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Mortgage after furlough leave

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 13, 2023

Getting a mortgage after furlough leave

Your employer may have furloughed you during the coronavirus crisis. Now you are wondering if this will impact your chances of getting mortgage financing.

Speak with a mortgage broker today for free mortgage advice. Our mortgage brokers will match you with a provider whose lending criteria you match and will discuss any furlough income questions you may have.

There is good news: mortgage approvals on furlough are possible. Expert mortgage brokers have helped many people obtain the mortgage they need under various circumstances. A mortgage broker is well-equipped to provide expert mortgage advice to furloughed individuals, regardless of whether they are applying for a single or joint mortgage.

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Is it possible to get a mortgage after a furlough scheme

Yes. There is no reason to deny getting a mortgage approval if you have returned to work following furlough leave, provided you meet all the lender’s eligibility requirements.

Furlough is technically considered to be remaining in employment. This means it won’t affect your ability to get a mortgage approval, provided you meet the lender’s general eligibility criteria.

Some other lenders may be cautious if you have just returned from furlough leave. Your choice of lender may be limited if there is a risk to your company or your job is under threat.

Many lenders will approach customers in high-risk sectors with caution.

Some people on furlough are not considered high-risk from a lending perspective. However, different lenders may be more willing to lend you post-furlough mortgages with standard terms. With the same rates that someone who was not on furlough during the coronavirus epidemic.

Apply for your mortgage through an experienced broker who understands the market and has several specialist lenders to introduce you to.

Some providers may be better placed than others to offer customers the best rates after a furlough. They will match your application’s risk to the mortgage provider that is most likely to approve it to get you the best possible deal.


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What effect will furlough have on my mortgage application?

You might find it harder to get a loan if you are still on furloughed income, particularly if you have questions about your job prospects. As previously stated, lenders may be concerned about the employment status of those who recently returned to work.

Most lenders will consider your entire income and any additional payments from your employer when lending while you’re on furlough. However, most lenders won’t consider additional income such as overtime and commission.

Is it possible to apply for second-home mortgages if you are furloughed?

In exceptional circumstances. While furloughed, you may also have problems with second mortgage applications, a remortgage, or missed payments on an existing mortgage or credit payments.

Failure to notify your lender about late payments could affect future financial support. For more information, contact our mortgage advice bureau today. We are also happy to help self-employed borrowers.

How to get the best rates for furlough leave

You should avoid mortgage lenders more likely to take your application as a higher risk. This is especially true if you are uncertain about your employment, which could affect your credit rating.

A broker will help you find the right lender for you. Enquire today free of charge.

A higher deposit can lower the deal’s overall risk by lowering the LTV. Plus, having more deposits means you have access to a wider variety of lenders and products that offer lower rates.

The rate you get will depend on your employment status. A bad credit mortgage lender may be required to approve your mortgage application. Depending on the severity and age of the issue, you might need to deposit a larger amount to be eligible for a mortgage.


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What if I have been furloughed?

Yes. As long as you are confident in your job, it is possible to lock in a lower interest rate.

Some lenders might offer you a deal on pre-furlough wages if you apply for a furlough remortgage. However, they may ask you to provide evidence, such as a letter to your employer that you intend to return to work at full pay in the future. This will likely be decided on a case-by-case basis.

Others lenders might only offer you a mortgage based on your furlough earnings, which is typically 80% of your regular salary unless your employer increases it.

You may have difficulty remortgaging after a furlough if you miss mortgage payments while on leave without agreeing to a payment holiday.

Learn more about refinancing mortgages by reading our guide to remortgaging.

What if I am still on furlough?

If the lender is sure that you will return to work after a furlough and that your job will remain secure, it might be possible to obtain a mortgage.

Many mortgage lenders will ask furloughed borrowers to provide employment references. They’ll also want to see your first payslip once you return to work to protect themselves from “furlough fraud”.

No matter what your situation, contact a broker to find out which mortgage lenders are best suited for furloughed customers.

What mortgage lenders accept furloughed applicants?

You would be best speaking to an independent mortgage broker with several specialist lenders like ourselves. Santander is among the mortgage lenders considering applications from furloughed people.

These lenders will evaluate furloughed applicants individually and may request a letter from the employer confirming that they will return to work. Others might request their first pay slip after returning to work.

There are still restrictions for mortgage providers that will lend to furloughed customers. It is important to seek specialist advice before applying.

It’s important to match you with the lender most likely to offer you the best deal in current circumstances. This is impossible if you only have access to one bank or building society.

A small number of lenders won’t consider new applications from furloughed borrowers. For example, Coventry Building Society will only accept applications from existing customers. On the other hand, Bluestone is cautious about furloughed customers in the hospitality sector.


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What support is there if I cannot pay my mortgage while furloughed?

The government announced measures in March 2020 to assist homeowners with difficulty paying their mortgages due to the effects of the coronavirus.

Lenders of mortgages are encouraged to be more accommodating to furlough customers experiencing financial difficulties. The Financial Conduct Authority (FCA) has also instructed lenders to refrain from repossessing properties while these measures are in effect.

In addition, the government offered mortgage payment holidays to customers as part of its support package. You can reach this agreement with your lender to ensure that no mortgage payments are due over three months. After confirmation of the national lockdown, they were extended for six more months beyond October 2020.

Experts recommend that you only take a mortgage vacation as a last resort. The interest will continue to accrue during the holiday, and you will end the holiday with higher monthly payments and more debt.

Coronavirus-affected homeowners also have other support options, such as mortgage holidays. Customers can change to an interest-only agreement and waive late fees.

You should talk to your lender if you have difficulty paying your mortgage. If there are no other options, consider taking a vacation.

Send us an enquiry to get independent mortgage advice. We’ll match you up with a broker and lender.

Talk to an expert about furlough mortgage lenders

A whole-of-market broker is the best way to find the best mortgage lender to give you favourable rates while or after a furlough. They will be able to identify the lenders most likely to approve your application and provide the best rates.

Contact us now for a no-obligation-free chat about your situation, call or submit an enquiry.


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