really empowered. So when they go and view properties, they say “Look, I can get a mortgage, I’ve done all my work already, I’m ready to go”. And housing associations and registered providers like that.
Yet an Agreement in Principle is not binding, is it?
It is not - but the way we do it it's a fair representation of the client's borrowing capabilities. Unlike some AIPs which are done online, we always have a face-to-face meeting with the applicants and their circle of support. After that meeting we give them time to think about it and make sure it’s right for them. Only then do they sign an agreement to say that they want to work with us to arrange a mortgage and to get a property for them. It’s only when we get that agreement back, that we then go and get an Agreement in Principle.
I would say 99 times out of a 100 those agreements work – most of them go through.
Are there any limits on the type of property disabled people are able to buy? Would the properties need to come from a pool of adapted properties?
Not necessarily. Because of their physical disability some individuals may need wheelchair-adapted or adaptable properties. Others may not need any adaptations at all. In general, once a disabled person purchases an adaptable property, they may then contact the Local Authority and they then will come and look at adapting the property to their needs. Also, housing associations sometimes build bespoke properties that are accessible to people with disabilities, with wide doors, wheelchair-accessible, with wet rooms, hoists, and other similar adaptations.
We have found that in London finding a suitable second-hand property is quite labour-intensive, so a lot of housing associations would rather build a block and sell 20 apartments to disabled buyers rather than work with one individual to buy one flat. This is why we don't tend to offer open market purchases in London, but outside the capital many buyers find their home via traditional Estate Agents.
Finally, what is the best way for a disabled person to initiate the process of purchasing their own home with MySafeHome?
The first step would be to call us on 02476 402211. We would then take the person through our 12-question initial assessment to see if they're eligible and take it from there.
You can find out more about MySafeHome on their website, www.mysafehome.info