The current situation with furlough mortgages
You may have been on furlough or finding yourself on an extend period with the current scheme running until 30th April 2021. If you are looking to purchase a property or remortgage your current home, you may find it difficult to find a lender to accept your furloughed income, especially if you also have bad credit and a poor credit score.
Around 9 million people have been furlough since the pandemic began and whilst some returned to work after the initial scheme came to an end, with the Government resurrecting the original 80% version it meant people went back on furlough or had the period extended.
Due to the risks associated with borrowing large sums of money and the lenders requirements to satisfy Financial Conduct Authority (FCA) affordability rules its important lenders understand your income both now and for the future.
Originally when furlough began, lenders would look at affordability based on the 80% provided by the Government. However, changes to the scheme, along with the recent extension has made lenders more cautious.
Can I get a mortgage on furlough
Currently, lenders are looking for customer to have returned to work and have a clear payslip with no furloughed income showing, they may even request two payslips and confirmation from the employer that you will not be going back on furlough.
The lending market is therefore even more difficult to navigate, and we would urge you to speak to a mortgage broker such as Clever Mortgages, who deal with all types of mortgages and are also specialist in bad credit mortgage advice.
Clever Mortgages can assess your situation now, to see if a mortgage is possible and if not work with you on a plan for when to apply to a lender. If you use a mortgage broker such as Clever Mortgages, with access to 100 of lenders, it means you aren’t going lender by lender yourself, running up marks on your credit file and potentially reducing your credit score.
If there is a second person to add to the mortgage and they have not been on furlough, it might be that will be enough to support your application. We can also look at product transfer options to save you money with your existing lender.
You may also find that there is less availability for those with a smaller deposit, say 5 or 10%. We have seen lenders start to offers these products again, but you have to match the criteria to achieve it, again this is were speaking to a mortgage broker is key.
Whatever your situation, please feel free to contact Clever Mortgages on 0800 197 0504 or using the live chat on our website to talk to the team.
Why use a broker?
Buying a new house doesn’t have to be a stressful process. Sure, moving all of your belongings and updating your details everywhere can be tiresome, but it’s an essential part of moving home that has to be done. Where the real stress of moving home comes in, usually, is trying to find the right mortgage provider.
People who go direct to their provider spend hours upon hours trawling through comparison websites trying to find the most suitable deal, comparing rates, calling different providers and so on. It can be an incredibly wearing process – unless you go to a mortgage broker.
What is a broker?
A broker is a Financial Conduct Authority (FCA)-regulated professional who specialises in finding mortgages for people. They do this by taking your circumstances into account and learning about your situation before recommending the most suitable mortgage deals for you.
Why use one?
There are many reasons why it’s beneficial to use a mortgage broker – here’s a few of the main ones.
One of the main benefits of using a mortgage broker is the fact that you can often get access to exclusive mortgage rates that aren’t available to people who go direct to their provider. The reason for this is that there are some lenders who only lend through brokers, and as a result you can get offers that might not be listed on comparison websites and potentially save a great deal on your mortgage payments.
Hate paperwork? Mortgage brokers remove a lot of the hassle from getting a mortgage deal over the line, and will often complete the majority of paperwork for you.
Using a broker also protects you against filling in paperwork incorrectly, which is actually something that happens often due to the fact that the paperwork involved with moving house can be quite confusing at times, and they’ll also deal with the lender on your behalf.
The most suitable deal for you (even with bad credit)
Mortgage brokers are experts in getting the most suitable deals for their clients. A good broker will take the time to learn every detail about your situation and how your circumstances might affect what rates you’re eligible for.
Once they’ve done this, brokers will comb the market in order to find the most suitable mortgage deal on the market for you. Even if you’ve got extenuating circumstances such as a bad credit score, for example, and have been rejected for a mortgage deal by some of the bigger high-street banks, a broker will be able to find you a deal.
Again, they’ll be able to do this due to the fact that they’ve got access to rates that simply aren’t available to people choosing to go direct their mortgage providers. This means that whatever your credit score, the chances of you getting the most suitable deal to suit your circumstances is greater if you choose to go to a mortgage broker.