Will receiving Universal Credit for a few months affect getting a future mortgage?

Afreeman3

I am currently unemployed due to Covid, searching for jobs and I am looking at applying for UC. I hope to achieve getting a job in the next couple of months, I have a few interviews lined up. However myself and my partner are looking to buy a house in about 6 months and will be applying for a mortgage. (We will not be applying for a mortgage if I still don't have a job).
I am worried that if I have Universal Credit on my 'record' it won't look great for future lenders for a mortgage. I want to put myself in the best situation for getting a mortgage for the future  - will being on UC for a few months affect this? 

Further background - I will be applying for a joint mortgage with my partner who has a stable job. 

Carl2510

If you manage to get w job and leave it 3 months you probably will get away with not seeing any Universal credit payments as they usually only ask for 3 months bank statements be aware some can ask for more.

K_S

@afreeman3 Having a short break in employment may have an impact on which lenders you can potentially go with. Whether or not you've taken UC during that period should have no material impact.

DCFC79

Speak to a broker, ime they were a godsend.

ACG

I agree with KS, the universal credit will not be the problem, people apply with ongoing universal credits without problem.
The bit that will affect your options is the period without employment. Most lenders will want 6-12 months employment history. If you were to start a job next month and apply in 6-7 months, there would be lenders who would not lend purely on criteria. 

It will not be a deal breaker and should not mean you end up paying more, but you might need a broker closer to the time once you know what your situation looks like. 

Afreeman3

Thankyou so much for everyone’s help!! 

ftb_allhopelost

Hi all

are there any lenders that will accept universal credit as second income/or use it towards affordability please?

K_S

@ftb_allhopelost There are lenders who will consider UC towards affordability. How much of an impact it will have will depend on what elements, lender policy, how they assess sustainability, primary income source, etc.

Grumpy_chap

There is something I can't quite get clear in my head for the OP's circumstances.

I am not an expert in mortgages or UC but agree with what others have said that a disrupted work history is likely to affect mortgage availability.  Hopefully that can be minimised by the lenders (or a good broker) looking at the case properly - given the time we've all been through, if mortgage lenders withdraw from anyone with a bump in the road there won't be many people left to lend to.  Claiming UC is not the cause, but is merely a symptom of the situation.

If the OP needs and is eligible for UC, then the OP should claim it.  Partly because that means having more money left over when they reach the point of applying for a mortgage and partly because there would seem to be nothing to gain by tolerating unnecessary hardship.  UC is not a generous payment to support the life of luxury but an essential safety net to support the bare essentials.  If you need it, you need it.

Now the bit that is confusing.  If the OP aims to take on a mortgage later this year, then the OP will need a deposit of 10% or more.  For most properties in most parts of the country that deposit is going to mean the OP has savings above the level at which UC is available.  On that basis, the worry that the OP has about UC being an impact on a mortgage application may not be one that materialises.  If the OP has "hidden" the deposit for the house, that will likely create far more issues...

An option for the OP May be to look at nJSA.  If the OP qualifies, there is the first payment available that is not means-tested so ignores the deposit saved for a house.

ftb_allhopelost

Grumpy_chap said:

There is something I can't quite get clear in my head for the OP's circumstances.

I am not an expert in mortgages or UC but agree with what others have said that a disrupted work history is likely to affect mortgage availability.  Hopefully that can be minimised by the lenders (or a good broker) looking at the case properly - given the time we've all been through, if mortgage lenders withdraw from anyone with a bump in the road there won't be many people left to lend to.  Claiming UC is not the cause, but is merely a symptom of the situation.

If the OP needs and is eligible for UC, then the OP should claim it.  Partly because that means having more money left over when they reach the point of applying for a mortgage and partly because there would seem to be nothing to gain by tolerating unnecessary hardship.  UC is not a generous payment to support the life of luxury but an essential safety net to support the bare essentials.  If you need it, you need it.

Now the bit that is confusing.  If the OP aims to take on a mortgage later this year, then the OP will need a deposit of 10% or more.  For most properties in most parts of the country that deposit is going to mean the OP has savings above the level at which UC is available.  On that basis, the worry that the OP has about UC being an impact on a mortgage application may not be one that materialises.  If the OP has "hidden" the deposit for the house, that will likely create far more issues...

An option for the OP May be to look at nJSA.  If the OP qualifies, there is the first payment available that is not means-tested so ignores the deposit saved for a house.

Hi 

Thank you for your insight. I only have 5% deposit at the moment of y own money but will be able to go up 10% with the help of my sister. At the time of partner's UC application i had not saved up enough for the 5% and also the deposit is less than £6k.