Getting a Mortgage After Furlough in 2023

As of now (September 2023), we are reflecting back on the time when the UK had a furlough scheme in place due to the lockdown. At that time, 9.5 million people were on furlough, no able to work and relying on the furlough income, which was part of a government-backed initiative to support employees and businesses.

Many individuals are now considering their mortgage options and are looking to secure a mortgage after furlough. Despite the peculiar financial situation during the furlough period, it is indeed possible to apply for a mortgage, although the process might involve stringent affordability assessment by mortgage lenders.

Your current lender or a new mortgage lender will likely want to see your bank statement to understand your financial health during and after the furlough period. It’s common for them to check how stable your income has been and assess your credit score to gauge your repayment capacity. Your furlough income, reflected in your bank statement, will be a crucial part of this evaluation.

Approaching a mortgage broker or a mortgage advisor can be a wise step in this scenario. They can offer you guidance tailored to your situation, helping you to understand the different mortgage options available to you based on your furlough history. These experts can guide you in presenting a strong mortgage application, potentially increasing the likelihood of it being approved.

As we move forward, being among the people on furlough does not disqualify you from securing a mortgage now. With the right guidance from a mortgage broker and a thorough review of your financial situation, you can identify and apply for a mortgage option that suits you best. It’s encouraged to start this process with a clear understanding of your current financial stance and an up-to-date credit score to aid in a successful mortgage application.

Post Topics

What was the furlough scheme, and how did it come to an end?

Can I get a mortgage if I’ve been on furlough in Past?

What are the latest eligibility criteria for getting a mortgage if you benefitted from the Furlough scheme in the past?

What documents do I need to apply for a mortgage if I have previously worked under this scheme?

Next Steps

What was the furlough scheme, and how did it come to an end?

Furlough Scheme, also known as Coronavirus Job Retention Scheme, was a government-funded scheme in the UK which was put in place to support businesses and employees during the national lockdown. This scheme allowed employers to temporarily place their staff on 80% pay while they were unable to work, with the government financially covering part of this wage. The scheme ended on September 30, 2021, after being extended for several months due to an increase in coronavirus cases.

Securing a mortgage after furlough can be daunting, but with the help of a professional financial advisor or broker, it doesn’t have to be. They can help you evaluate your current financial situation and provide advice on how to present yourself as an ideal applicant for a mortgage. Additionally, they may suggest other options, such as remortgaging or finding alternative lenders who are more likely to approve your application.

Can I get a mortgage if I’ve been on furlough in Past?

Yes, you can get a mortgage today, even if you have been on furlough in the past. Mortgage lenders will evaluate your financial situation and credit score to assess your repayment capacity. It’s important to approach the process with a clear understanding of your current financial position and up-to-date credit score. Seeking advice from a mortgage broker or advisor can give you tailored guidance that can increase the likelihood of your application being approved.

What are the latest eligibility criteria for getting a mortgage if you benefitted from the Furlough scheme in the past?

If you benefitted from the Furlough scheme in the past, the latest eligibility criteria for getting a mortgage vary from lender to lender. However, some general things to keep in mind include:

• You must have been furloughed for a short period of time, and be confident that you will be returning to full-time work soon.
• You must have a good track record of employment and a strong credit history.
• You must have a large enough deposit.
• You may need to accept a higher interest rate or a lower loan amount.

Some lenders may also consider the following factors when assessing your application:

• The stability of your employer
• The likelihood of your industry being affected by the pandemic
• Your overall financial situation

It is important to speak to a mortgage advisor to get an accurate assessment of your eligibility for a mortgage if you have been furloughed. They will be able to advise you on the best course of action based on your individual circumstances.

What documents do I need to apply for a mortgage if I have previously worked under this scheme?

If you’ve worked under the furlough scheme and are preparing to step onto the property ladder, understanding the mortgage application process and the documents needed is essential. Here’s in this section, we will help you navigate your mortgage after furlough:

First, consult with a mortgage advisor or an independent mortgage broker to grasp your mortgage options based on your current financial situation. Given the impact of the furlough scheme on millions of persons, expert advice can guide you in selecting the best mortgage deal aligning with your financial stability.

The documents you generally need are:

1. Proof of current income and employment status: This encompasses your recent payslips (the last three months) and a letter from your employer outlining your return to full-time employment. For self-employed clients, a letter from your accountant or financial advisor detailing your financial situation post-furlough could be required.
2. Bank Statement: Highlighting your financial health, the bank statement should reflect your monthly income, including any furlough payments, and your expenditure to help lenders calculate your debt ratio and income ratio.
3. Credit History and Credit Rating: Obtain a detailed report that reflects your financial commitments and habits. It may include details of credit card usage, previous mortgage repayments, and any other debts. Maintaining a good credit record can enhance your mortgage chances.
4. Proof of Identity and Address: Government-issued ID such as a passport and a recent utility bill or council tax statement will suffice here.
5. Deposit: Be prepared with a deposit, generally at least 5% of the property’s value.
6. Additional Information: Details of your savings, monthly mortgage repayments, any additional or variable income, and a breakdown of your regular and stable income. This might also cover a statement of your expected mortgage term and the prospective monthly mortgage repayment.

Remember, the choice of lender can vary significantly. While some street banks or mainstream lenders might focus on your basic salary, others might consider your total income, including bonusIncome received as a bonus, which may affect a borrower's ab... payments, to assess your mortgage affordability.

Rishi Sunak’s furlough scheme has seen variations in normal salary and reduced income, influencing the housing market considerably. To stand a better chance in the competitive market, consider providing evidence of your financial difficulty management during the health crisis, such as a mortgage holiday or revised mortgage payment structure.

The mortgage provider might undertake a detailed affordability assessment, considering your employment situation post-furlough and any potential job loss. Applying for products such as a joint mortgage or seeking a product transfer with your current lender might be viable options to consider.

In the evolving property market landscape post-furlough, securing a mortgage deal that suits you best involves a thorough understanding of the available mortgage interest rates, the application process, and seeking professional advice from a market mortgage broker to ensure a seamless transition in your journey to secure the perfect type of property for you.

Please note that some advisors might charge a fee for mortgage advice, so be prepared and informed to make the best choice in securing your mortgage on furlough.

Next Steps

Getting a mortgage after the furlough scheme can be a tricky task. It is important to provide evidence of financial difficulty management during the health crisis, such as a mortgage holiday or revised mortgage payment structure. Additionally, you should consider the available options for products like joint mortgages and product transfers with your current lender. Lastly, make sure to consult professional advisors and research the market to ensure you secure the best type of property for you.

 FAQs

What was the UK’s furlough scheme, and how did it come to an end?

The furlough scheme, known as the Coronavirus Job Retention Scheme, was a lifeline for millions of workers during the national lockdown in the UK. British workers on a contract of employment were placed on leave, with 80% of their usual income being covered by the government, preserving the employment status of millions of people. The head of mortgages at several banking institutions acknowledged the crucial role of this scheme during a temporary situation like the pandemic. This strategy, which significantly impacted the mortgage sector, was drawn to a close on 30th September 2021. The end of the scheme, in turn, led to a surge in mortgage rates and affected the monthly repayments for many mortgage borrowers.

Can I apply for a mortgage after being on furlough, considering the current mortgage situation in September 2023?

Absolutely, as of September 2023, individuals, including self-employed workers who were previously on furlough, can still be potential mortgage applicants. Despite the prior impact of furlough on your source of income, it is possible to apply for a mortgage. It is advisable to be forthright about your financial history during the furlough period to avoid service difficulties during the application process.

What criteria will lenders consider for mortgage furlough applicants when assessing their current financial standing?

In light of the mortgage furlough period, lenders are adopting a more flexible approach to lending. They examine several factors, including the stability of your current source of income, credit score, and the amount saved for a deposit. Additional affordability checks might be more stringent, factoring in the impacts of Brexit and the economic landscape at the time of writing. For self-employed applications, lenders might seek evidence of a steady inflow of income post-furlough. Acquiring advice on mortgage affordability criteria through mortgage experts or independent mortgage advisers could enhance your borrowing affordability.

What documentation is essential for mortgage after furlough leave applications, especially for self-employed borrowers?

For potential mortgage borrowers, including self-employed applicants, the preparation of the necessary documents is crucial. Generally, you will need proof of regular income or business revenues for self-employed workers, recent bank account statements reflecting your financial health during and after the furlough period, and an accurate report of your credit history. Proof of additional income, such as annual income from investments or universal creditA government benefit that replaces several other benefits, i..., might strengthen your application. Consulting a mortgage hut or a visionary finance expert can provide insight into assembling a robust application, inclusive of all potential sources of assessable income.

How can mortgage advisers aid mortgage applicants in navigating the post-furlough mortgage sector, particularly in the context of fluctuating mortgage rates?

Mortgage advisers, with a pulse on the current trends and a comprehensive understanding of various products in the market (spanning 1000s of products), are well-equipped to guide mortgage applicants. They offer financial advice, helping applicants navigate through fluctuating mortgage rates and potentially suggesting options that align with the Bank of England base rateThe interest rate set by the Bank of England, affects the in.... Advisers might propose alternative solutions such as considering a variable rate mortgage or leveraging payment holiday schemes to optimise monthly mortgage payments. Working with an adviser can strategically position you to present a strong application amidst the dynamic post-furlough mortgage landscape.