UC and New Mortgage

[Gingerbeerfear]

Hi all. Apologies if covered before.. currently I am working and receiving UC which includes allowance for rent, one child and myself. I’d say my income is 50/50 salary and UC.

I rent privately and looking at my annual income x the 4.5 requirement I should be able to afford a mortgage on a similar property in my area. Question being can you use UC as an income on a mortgage application?

I’m a single mum so I work as much as I can around childcare. I’m not in anyway trying to abuse the system to buy a property but security worries me especially renting.

Just a musing but any experience welcome.

Your best bet is to speak to a whole of market broker.
I don't know about universal credit but we got our tax credit taken into account but not every lender would.

Is there not a savings cut off above which you become ineligible for UC, I would have thought that would be a barrier to being able to save up a 15% deposit? I guess depends on house prices in your area.

UC is made up of lots of different elements so it would depend on the reasons I suspect. I am not an expert on this but I do know that (a) if you receive a housing element of UC this is only for rent, you would lose this element if you have a mortgage but (b) when I was applying for a mortgage I was allowed to include my child benefit payments as part of my income- this would depend on the specific lender.

the problem from the banks point of view - if someone has a job earning £20k per year then the bank can be reasonably confident that their income will stay at least that level, they have the capacity to hold down a job at that level. if someone has a job earning £10k per year and receives benefits of £10k per year, then a change in government policy could halve their income and they might have no way of keeping up their mortgage payments. it would be quite a risk to take.

The simple answer is yes and no.
UC is made up of several elements to which a monetary amount is assigned.

For example.

Person allowance (over 25) £409
Child allowance (one child) £281.25
Rent (local housing allowance) £600

Total allowance £1290.25

Less your earnings £800.

UC entitlement £971.57 per month

However - without rent , your entitlement in the same circumstances is £510.21 per month.

Does that still work for you ?

Best thing to do is to put your actual figures through the 'turn2us' calculator and your circumstances when you are no longer paying rent.. and compare .

If you had a mortgage you would get a higher work allowance on UC ( the amount that is disregarded from earnings before deductions start). However as others have said I would have thought that unless someone is gifting you a deposit for buying a house then savings over 16k would wipe out any entitlement to UC. Or are you planning to buy a very cheap house with a very small deposit ? To answer your question about whether mortgage lenders will count UC income as income then I think the answer is that each lender would have different criteria. The thing is benefits are not guaranteed income. You also need to remember that if you are currently going on current Uc amount that may well drop by £80 next April when the temporary covid increase is likely to come to an end.

Cannot answer properly so apologies but I receive TCs. Some lenders will take these into account. I had a better off calculation done and I was significantly worser off on UC which I was told was most likely due to my mortgage (as all other criteria was very low). If I was in rented I would receive more UC than I do TCs, but as I have a mortgage my award on UC would be slashed to around 1/3 of what i get on TCs.

I am a lone parent, earning less than 14k a year. Lenders wouldn't touch me on my salary alone. Luckily I had my house before my child but ive never been able to move lender due to my salary, so I've always had to move product. Im hoping next year when I can remortgage it will be different as I no longer have childcare costs more than double my mortgage payments

Some lenders will take benefits into account, a mortgage broker is your best bet with that. But how will you manage a deposit? UC is reduced once you have I think £6k in savings and you dont qualify at all with over £16k. And lenders arent doing under 90% ltv at the moment.

Also, a lot of lenders won't lend if you have a deposit from your parents now - it's bizzare!