Does being on furlough affect mortgage?

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Elton Willms asked a question: Does being on furlough affect mortgage?
Asked By: Elton Willms
Date created: Sat, Jan 30, 2021 9:12 PM
Date updated: Wed, Jun 22, 2022 10:51 PM

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Top best answers to the question «Does being on furlough affect mortgage»

The main issue surrounding furlough is your reduced income. While this won't impact the rates you're offered, it will impact the amount you're able to borrow. Being furloughed is also just one of many factors your lender will assess you on.

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Being furloughed does not mean the end of your mortgage application If you have been furloughed and are currently on the government Job Retention Scheme, you may understandably be slightly worried about how this may affect your mortgage application.

The impact of your mortgage approval in the case of a furlough will depend largely on where you are in the mortgage process and how soon you will return to your normal schedule or rate of pay.

Mortgage applicants that are still on furlough may be able to successfully gain approval for a mortgage but the majority of lenders will view the application with caution.

Will furlough affect remortgaging? Whether you’re looking to switch lender or switch plan with the same lender, furlough can potentially limit your options when it comes to remortgaging. If you’re looking to stay with the same lender and migrate to a new like-for-like plan, then being furloughed will not have an impact on this.

When the property market reopened in May, banks would generally allow mortgage applications from people on furlough – albeit with the caveat that only their furloughed income (80%) would be taken into account. Now, though, that’s changed, with some of the biggest lenders now refusing to consider furloughed income at all.

You can still buy a house if you’re furloughed, get a mortgage or apply for related financial products like remortgages and bridging loans. If you’ve returned to work after furlough leave there’s no reason why mortgage approval should be off the table, assuming you meet the lender’s general eligibility criteria.

Yes –mortgage payment holidays apply to buy-to-let mortgages as well as residential mortgages, which should clear up the position for the lender on this.

Any worker who has been furloughed and placed on the government Job Retention Scheme may find that it has an affect their ability to get a mortgage. Whether purchasing a property to live in, buying a buy to let property or remortgaging, lenders can view mortgage applications from furloughed employees in a different light.

Matt explained: “Lenders require customers to have a solid source of income to be able to offer them a mortgage. “Being placed on furlough means you are technically still employed and have money...

“A furlough – especially if it’s unpaid – will likely carry similar weight in a lender’s eyes as being laid off,” says Adam DeSanctis, spokesman for the Mortgage Bankers Association. “Depending on...

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