buying a home whilst receiving universal credit

Gillimoo

My daughter works part time (16 hours) since having her daughter 18 months ago.  She's single and has rented privately for 10 years, but I'm looking into her buying a shared ownership property.  Can she do this whilst receiving universal credit?  I'm going to give her the deposit (I've read and noted the chats on this subject), but does being on UC prejudice her getting a mortgage?

marcia_

Gillimoo said:

My daughter works part time (16 hours) since having her daughter 18 months ago.  She's single and has rented privately for 10 years, but I'm looking into her buying a shared ownership property.  Can she do this whilst receiving universal credit?  I'm going to give her the deposit (I've read and noted the chats on this subject), but does being on UC prejudice her getting a mortgage?

 If you give the deposit directly to her she will be ineligible for universal credit if it's over £16000 and have it reduced if over £6000. 

 She might still get a mortgage but if universal credit makes up the majority of her income she will struggle 

fatbelly

It's more a question for the mortgage board. I would have thought a small mortgage based on her earned income would be possible

teaselMay

It is possible, dependent on the actual numbers.

I'm just waiting for the wheels of conveyancing to turn on a shared ownership house. My income is solely PIP and UC. Your daughter's wages will be more than my PIP. The wages also mean it's not a benefits only income which broadens the lenders that will accept her.

A few things that it's worth your daughter knowing from the start rather than at the point of application like me:

• Banks don't like lending on less than a 25% share, and so whilst lots of places are advertising 10% shares, and that you can buy with a tiny deposit, it's extremely hard to get a mortgage for a 10% share. I had to leap from having saved for a 10% share to 25%. Realistically you need a 10% deposit of a 25% share.

• With UC although her current award will include housing allowance towards her rent, and the rent component of the shared ownership will be paid by UC too, banks completely ignore that housing allowance in their calculations. A mortgage will be based on the other components of UC only (adult, child, any disability components)

• Whilst the housing component of UC is excluded, the rent, any service charge and ground rent are included as expenses for the mortgage affordability.

• If your daughter receives a council tax reduction because of her income this may make a huge difference to how much she can borrow. Make sure that she has proof of the discount she will receive. If she's buying in the same local authority area as currently living that's simple because she already has paperwork confirming her entitlement, although the figures may be different for new place if the band is different. If it's a different area the rules of entitlement may be different. Speak to the local authority and ask for confirmation of what she would pay. Because council tax is a big monthly expense this made the difference between being able to borrow enough or not for me.

If you find a likely house so that you know rent figures, go on Barclays affordability calculator, 'how much can I borrow' on their website, and complete it adding the UC amount minus housing allowance as benefit income. You can then play around with deposit amounts to see what would work. That was an accurate reflection of what I could borrow when I did it formally. 

housebuyer143

It's unlikely she gets a mortgage on UC. Many lenders do not accept UC as guaranteed income so unless her part time job earns her enough to pass the affordability which is unlikely, then it's probably not going to happen. 
They tend to accept things like PIP as far as benefits go but not really UC. 
You can speak to a broker who might advise for certainty if it's possible though. 

teaselMay

housebuyer143 said:

It's unlikely she gets a mortgage on UC. Many lenders do not accept UC as guaranteed income so unless her part time job earns her enough to pass the affordability which is unlikely, then it's probably not going to happen. 
They tend to accept things like PIP as far as benefits go but not really UC. 
You can speak to a broker who might advise for certainty if it's possible though. 

This wasn't my experience with Barclays. They were more used to UC than PIP and didn't have a problem with either. 

Channy7

I bought a property whilst on UC and unemployed. I used a broker

kimplus8

I am a single mum, I work full time and receive UC and I have just purchased my first home with a 10% deposit. It is possible.