Most lenders do not accept stipend income because mortgages typically span decades, while stipends are only payable for a fraction of that time.
Lenders prefer a sustainable and consistent income source. However, the good news is that there are lenders who do consider stipend income and understand the nuances of this unique income type.
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Factors to consider when considering a stipend mortgage
There are several factors specific to stipend mortgages that will determine if you are eligible.
How long will you continue to receive stipend?
The remaining time during which you will receive stipend income will determine the options available to you. For instance, some lenders require a minimum of 12 months of stipend income before considering your application. The longer the remaining duration of stipend income, the more options you are likely to have when seeking a mortgage.
Applying alone or jointly
If you are applying for a mortgage with someone else, such as a partner or spouse, you may have the option to include their income in addition to your own.
In some cases, you may even be able to rely solely on their income if it is sufficient to meet the affordability criteria. This can be especially useful if a lender does not accept your stipend income.
If the other applicant is also studying for a PhD and receiving a stipend, there may be a possibility to combine both incomes for mortgage qualification purposes.
Lenders who understand stipend income and consider multiple income sources may be willing to take both stipend incomes into account when assessing affordability.
Are you receiving other income?
Some lenders may have a requirement for borrowers to have an additional income, such as earned income, in addition to receiving stipend income. These lenders may not consider the stipend income on its own for mortgage purposes. However, it is worth noting that there are lenders who do consider stipend income on their own.
If you have a job in addition to your studies and wish to use both stipend and earned income for your mortgage application, some lenders may require you to have been employed for a minimum of 6 months. This requirement ensures that you have a stable employment history and income from both sources.
It is important to recognise that the relatively lower amount of stipend income compared to most earned incomes can impact the borrowing amounts available. As a result, the borrowing capacity for those relying solely on stipend income may be lower or may not meet the minimum income requirements set by certain lenders.
Your profession can indeed have an impact on the lender options available to you when it comes to stipend income. Different lenders may have specific criteria regarding the acceptance of stipend income based on the profession.
For example, Halifax may only consider stipend income from members of the clergy. This means that individuals in professions outside of the clergy may not be eligible to use their stipend income with Halifax for mortgage purposes.
How long you’ve been in receipt of income
Most lenders that consider stipend income are willing to assess your eligibility even if you have been in receipt of stipend payments for as little as one payment.
This means that you may not need to demonstrate a lengthy history of receiving stipend income in order to be considered for a mortgage.
While some lenders may have specific requirements or preferences regarding the length of time you have received stipend income, many are open to considering your application, even if you are relatively new to receiving stipend payments.