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Redundancy mortgages

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 16, 2023

Redundancy mortgages

A mortgage application can be affected by redundancy. This could happen before, during, or after you have applied for an agreement of principle. This could be due to the mortgage repayments not looking possible.

It’s possible to get a mortgage still even if you have been made redundant.

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Mortgages & redundancy guide

Our guide to redundancy and mortgages will show you how to do it, your options, and how the right mortgage broker can help you save your plans.

Contact us today; we provide mortgage advice free of charge and have a few mortgage providers lending under different circumstances daily.

You can read on to learn more about mortgages approved and insurance policies or use the menu to jump directly into a topic.

If you are facing redundancy, can you still qualify for a mortgage?

Yes. However, it is possible. You should consult an expert before applying for a mortgage. Mortgage applications can be dangerous during financial uncertainty. Although many mortgage lenders will reject you, there are still options that you might be able to get a mortgage through mortgage brokers.

Some mortgage companies will be flexible with your finances and income-related employment. They may offer options if you can show them that you can afford a mortgage even if your job is gone. However, you’ll need to work with a broker to help you find them.


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There are many options that you might have

If you are facing redundancy or have been made redundant recently, you could still qualify for a mortgage.

  • You have a job lined up: While not all lenders will offer mortgages to you if your next job isn’t yet started, some may consider you if there is clear evidence of future employment and timing.
  • You are applying with someone else: If the loan amount is reasonable based on the other person’s salary, you may still be approved for a mortgage. However, the lender may reconsider the amount that you can borrow.
  • You have the option to increase your deposit: Maybe you are getting a substantial redundancy payment and can use that to increase your deposit significantly. Although your chances of getting a mortgage would be higher, you’ll almost certainly still need to earn income.
  • If you have other income sources or assets, A mortgage is possible if you are cash poor but not asset rich. You could also apply for a mortgage using other income sources, such as benefits, e.g. universal credit, redundancy pay or freelance work.
  • Family mortgage options If your family is willing to support you financially, certain types of mortgages can increase your chances of approval, including a joint borrower arrangement and sole proprietor arrangement.

There are many options available for those who wish to apply for a mortgage; even if they are at risk of being made redundant or redundancy, most require that you have some income.

You should always speak with a mortgage broker before applying for a mortgage. There could be financial risks if you are experiencing financial uncertainty.


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What to do if your mortgage application is halted because you were made redundant?

The situation remains the same regardless of whether you have been made redundant following agreement in principle, during the application process, or after receiving a firm mortgage offer. A lender can withdraw a mortgage application anytime, including when applying for it. The chances of them doing so are high if there is a possibility of redundancy or other uncertain circumstances.

If your mortgage is at risk due to redundancy or your lender withdrawing your application, you can still save your mortgage.

These are the steps you need to follow…

  • Talk to a mortgage broker. This is an important first step.You will need to ensure that you are in your best interests to proceed with your application in the face of redundancy and all the uncertainty it brings. Your broker can help you determine if obtaining a mortgage is possible.
  • Prepare your paperwork. Your broker will require you to create paperwork to support your application. Find out which documents you will need here. Do not forget to show proof of your plans for making your mortgage payments following redundancy.
  • Let your mortgage broker do the rest. Our brokers have strong working relationships with lenders willing to lend mortgages to those at risk of being made redundant or redundant. You can be sure that you will be matched with the right lender first-time, thanks to their assistance.

Our broker-matching service is free and can match you with a broker that helps redundant people get mortgages or revive their applications.

Send us an enquiry online, and we’ll arrange a no-obligation chat with you.


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Before and after redundancy: Remortgaging

You might consider remortgaging your home if you are tied to a mortgage or face redundancy. Your circumstances and whether your application was approved depend on how you remortgage your home before or after redundancy.

Before you are made redundant

You may be able to avoid future financial difficulties and lower your monthly payments if you are aware that you will soon lose your job.

A broker can help you get the best remortgage offer. Your new quotes should reflect this fact, as you will have more equity than when you applied.

It may be a good time to remortgage if your job is in danger. You might get a lower rate. Remortgaging before or after redundancy will increase your chances of being accepted.

After redundancy

Many mortgage lenders won’t approve a remortgage if your salary is a significant part of your monthly payments. Some lenders might accept your application if your spouse has sufficient income and you have a joint mortgage.

In this situation, the best advice is to contact your mortgage provider immediately. They will help you if you are unsure if you can repay your loan.

If you have a track record of paying your mortgage payments on time, some may offer you a “mortgage vacation”. Some may offer to lower your interest-only repayments, extend your mortgage term, or even move you to a better deal.

Although each provider may have different eligibility criteria and approaches, many will be happy to assist you if your payments have been consistent. Lenders don’t like repossessions, so they will be happy to help you in your time of need.


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These are the key takeaways from the guide

  • If you are at risk of being laid off, you can apply for a mortgage.

You could even be eligible for a loan after you have been laid off. There may be options for lending available if you have the means and ability to pay your monthly mortgage.

  • It is a must to speak with a broker:

Expert advice is important if you are applying for redundancy or after one. The risk of being fired is higher. A broker can help you decide if it is in your best interests to proceed with your application.

  • We can help you find the right broker.

Our brokers help those at risk of being made redundant or at high risk of losing their job to get a mortgage. These brokers are experts in this field and can increase your chances of getting a mortgage approval the first time. They also have extensive relationships with lenders that can help you negotiate the best deal possible.

Make an enquiry to be introduced to your ideal mortgage broker. We’ll also set up a no-obligation, free chat between you two.


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Redundancy Mortgage FAQ’s

Is it going to make any difference if my voluntary redundancy is not taken?

A mortgage lender will not approve you for voluntary redundancy. However, the financial compensation is usually higher than that of compulsory redundancy. However, you should speak with a broker before applying.

Does mortgage payment protection insurance cover redundancy?

Yes. You can get protection for your mortgage in the event of your redundancy. However, it will depend on what you want and your circumstances.

The insurance that covers mortgage payment protection is also known as mortgage cover for redundancy, insurance covering mortgage redundancy or protection against mortgage redundancy. It can help you pay your monthly payments if your job is lost or you cannot work.

Read more about mortgage redundancy coverage.


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What can you do to get mortgage redundancy coverage?

You may be eligible to claim up to 125% of your mortgage payments for involuntary unemployment. This could help you cover expenses and bills. Many policies have a monthly maximum payout between £1,000 and £2,000.

The waiting period for your coverage will likely be one to three months after you have been unemployed. During this time, you won’t be able to make any claims. Most policies only cover you for a maximum of 12 months. This waiting period is typically between one and three weeks.

You can choose a back-to-day one’ policy to receive additional payments for the time you have been unemployed since the beginning. However, these payments are retroactive, so ensure sufficient savings to cover this waiting period.

Do you have any restrictions?

Yes. Part-time, self-employed, or temporary work may mean you won’t be eligible for coverage. There are still other options, like income protection.

You may not be eligible to claim if redundancies were announced at your workplace when you purchased your insurance. It is best to purchase this insurance well before you need it.

You may also be denied if your pre-existing conditions are present when you purchase accident and sickness insurance with unemployment coverage.

MPPI may not pay in certain circumstances.

  • Voluntary redundancy
  • You can resign from your initiative
  • You are fired from your job because of misconduct

The number of redundancy insurance providers has decreased in light of the COVID-19 epidemic. Instead of spending your time looking for the right provider, contact us to speak with a broker who can help you find the best insurers for you.


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What is mortgage redundancy coverage?

The insurance mortgage redundancy coverage, also known as MPPI, will pay some or all of your mortgage payments after you are laid off.

This coverage is tied to your mortgage, unlike other forms of income protection where you can use the cover to pay any bills or expenses. You will receive the payment directly so you can continue paying your mortgage.

What is MPPI?

There are three types of MPPI available:

  • Unemployment only: This protects your mortgage payments if you become disabled.
  • Only for accident and sickness: This covers your mortgage payments if you become incapacitated or are seriously ill.
  • Accidents, sickness, and unemployment: This combination covers redundancy plus any accident or illness.

You must ensure that your policy includes unemployment coverage if you want redundancy protection. Unemployment cover will cost less than purchasing it without accident and sickness.

What is the cost of this?

Prices can also vary depending on:

  • Age
  • Repayments on mortgages
  • Occupation

Desk-based jobs are more affordable than those that have a higher risk. A ‘back-to day-one policy that covers you up to the first day of your absence from work could be an option.

While the average monthly premium is about £20, it could vary depending on your circumstances, from just under £10 to well over £40.

A mortgage broker can help you get the best MPPI quote that suits your personal circumstances.

Contact us and our mortgage brokers today.


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