NOTE: This guide is mainly aimed at people who are currently on furlough or have come off furlough in the last few weeks. If you’ve been on furlough previously but have been back at work for at least a couple of months, your ability to get a mortgage should be unaffected and we can help you find a great deal during your FREE consultation.
The furlough scheme has been extended until the end of March 2021 – with workers receiving 80% of their wages up to £2,500 a month. This scheme has been hugely beneficial for millions of people, allowing them to keep up with payments and living expenses. But how does it affect those who are hoping to move home and take out a new mortgage? With low interest rates and a robust housing market, now is deemed a great time to move by many people. If you want to take advantage of this opportunity but you’re currently on furlough or you’ve recently come back from furlough, it may be a bit more difficult to secure a mortgage, but in most cases, it’s not impossible.
In this guide, we’ll explain everything you need to know about moving house and getting a new mortgage whilst on furlough. If you’ve recently come back from furlough, some of the points explained in this article may still apply for a few weeks, but after a couple of months your ability to get a mortgage should be unaffected by your previous furlough period providing you haven’t built up any major debts.
Finding and Applying for a Mortgage Whilst on Furlough
If you’re currently on furlough, the process for finding a mortgage is the same as before but you may have fewer options. Book in for a FREE consultation where we can assess your situation and find out what deals are available to you from the whole market of lenders. The process for applying for your mortgage whilst on furlough will also be similar, but we may advise you to include additional information that could support your application. We can find the right mortgage for your situation and apply on your behalf – saving you time and ensuring the process runs smoothly.
Things That May Prevent You From Getting a Mortgage Whilst on Furlough
Most lenders will only take into account your current earnings whilst on furlough rather than your normal salary, which can result in you being offered a lower borrowing limit than you were hoping for and potentially a higher interest rate too. If your current earnings are considerably less than usual, you may find that the deals available to you don’t satisfy your needs. On top of this, some lenders might worry that you’ll become unemployed after the furlough scheme ends, which could reduce the number of providers willing to lend to you. As with any mortgage application, the amount of debt you have will also be taken into consideration; if you have a high debt-to-income ratio, this could make it more difficult to find a mortgage whilst on furlough.
Being rejected for a mortgage can negatively affect your credit score, which is why it’s always important to speak with a mortgage broker who understands the criteria of each lender before applying – this is particularly crucial if you are on furlough or have a lot of debt as there’s more chance you’ll be rejected by certain lenders.
Things That Can Help You Get a Mortgage Whilst on Furlough
If you are applying for a joint mortgage, then your partner’s income will be taken into account and could help to satisfy affordability checks. Some lenders may also look at savings, pensions, or benefits you may have, which could help to support your application. If you are still on furlough, try to get an official letter from your employer confirming that you will be returning to your normal position and receiving your full salary. Given the economic uncertainty caused by the pandemic, your employer may not feel comfortable doing this, but it could help to lessen the perceived risk and improve your chances of getting a good mortgage deal.
The Bottom Line
If you are currently on furlough or you’ve come off furlough very recently, you may find it a little harder to find a mortgage. But in most cases, it can be done, and there are ways to support your application to give you the best chance of success. Being rejected for a mortgage can damage your credit score, which can further reduce your chances of being accepted by another lender – this is one of the reasons it’s important to seek professional advice before applying.
We’re whole of market mortgage brokers and we understand the criteria for each lender, meaning we can work out what deals you’re likely to be accepted for before you apply, This can save you time and hassle, but crucially, it can also protect your credit score. You can sort your mortgage with us remotely, so if you’re at home on furlough we can help you make the most of your downtime! Get in touch with one of our friendly advisors today and we’ll get you moving with a mortgage that suits your needs perfectly. Book in for your FREE consultation, available via phone or video call. We look forward to helping you!
