Getting a mortgage when furloughed
The furlough scheme, or to give it its official name, the Coronavirus Job Retention Scheme has been a huge part of the government’s support package to help people get through the pandemic over the last 12 months.
It has meant the government has picked up the tab for 80% of furloughed employees’ salaries, and at the Budget, in March it was announced that the scheme would be extended once again until the end of September.
The scheme has been hugely popular with employers. According to the latest figures from HM Revenue & Customs, a massive 11.4 million unique jobs have been supported through the scheme, with around 4.7 million people still on furlough in February.
But what does being furloughed mean for your chances of getting a mortgage?
Can I still get a mortgage?
The good news is that it’s still possible to get a mortgage, whether you have been furloughed at some point over the last 12 months or if you’re still on furlough. While not every lender is comfortable lending to people who are currently furloughed, there are still lenders who will do so.
Ultimately, the big factor for any mortgage lender is whether you can afford the repayments, not just today but in the future too. Crucially, when they assess that affordability, the lenders will base their judgements on your current income. If you are on furlough, it will be judged on your furloughed income rather than your regular salary, so if you can demonstrate that you can afford those repayments on a furloughed income, then you are in a decent position.
Some lenders are understandably a little cautious when it comes to lending to people still on furlough. While many will at least consider your application, they may ask for documentation from your employer to reassure them that you will soon be returning to your regular employment – in some cases requiring a specific date on which you will be returning – and that your job is not at risk.
Finding the right mortgage when furloughed
It’s obviously really encouraging that some lenders are being so understanding about people who have either been furloughed in the last year or who are still on furlough, meaning that you have some options open to you.
However, there is still work to do when it comes to finding the right mortgage for you and your circumstances. That’s where working with an independent mortgage adviser can bring so many benefits. Some lenders who will consider furloughed borrowers aren’t high street lenders – they only distribute their deals through intermediaries, so by making use of an adviser you enjoy a far greater range of options.
What’s more, advisers are experts on the criteria employed by different lenders, so can direct you towards lenders that are most likely to accept an application from you.
In other words, partnering with the right adviser will mean you can find the perfect deal, no matter what your furlough situation is.