Buying a shared ownership home on Universal Credit

happydaisy11

Hi everyone, just looking for some advice. 

Due to a separation I'm in the process of selling my home. I will be looking to buy via shared ownership for my children and me. I've seen a specific development, registered with Help to Buy and am on the estate agent waiting list for homes coming soon. However, my sale is going to complete before the shared ownership home is released and I will be staying with my mum until I can apply and hopefully be accepted. 

I only work part time, but have an Agreement in Principle for a mortgage based on my wage and receiving universal credit. The lender wants to see proof of the monthly universal credit payments as a condition of acceptance. The problem is, when I sell my home, I will have a large deposit, (all of which I plan to put down to purchase a shared ownership property) but I believe this would cancel out my universal credit payments. 

Has anyone been in this situation? Can my deposit be ignored for a short time, so I can continue to receive universal credit, the new homes are released and I can apply for a mortgage? Otherwise, I assume the lenders won't give me a mortgage without the UC proof, and it will also eat into my deposit and I won't have enough to put down to secure a home. 

Thanks in advance for any advice.

Alice_Holt

There is a savings disregard for such situations, see:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1085956/admh2.pdf

H2119  Page 22

"Where a person has received an amount within the past 6 months which is to be used to purchase premises that the person intend to occupy as their home, that amount can be disregarded from the calculation of that person’s capital where it
1. is attributable to the proceeds of the sale of premises formerly occupied as their home..."

And:

https://www.legislation.gov.uk/uksi/2013/376/schedule/10

The disregard can be extended beyond 6 months by a DWP decision maker. 


I'd suggest keeping UC fully in the picture, ask that the disregard is applied, and be sure to keep all the relevant paperwork.

happydaisy11

Thank you so much, this is so helpful. Very much appreciated. 

Muttleythefrog

happydaisy11 said:

Thank you so much, this is so helpful. Very much appreciated. 

I have very recently been in similar situation. We moved to my parents' house after sale of my property and pending purchase of another home. There was no mortgage involved and we bought outright a resale property. However above by Alice is correct.... they can disregard the capital from the sale for 6 months if intending to use it to buy another home to live in.. and also as she pointed to they can then disregard for further time in some circumstances if required such as if the purchase has not yet completed. In our case we got an extension after our purchase was delayed (it ultimately fell through and we bought another property).

My only concern for you would be that they can take time to take decision (on disregarding the sale proceeds) and that was not particularly a problem for us but it could be for you if you need evidence of ongoing U/C payments via the monthly statements - in effect they suspended the statements and payments pending decision on entitlement and then backdated and produced statements after decision. With that in mind I would be quick to inform them of the changed circumstances and also possibly point out when they ask for further information that you will need to evidence ongoing U/C for the mortgage product and so a speedy decision would be important. Chase them up and try to escalate if you did find a problem arising on any delayed decision... but you could get lucky... might be efficient... they were quite quick with our initial decision but slow on the 'reconsideration' extension decision (they did rapidly take decision after they escalated it).

As general point they never asked us for evidence beyond our own words and figures in these matters including when the money was spent (sent to solicitor). So otherwise it was quite smooth and they seemed to take a line of 'what sounds reasonable, not unexpected and is consistent' can be assumed true.

All the best!

happydaisy11

 Muttleythefrog said:

happydaisy11 said:

Thank you so much, this is so helpful. Very much appreciated. 

I have very recently been in similar situation. We moved to my parents' house after sale of my property and pending purchase of another home. There was no mortgage involved and we bought outright a resale property. However above by Alice is correct.... they can disregard the capital from the sale for 6 months if intending to use it to buy another home to live in.. and also as she pointed to they can then disregard for further time in some circumstances if required such as if the purchase has not yet completed. In our case we got an extension after our purchase was delayed (it ultimately fell through and we bought another property).

My only concern for you would be that they can take time to take decision (on disregarding the sale proceeds) and that was not particularly a problem for us but it could be for you if you need evidence of ongoing U/C payments via the monthly statements - in effect they suspended the statements and payments pending decision on entitlement and then backdated and produced statements after decision. With that in mind I would be quick to inform them of the changed circumstances and also possibly point out when they ask for further information that you will need to evidence ongoing U/C for the mortgage product and so a speedy decision would be important. Chase them up and try to escalate if you did find a problem arising on any delayed decision... but you could get lucky... might be efficient... they were quite quick with our initial decision but slow on the 'reconsideration' extension decision (they did rapidly take decision after they escalated it).

As general point they never asked us for evidence beyond our own words and figures in these matters including when the money was spent (sent to solicitor). So otherwise it was quite smooth and they seemed to take a line of 'what sounds reasonable, not unexpected and is consistent' can be assumed true.

All the best!

Thank you so so much for taking the time to reply to me. I really do appreciate it!! That's very helpful advice and I will be sure to stress the importance of continuing the UC payments for the mortgage product. Thanks so much again for your help

spilledink

Hello, sorry to dig up an old thread. 

May I ask if the 6 months disregard of income would also apply to an inheritance lump sum put towards a shared ownership house?

I am thinking of buying into a shared ownership house and am on UC. I'm now wondering if staircasing would be an option for me, when I receive an inheritance (hopefully this is a long time in the future).

kaMelo

No, inheritance money would need to be declared once received and would count as capital immediately. If inheriting a property it would be disregarded whilst up for sale but once sold the proceeds would not have any disregard as the property sold was not your home.

spilledink

Ahh, okay. That's fair enough