MY INCOME IS TOPPED UP WITH UNIVERSAL CREDIT. CAN I STILL GET A MORTGAGE?

Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at [email protected].

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?

Answer: This is a very common question which many applicants even those in steady employment find that part of their income is made up of universal credit.

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.

When lenders review your mortgage application, they are primarily looking at two things: income and affordability. They want to see that your income is reliable and that your monthly outgoings leave enough headroom to comfortably afford mortgage repayments now and in the future.

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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Some lenders are flexible. For example, Darlington Building Society, Barclays and Penrith Building Society can consider 100 per cent of universal credit (UC) for affordability purposes, provided it is not your only source of income.

Others, like Tipton & Coseley Building Society and Buckinghamshire Building Society, may accept UC but place limits on how much is used in the calculation.

This might be only 25 to 50 per cent of the benefit amount or a cap of no more than 25 per cent of your total income.

It is also common for lenders to treat the elements within universal credit differently.

Universal credit is made up of a standard allowance, and additional elements if, for example, you’re responsible for children, an unpaid carer, unable to work due to an illness or disability, and/or renting your home.

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.

This is because housing support is designed to help with rent and will no longer apply once you own your home.

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.

Earned income is typically required alongside UC. In practice, this means that, while UC can support your application, most lenders will not consider it if you do not have employment or self-employment income.

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.

You will also need to provide documentation. Most lenders want to see your most recent three months of UC award statements and bank statements. In many cases, they will average the payments over that time or use the lowest figure to be cautious. Lenders such as West Brom and HSBC also want to see that the amount is stable and likely to continue across the mortgage term.

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.

A mortgage broker will know which lenders will consider UC and what sort of evidence you will need to provide. They can also help you avoid wasting time applying to lenders whose criteria do not fit your circumstances.

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.

2025-06-10T04:52:22Z