Could Universal Credit stop you getting a mortgage?

Millions of borrowers could potentially find it difficult to obtain a mortgage if they claim Universal Credit.

This is thought to be due to communication difficulties between lenders and the Universal Credit system. An investigation by Guardian Money recently took place, revealing that one buyer who lives in an area taking part in tests for the benefit was told that the mortgage amount she may be approved for would be cut, due to part of her income being Universal Credit.

According to Guardian Money, the credit won’t be accepted at all by some lenders when calculating the amount buyers may be able to borrow. The IT systems of some of the lenders have not been amended to cope with the new benefit, while others simply will not accept the credit.

Although some lenders will accept the benefit, the latest version of Universal Credit is operational solely online, and has no paper trail. However, many lenders still require a paper copy of the benefit received from the provider. Around seven million people will be claiming the benefit by 2022, which incorporates tax credits and six other types of benefit.

One claimant who had contacted Guardian Money said that her mortgage offer had been reduced as she was unable to produce a hard copy of the amount of Universal Credit received from the Department for Work and Pensions, detailing a breakdown of the amount received. Mortgage advisors learn about this type of situation on CeMAP training courses, so they can support borrowers.


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