Which Mortgage Lenders Accept Universal Credit and Other Benefits?

Are you wondering which mortgage lenders accept Universal CreditA government benefit that replaces several other benefits, i... as part of their affordability assessment? Many lenders consider benefits as income, but not all treat Universal Credit equally. This guide explores how to find the right lender and what you need to know about applying for a mortgage while receiving Universal Credit.

It should be noted that there are many different kinds of mortgages out there, but they all have one thing in common – they allow you to borrow money from your bank or another lender at a lower interest rate than if you were borrowing directly from another person. In addition, most banks offer mortgage insurance which protects them against losses on any defaulted loan payments. 

Major Mortgage Lenders in the UK that Accept Universal Credit

Additional Notes:

1.Documentation Required: Most lenders require official confirmation of benefit payments (e.g., Universal Credit award letters) and recent bank statementsA record of a borrower's financial transactions often requir... showing deposits.

2.Exclusions: Some lenders exclude the housing element of Universal Credit from income calculations, as it is designed to cover rent and not mortgage payments.

3.Deposit Requirements: Lenders may ask for a larger deposit (typically 10–25%) from applicants relying on benefit income.

4.Specialist Brokers: Consulting with brokers who specialise in benefit-based mortgages can help identify additional lenders and streamline the process.

What is a mortgage on benefit income?

What does it mean when someone says, “I’m buying my house with a mortgage on benefits”? The term refers to any type of loan taken against future income, such as pension payments. In most cases, people use them for home improvements, holidays, weddings, cars etc. But what happens if you can no longer make repayments because you lose your job? Or maybe you want to buy something big like a new car or even renovate your whole house? Plus, lenders want to make sure borrowers don’t spend more than what they earn, so they won’t give them credit. However, you may need to pay back the amount borrowed with extra payments over time instead of just once when you buy the property. If you’re not able to afford repayments, then you could end up losing your house.

Can you get a mortgage on benefits?

The answer is yes, but it’s not always straightforward. If you’re on benefits, you might think that it’s impossible to get a mortgage. However, there are specialist lenders who will consider your application, and the good news is that you may be able to borrow more than you think.

At needingadvice.co.uk Ltd, we understand that getting a mortgage can be a daunting task, especially when you’re on benefits. That’s why we’ve put together this guide to help you understand your options and increase your chances of being approved.

First of all, it’s important to note that not all lenders will consider your application if you’re on benefits. However, some specialist lenders will be more willing to work with you if you can prove that you can afford the mortgage repayments. It’s important to remember that lenders will consider a range of factors when assessing your application, not just your benefits.

The first step in applying for a mortgage on benefits is to find a specialist lender who will consider your application. You can do this by using a mortgage broker who has experience working with people on benefits. They will be able to advise you on which lenders are likely to be more sympathetic to your situation and help you to prepare your application.

When applying for a mortgage on benefits, it’s important to be as honest and transparent as possible. You will need to provide evidence of your income, including any benefits you receive, as well as details of your outgoings. This will help the lender to assess whether you can afford the mortgage repayments.

Another important factor to consider when applying for a mortgage on benefits is your credit score. Lenders will take your credit score into account when assessing your application, and if your score is low, it may be more difficult to be approved. However, there are steps you can take to improve your credit score, such as paying off any outstanding debts and ensuring that you’re on the electoral roll.

It’s also worth noting that you may need to provide a larger deposit when applying for a mortgage on benefits. This is because lenders will typically require a larger deposit if they consider the application to be higher risk. However, if you can afford a larger deposit, this may increase your chances of being approved and reduce the amount of interest you need to pay.

Overall, getting a mortgage on benefits is possible, but it can be more difficult than for those who are in employment. By working with a specialist lender and being honest and transparent about your situation, you can increase your chances of being approved and get on the property ladder.

If you’re on benefits and looking to get a mortgage, we recommend that you speak to an expert broker who has experience working with people in your situation. They will be able to guide you through the process and help you to find a lender who will consider your application.

What Types of Benefits Do Mortgage Lenders Accept, Including Universal Credit?

Government benefits that mortgage lenders will consider as part of income are while accessing the mortgage application are as follows.

Attendance AllowanceIncome received by borrowers who require care due to a disab...

If you have been claiming an Attendance Allowance, then it counts as income. The amount of money you earn from attending college courses doesn’t matter either.

Carer’s Allowance

Carer’s Allowance is paid to help families care for someone else. It comes out of your weekly earnings and isn’t taxed. Mortgage lenders may use this information to decide how much you should borrow. Read more about this allowance in our article can I get a mortgage on carers allowance?

Child Benefit

Child benefit helps parents raise children. Some mortgage lenders will also consider this as part of your income.

Child Tax Credit

Child tax credits give extra cashbackA sum of money paid by the lender to the borrower as an ince... to working families. Your family receives more than £1,000 per year, depending on how old your kids are. Mortgage lenders will usually only consider this after other sources of income have been taken into consideration. You can read more in our other article on mortgages with child tax credits.

Disability Living Allowance (DLA)

If you have been claiming Disability Living Allowance, Income SupportIncome received by borrowers who are on a low income. or Jobseeker’s Allowance, it counts as part of your income.

Incapacity Benefit (IB)

IB pays if you’re unable to work due to illness or injury. Mortgage lenders won’t normally consider this when deciding how much to lend, but some companies may ask about it before making an offer.

Jobseekers’ Allowance

This is a government scheme that gives people financial support whilst looking for employment. Mortgage lenders will usually not consider this in their decision-making process.

Maternity Allowance

Maternity allowance is given to mothers who need time off work because they’ve had a baby. Mortgage lenders will generally ignore this unless there has been a change in circumstances, such as having another child.

Pension Credit

Pension credit is available to older workers who aren’t receiving a state pension. You’ll get up to £255 every month. Mortgage lenders will often use this figure to calculate how much you can afford to pay each month.

Employment and Support Allowance ( ESA )

Disabled adults can use severe disablement allowance over 16 years old. They come out of your weekly earnings. Mortgage lenders will typically look at these payments first rather than any disability living allowance.

Widow’s Pension

A widow’s pension is payable to widowed women aged 60 or above. Mortgage lenders will generally use this figure to determine what you can afford to repay monthly.

Working tax credit-

The working tax credit is designed to encourage employers to hire those who would otherwise struggle to find jobs. Mortgage lenders will likely take account of this payment when calculating how much you can afford to pay each month, so make sure you keep all receipts.

There could be some other schemes that are not mentioned above, it’s always good to contact financial services before starting the mortgage application.

Which income sources qualify for a mortgage?

If you receive any benefit payments through Jobseeker’s Allowance, Income Support, Universal Credit, Housing BenefitIncome received by borrowers who receive housing benefit., Council Tax Reduction Scheme, Pension Credits, or Child Benefits, these could count towards meeting your monthly housing costs. However, it is important to note that some benefits cannot be taken into consideration at all. For example, Carer’s Allowances cannot be considered because they are paid directly to carers rather than individuals.

Mortgage Lender options if you’re disabled or ill

The easiest way to find a lender who will take your benefits into account is to work with a mortgage adviser. Mortgage options if you’re disabled or ill Mortgage loans aren’t just available to those without disabilities or illnesses; they’re also accessible to anyone who needs extra support because of illness or disability. This includes carers, parents caring for children, veterans recovering from injuries sustained during service, and any others whose circumstances mean they need additional financial assistance.

If you’ve been diagnosed with cancer, you might want to look into specialised mortgage products. You could even apply for a personal loan instead of a standard mortgage.

Mortgage on disability benefits advice from the mortgage broker

Yes – they can! However, there are some restrictions. For example, most lenders don’t allow Disability Living Allowance, Attendance Allowance or Bereavement Support Payments. However, they may accept Income Related Employment Benefits instead.

You’ll need to apply for DLA separately through Jobcentre Plus and then ask your lender to add any payments received under DLA onto your mortgage agreement.

Buy-to-Let mortgage on Benefits

Most main street lenders won’t accept the Buy-to-Let mortgage application on benefits, but Some mortgage lenders could start your mortgage application. It is better to contact a mortgage broker for financial advice before starting your application for a buy-to-let property loan on benefits.

The Financial Conduct Authority do not regulate buy to let mortgages.

Mortgage on benefits with bad credit

Mortgage on benefits with bad credit scores is more difficult when compared to a normal application. This is because any mortgage lender tends to give the loans based on the borrower’s credit rating. An adverse credit score means to affect your affordability check process, which also means that lenders will consider failing you for failing in mortgage repayments. If you have a poor credit rating, you should probably contact some specialist mortgage brokers to help you with your application. At NeedingAdvice.co.uk Ltd, we can help you with the steps that you can take to positively improve your credit rating before starting the application.

FAQs

Will benefits affect my chances of getting a loan or credit card?

Claiming benefits does not always affect the credit rating, but in some cases, it may reduce the chances of acceptance of your mortgage application. The reason is simple if you are claiming benefits it means you have a low income which mostly means that you have failed to meet the minimum incomeThe minimum income required for a borrower to be eligible fo... requirement for Credit cards or loans.

Does Universal Credit affect mortgage applications?

Claiming universal credit will not appear on your credit report, but it could affect an individual’s ability to get a mortgage. Contact some financial services before going for a mortgage if you are also receiving benefits like Universal Credit.

How Does Universal Credit Affect Your Credit Rating?

Receiving Universal Credit will not directly affect the credit report, but it could affect when you apply for credit cards, mortgages, or loans in future. Therefore, it is useful to consult financial services like NeedingAdvice.co.uk Ltd before your mortgage application on benefits like universal credit.

Does Universal Credit affect credit rating?

No, universal credit does not directly affect your credit rating.

Can you get a mortgage if you’re on benefits?

If you are receiving benefits such as job seekers allowanceIncome received by borrowers who are seeking employment., disability living allowance, bereavement support payment etc., you cannot claim these benefits while applying for mortgages. It would help if you stopped taking them once you’ve applied for a mortgage. This is because the government wants people to be able to work and pay mortgage payments without having their finances affected by being unemployed. As you know that every mortgage lender has a different set of rules for affordability criteria for your mortgage application. Read more about mortgages on benefits here.

What benefits do mortgage lenders accept?

Some mortgage lenders might allow applicants to receive certain types of benefits. For example, they might allow those who are disabled to receive housing benefits. However, this depends upon what type of mortgage you want to apply for. In general, most mainstream banks don’t offer any kind of special treatment to borrowers who are on benefits. Instead, they just look at whether you can make regular monthly mortgage payments.

Which mortgage lenders include benefits?

Most major UK banks, including Barclays, HSBC, Lloyds Bank, Nationwide Building Society, Santander, RBS, TSB, Yorkshire Bank, Virgin Money, Halifax, Abbey National, Alliance & Leicester, Bradford & Bingley, Co-operative Financial Services Group, Clydesdale & Yorkshire Banks, Coventry Building Society, First Direct, HBOS, HSBC, NatWest, Northern Rock, Royal Bank of Scotland, Scottish Widows, Tesco Bank, Ulster Bank, includes benefits.

Does child benefit count as income for a mortgage?

Yes, many mortgage providers will take child benefits into account during the mortgage affordability assessment process.

Does a mortgage lender accept disability benefits?

Yes, a mortgage lender could accept applications from individuals who have been diagnosed with a long-term disability or condition which has made them unable to work. Some may even require proof of medical evidence confirming the diagnosis. If you need help finding out more about accessing benefits, don’t hesitate to get in touch with a specialised mortgage broker.

How much income do I need to qualify for a home loan?

The amount of income needed varies depending on the size of the property you wish to buy. Various Mainstreet lenders, such as Lloyds Bank, can give you a mortgage, but first, you need to contact a mortgage adviser for a suitable mortgage deal.

How do I find out whether I qualify for a home loan?

You don’t necessarily need to apply for a mortgage straight away – you might want to wait until you know exactly what type of property you would like to buy. It’s always better to consult financial services before starting your application.

How do I apply for a home loan?

You don’t necessarily need to go through any bank such as Lloyds Bank to access finance. Many different types of loans are available, including personal unsecured loans, secured loans, business loans, and commercial mortgages.

Does any lender accept benefits income for Buy-to-let Property?

Yes, some lenders may accept benefit income on a mortgage application for a buy-to-let property.

How much mortgage can I get on the basis of my annual income?

Typically, we can get a loan amount that is 4.5 times our annual income. It’s also better to contact a broker for better mortgage advice and cheaper interest rates. You can also read about our guide for buy to let mortgage income requirements in the next section.

Would my additional income and assets support my application for a mortgage with benefits?

Yes, there are good chances that your additional income and relevant assets may help you to support the mortgage application but it’s always better to contact an expert mortgage advisor for specialist advice.

Can I get a mortgage on benefits with a shared ownershipA scheme where a borrower purchases a share of a property an... scheme?

Yes, you can get a mortgage on your income from benefits with a shared ownership scheme that is also a part of the government’s affordable housing program.

What is the affordable housing programme by UK government?

This is a government initiative aimed at helping people who cannot afford to purchase their own homes. The aim is to provide affordable housing to those who need it most. This includes low-income households, young families with children, older people and disabled people.