Question: I am trying to apply for a mortgage, and though I work, part of my income is topped up with universal credit (UC). How will this affect my income as assessed by a mortgage lender and will it affect eligibility?
The good news is that several mortgage lenders do accept universal credit when assessing affordability. However, it’s not quite as straightforward as with standard employment income.
If part of your income is topped up with universal credit, whether it is considered depends entirely on the lender’s individual criteria.
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Others, like Tipton & Coseley Building Society and Buckinghamshire Building Society, may accept UC but place limits on how much is used in the calculation.
It is also common for lenders to treat the elements within universal credit differently.
Precise Mortgages and United Trust Bank will only consider specific elements such as the standard allowance or child-related payments, but not the housing element.
For this reason, lenders often ask for a full UC award letter or monthly statement so they can assess which parts of the benefit are appropriate for affordability purposes.
Some lenders, like MPowered Mortgages, make it clear that UC must be supplementary. Others, such as Skipton Building Society, will cap benefit income to the level of your earned income, so that it does not make up more than half of what you bring in.
Not all lenders accept UC. Nationwide, Santander, Metro Bank and many smaller building societies currently exclude it entirely. This is where working with a broker can be extremely useful.
Receiving UC as part of your income does not prevent you from getting a mortgage. Many lenders will consider it, particularly when it forms a top-up to a stable earned income. However, the amount of UC accepted, and the parts of it that count, can vary significantly from one lender to another.
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