Mortgage Lenders That Accept Universal Credit

Home Mortgage Lenders That Accept Universal Credit
Sunny Avenue
image
Mortgages Sunny Avenue
22 Sep 2023

Are you receiving universal credit and looking to secure a mortgage? Navigating the mortgage landscape and finding mortgage lenders that accept universal credit can be challenging. However, there are specialist lenders who understand the unique circumstances of individuals receiving universal credit and are willing to work with you.

In this insight, we will explore the question, can you get a mortgage on universal credit, the types of mortgage lenders that accept universal credit, and provide you with valuable information to increase your chances of being approved.


Key Takeaways

  • You can get a mortgage while on universal credit, but it may not be straightforward. Specialist lenders may be more open to working with you if you can prove affordability.
  • Mortgage lenders like Halifax, Nationwide, Coventry Building Society, and others consider universal credit as income, but it's essential to consult a mortgage broker for a whole market view.
  • Factors like income, credit score, and deposit size influence mortgage approval. Honesty and transparency throughout the process are crucial.
  • Benefits like Universal Credit are accepted by many mortgage lenders, but policies and calculations may vary. Seek a mortgage broker to identify suitable lenders and understand their criteria.

Can You Get a Mortgage on Universal Credit?

The answer is yes, but it may not always be straightforward. While some lenders may hesitate to consider applications from individuals on benefits, there are specialist lenders who are more open to working with you. The key is to prove that you can afford the mortgage repayments.

Working with a mortgage broker experienced in assisting benefit recipients can significantly increase your chances of finding a lender willing to consider your application.

Mortgage Lenders That Accept Universal Credit

Mortgage lenders typically assess all income sources, including universal credit. However, some lenders may deem certain income as non-allowable, affecting your affordability. The latest lenders to include universal credit include: 

  • Halifax
  • Nationwide Building Society
  • Coventry Building Society
  • Santander
  • Yorkshire Building Society
  • Barclays
  • Lloyds Banking Group

Talk with a whole of market mortgage broker to consider who will lend the most including your universal credit.

Are You Looking To Find Out How Much You Can Borrow?

If you're thinking about your mortgage options ahead of buying your first home, moving home, or even to borrow more?
We can help you find a mortgage specialist to offer you the very best advice. Complete our Sunny Fact Find form to provide us a bit more detail about your circumstances and we'll find the best-suited adviser for your needs.
Your appointed adviser will contact you to discuss how they can help, you decide how to proceed.

Does Universal Credit Count as Income for a Mortgage?

Lenders will include universal credit when assessing your income for a mortgage. However, it will vary from lender to lender whether universal credit income is counted for affordability purposes as it may not be sustainable income. Some lenders will include 60%, some none at all.

Factors to Consider When Applying for a Mortgage on Universal Credit

When applying for a mortgage on universal credit, several factors come into play. It's essential to be honest and transparent throughout the process. Here are some key considerations:

Income and Affordability

Lenders will assess your income and affordability to determine whether you can comfortably afford the mortgage repayments. While universal credit is considered income, lenders may also consider other sources of income, such as part-time employment or rental income. Providing evidence of your income, including universal credit statements, will be crucial in demonstrating your ability to meet the repayment obligations.

Credit Score

Your credit score plays a significant role in mortgage applications. While a lower credit score may make it more challenging to secure a mortgage, it is not impossible. Taking steps to improve your credit score, such as paying off outstanding debts and ensuring you are on the electoral roll, can increase your chances of approval.

Deposit

Lenders may require a larger deposit when considering applications from individuals on universal credit. A larger deposit can reduce the perceived risk for lenders and increase your chances of approval. Saving for a larger deposit should be part of your financial plan when preparing to apply for a mortgage.

Specialist Lenders and Mortgage Brokers

Working with specialist lenders who understand the unique circumstances of benefit recipients can greatly enhance your chances of securing a mortgage. Mortgage brokers experienced in working with individuals on benefits can provide valuable guidance and help you navigate the complexities of the mortgage application process.

Benefits Accepted by Mortgage Lenders

While not all benefits are accepted by mortgage lenders, many will consider universal credit as part of your income for a mortgage application. Here are some common benefits accepted by mortgage lenders:

  • Attendance Allowance
  • Carer's Allowance
  • Child Benefit
  • Child Tax Credit
  • Disability Living Allowance (DLA)
  • Employment and Support Allowance (ESA)
  • Incapacity Benefit
  • Jobseeker's Allowance (JSA)
  • Maternity Allowance
  • Pension Credit
  • Universal Credit
  • Widow's Pension
  • Working Tax Credit

It's important to note that each lender may have different policies regarding the acceptance and calculation of these benefits. Some lenders may consider the full value of the benefit, while others may only include a portion of it in their income calculations. Consulting with a mortgage broker will help identify lenders who accept your specific benefits and understand their individual criteria.

Additional Help for Mortgage Applicants on Benefits

In addition to securing a mortgage, there are government-backed schemes and support available for individuals on benefits. These programs aim to provide additional assistance to potential mortgage applicants. Here are some options worth exploring:

HOLD Scheme

The HOLD (Home Ownership for People with Long-Term Disabilities) scheme is a shared ownership program designed to help individuals with long-term disabilities purchase a home.

Support for Mortgage Interest (SMI)

If you are already a mortgage holder and receive Jobseeker's Allowance, you may be eligible for SMI, which provides support with mortgage interest payments.

Buy-to-Let Mortgages on Benefits

If you're considering a buy-to-let property and are on benefits, some lenders may accept benefit income on your mortgage application. However, it's important to note that the choice of lenders may be limited. Working with a mortgage broker can help you review your personal circumstances, financial objectives, and identify the most appropriate mortgage options available to you.

Mortgage Options for Individuals with Bad Credit and Benefits

Securing a mortgage with bad credit and being on benefits can be more challenging, but it is not impossible. Some specialist lenders are willing to work with individuals in these situations. Working with a mortgage broker experienced in bad credit mortgages can help you navigate the complexities and increase your chances of approval.

What Happens if Your Circumstances Change?

If your circumstances change after securing a mortgage, such as a loss of benefits or a change in income, it's crucial to seek financial advice as soon as possible and be honest with your mortgage lender. There may be options available to assist you, depending on the nature of the change in circumstances.

Are You Looking To Find Out How Much You Can Borrow?

If you're thinking about your mortgage options ahead of buying your first home, moving home, or even to borrow more?
We can help you find a mortgage specialist to offer you the very best advice. Complete our Sunny Fact Find form to provide us a bit more detail about your circumstances and we'll find the best-suited adviser for your needs.
Your appointed adviser will contact you to discuss how they can help, you decide how to proceed.

Can you use housing benefit to pay a mortgage?

In most cases, you cannot use Housing Benefit to directly pay a mortgage on a property you own. Housing Benefit is a government subsidy designed to help individuals or families with low incomes to cover their rent costs in rented accommodations, such as private rentals or housing association properties.

Can I get a mortgage with no job?

Obtaining a mortgage without a job is feasible but requires demonstrating alternative income sources like a pension or investments. Another option is to apply with a co-borrower who has stable employment, essentially sharing the responsibility for the mortgage payments.

Conclusion

Securing a mortgage while on universal credit may require additional effort and consideration, but it is possible. By working with specialist lenders, being transparent about your circumstances, and seeking guidance from experienced mortgage brokers, you can increase your chances of obtaining a mortgage that meets your needs. Remember, each lender has its own criteria, so it's important to explore your options and find the best fit for your specific situation. With the right support and information, you can navigate the mortgage landscape and achieve your homeownership goals, even while receiving universal credit.

ABOUT THIS AUTHOR - STUART CRISPE

Stuart is an expert in Property, Money, Banking & Finance, having worked in retail and investment banking for 10+ years before founding Sunny Avenue. Stuart has spent his career studying finance. He holds qualifications in financial studies, mortgage advice & practice, banking operations, dealing & financial markets, derivatives, securities & investments.

  • The content on this page is regularly checked by our onboarded advisers and experts.

Be notified when we add new articles

CONNECT WITH AN ADVISER

SUNNY FACT FIND

SHARE

Our website offers information about financial products such as investing, savings, equity release, mortgages, and insurance. None of the information on Sunny Avenue constitutes personal advice. Sunny Avenue does not offer any of these services directly and we only act as a directory service to connect you to the experts. If you require further information to proceed you will need to request advice, for example from the financial advisers listed. If you decide to invest, read the important investment notes provided first, decide how to proceed on your own basis, and remember that investments can go up and down in value, so you could get back less than you put in.

Think carefully before securing debts against your home. A mortgage is a loan secured on your home, which you could lose if you do not keep up your mortgage payments. Check that any mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.