I've lost my UC payment as I've bought a Shared Ownership property

Jak51

Hi,

I have just found out that I have lost £164 a month from my income from Universal Credit due to purchasing a Shared Ownership Property. I knew nothing about this and didn't even think to check as I declared everything to my mortgage advisor and mortgage lender, so according to the advisor at TurnToUs they should have informed me of this. The lender actually declined me without the UC benefit, then when I provided them with the statement and breakdown, they accepted me for the mortgage based on the payment I was receiving.

I can apply for an loan which contributes towards the mortgage interest but that does not come to me as income, it goes straight to the bank and does not reduce my overall mortgage payment. TurnToUs has suggested that I go back to my lender and see if they will reduce my mortgage payment.
 
Has anyone else experienced this? Any advice would be greatly appreciated as a £2000 a year drop in income is really going to affect me.

ACG

TurnToUs said the mortgage advisor should have told you about a drop in universal credit? 

kingstreet

Why has your UC been reduced? For what was it being paid?

ElwoodBlues

Are you saying that you were renting before buying, and were receiving housing element of UC towards your rent, and that's been stopped now you are no longer renting? I'm not sure if the rented portion of your shared ownership poperty qualifies for partial UC housing element?

kingstreet

AFAIK HB/LHA used to apply to the shared ownership rent. I can't say if it remains the case under UC but if that's what the OP is referring to...

"Shared ownership schemes. You normally have to pay a mortgage amount and a rent amount. If you get help with this, your Universal Credit housing costs payment will include help towards your rent amount with any help towards your mortgage interest usually being paid direct to your mortgage lender."

kingstreet

https://www.turn2us.org.uk/get-support/information-for-your-situation/universal-credit-uc-housing-costs-element/universal-credit-uc-how-much-will-i-get-i-have-a-shared-ownership-property

Universal Credit (UC): How much will I get? I have a shared ownership property

If you are renting while buying your home through a shared ownership scheme, you may be able to get help with your rent and service charges through Universal Credit.

You won't get any help with your mortgage through Universal Credit, but you might be able to get help through a Support for Mortgage Interest Loan.

You won't be affected by the Local Housing Allowance rules or the Bedroom Tax.

Jak51

@ElwoodBlues. Yes, that's correct. The proportion of rent of the shared ownership will still be taking in account, so I will receive a UC payment, but it will be £164 less a month than what I have been receiving, which is a massive shock! If I had of known this, I may not have purchased the shared ownership property as I may struggle financially without the extra £164.

I didn't realise that most of my UC payment was towards rent. It's such a complex benefits system that it's difficult to understand.

On top of this, because it it is shared ownership, I've had to pay for the flooring and there's even been extra costs for the solicitors, than what a normal purchaser would pay, e.g. the developer's properties came with £3000 worth of flooring and white goods. So, this means I have had to put everything I've got into buying this property, so have absolutely no saving now. For example, deposit, £2600, Sol fees £2500 and Flooring £1500.

Jak51

ACG said:

TurnToUs said the mortgage advisor should have told you about a drop in universal credit? 

Yes, they said, because I was initially declined on my sole salary (without UC) then the lender accepted me based on the UC payment and had requested a breakdown of the UC statement, so they knew exactly what the breakdown was for my payments, then they have should have declined me based on the drop in UC payments that would occur, because the majority of my UC payment was based on my rent. They cited irresponsible lending. 

kingstreet

FWIW I would not include the housing element of UC in any mortgage application as it's likely to end and would be subject to reapplication. We are not authorised to advise on benefits either.

Jak51

kingstreet said:

FWIW I would not include the housing element of UC in any mortgage application as it's likely to end and would be subject to reapplication. We are not authorised to advise on benefits either.

Are you saying that if I complain to my mortgage broker and lender, that they could effectively cancel my mortgage?

kingstreet

No. Of course not. Once the mortgage and purchase is completed you're stuck with it. However, if an intermediary has taken into account benefits which would end with the purchase, you may be able to complain and have some kind of redress.