Getting A mortgage if you have Furlough Income

It is fast approaching a full year since the UK's first lockdown and Furlough was introduced by the Government. Most of us had never heard of the word Furlough before and had no idea what it was, but we certainly do now.

The Furlough scheme has helped a lot of businesses stay afloat and helped keep on staff who would otherwise have been made redundant. But, being furloughed has usually meant a reduction in wages for many people and for some there is still no clear end date for when they will be able to return to work. So how does this affect getting a mortgage?

The key thing here is whether you have an expected return to work date or not. Some industries such as leisure and hospitality have no set date for when they will be allowed to return to work and therefore resume their normal salaries. Some industries who have Furloughed staff as a short-term measure may already know when they plan to bring staff back. With a set return to work date this can prove massively helpful when determining your income to use as part of your mortgage affordability check. Without a return to work date the lenders are left questioning how long it will be before your salary returns to normal.

We have seen some huge changes recently from lenders and how they are treating Furloughed workers. Most lenders are now requesting that workers have returned to work and can evidence a full month’s payslip with no furlough income on there. This shows the lenders you are back at work and earning your normal salary. However, there are still a couple of options available for those still on Furlough or who have not yet got a full month’s payslip. They will base your affordability assessment on 80% of your normal salary and as long this still fits the requirement for the amount you need to borrow they will accept an application.

So, in short, all is not lost when it comes to being Furloughed. There are still options available and you do not have to wait until you go back to work. We are of course hoping that in the near future this will no longer be an issue and that people are back to work and earning their full wages again, but until this time there are still options, just not many. Speak with your local mortgage Broker to find out more if this affects you.