Accord Mortgages accepts Universal Credit for mortgages: New rules for Ukrainians in the UK.

According to The Sun: The lending institution Accord Mortgages has simplified the application for mortgages for those receiving Universal Credit and other social benefits.

Now social assistance is considered as a source of income when assessing creditworthiness, provided at least one of the applicants has a stable job.

Up to 60% of the amount of Universal Credit is considered, excluding housing support, fees, or shares related to children over 11 years old.

This step is also accompanied by an increase in the creditworthiness factor for foreigners without permanent residence status – it rises to 90% from the previous 75%, provided the applicant has an income of over £50,000.

Both changes came into force on August 28.

This step opens new opportunities for those dreaming of their own home but who previously had difficulties obtaining a mortgage due to their financial situation.

It is generally harder to get a mortgage for those receiving social benefits, especially unemployed individuals, as lenders are often concerned that they do not have a stable income to repay the loan.

Experts' Reaction

Nicolas Mendes, technical manager for mortgages at John Charcol, called this move a 'real progress.'

'A major benefit is that Accord recognizes UC as real household income, giving a greater number of borrowers a chance for a positive outcome.'

'On the other hand, only 60% of UC is considered, housing support is excluded, and applicants still need to have earned income – so it does not support those who rely solely on social benefits.'

'By considering 60% of UC, Accord emphasizes that they view these payments as part of real household income.'

Are other lenders accepting Universal Credit?

To date, only a few lenders consider Universal Credit, and even then usually with strict limitations.

'Many well-known banks like Coventry, TSB, and Metro Bank do not accept it at all,' noted Nick.

For example, Leeds Building Society accepts Universal Credit if the main source of income in the application is salary or self-employment income.

Barclays might also consider this support depending on the circumstances, but points out that the housing portion may only be considered in shared ownership.

The Marsden Building Society has also reported that it may accept Universal Credit as an acceptable source of income, but only 50% of this support, excluding elements related to housing costs or unemployment.

What support is available for first-time buyers?

Buying a home can seem a challenging task, but there are programs that can help first-time buyers secure their own home.

Help to Buy Isa: This is a tax-free savings account where the government adds an extra £50 for every £200 you save. However, the maximum limit is £3,000, which will be paid to your lawyer upon certification. These accounts have already been closed for new applications, but those who already have one can use it until November 2029.

Help to Buy Equity Loan: The government provides up to 20% of the purchase price – or 40% in London – after you make a 5% down payment. This loan is additional to the regular mortgage, but can only be used to purchase a new build.

Lifetime Isa: This program offers everyone aged 18-39 the opportunity to save tax-free and receive a bonus of up to £32,000 for their first home. You can save up to £4,000 per year, and the government adds 25%.

Shared Ownership: Shared ownership with a housing association allows you to buy part of the property and pay rent for the rest. You can acquire between 25% and 75% of the property, but only within specific properties.

Mortgage Guarantee Scheme: The scheme started on April 19, 2021, for new mortgages with 95% financing. Applicants can buy their first home with a 5% down payment; it is available for properties up to £600,000.

Thus, the recent changes in Accord Mortgages policy create new opportunities for many borrowers who previously had difficulty obtaining a mortgage due to their financial situation. This gives those receiving Universal Credit the chance for improved living conditions in the future. Even if other lenders still hesitate to recognize social assistance as a source of income, the changes at Accord could signal that other institutions are reconsidering their criteria.