One of the key burning mortgage-related questions of the moment relates to furlough.
Does being on furlough preclude you from getting a mortgage?
Short answer: no.
But your options have narrowed. Sadly, the number of lenders accepting furlough applications is relatively small.
To date 11 million people have been furloughed.
This has meant government underwriting 80% of salaries x 11m!
That 80% became the basis for mortgage applications though some employers opted to top up the 20% balance.
The Coronavirus Job Retention Scheme lasts until end of September.
Applying for a mortgage once furlough has finished could be a better option for you.
We’d recommend you do so after you’ve been back for a month and are able to show that crucial first month payslip.
Be aware: Lenders may ask your employer if any further furloughing is planned at your place of work.
Lending is all about risk: lenders are by nature risk-averse.
So they look at applicants in the most pessimistic terms - whether they can meet payments; whether their jobs are safe etc.
The sector in which you work is also a factor for them: if you work in retail, travel and hospitality it’s going to be harder for you. Sorry!
Furlough-based mortgage applications will be based on 80% of your salary reflecting the 80% paid by government.
You may find some lenders imposing a £30k cap on your application mirroring the maximum £2,500 monthly furlough payment made (£30k annual). We’ve heard of that figure being knocked back to 70% and 60% in some cases.
Are there any other payments that might be considered as part of salary?
Most obvious one is bonuses.
This is at lender discretion though there seems to be an easing of accepting bonuses as part of your salary package which obviously impacts on the amount you can borrow.
Overall? It’s not the easiest.
But there are ways through, but be prepared for exacting requirements and oodles of paperwork.
If only you knew of a company which might be able to help you.
Oh. You do. Get in touch!