The COVID-19 ‘lockdown’ and the subsequent jolt to the World’s economy has been a unique challenge for all of us. Due to the government’s decision to close businesses and effectively isolate people in their homes, the furlough scheme was introduced for employees unable to work. This scheme effectively enabled the government to pay employees that would otherwise have been laid off, without pay.
If you have an interest-only mortgage coming to the end of its term or your initial fixed-term period is about to expire, you are more than likely going to need to re-mortgage. When fixed term rates end, most mortgages revert to the lender’s standard variable rate and with so many lenders out there in the market, your lender’s SVR is unlikely to be competitive. This is why we always recommend that our clients periodically check in with us so that we can assess the market and keep you saving money.
So, what if you need to remortgage but you are currently furloughed at 80% of your salary or £30,000 per annum, whichever is the lesser?
Some of the UK’s top mortgage lenders have intimated that existing customers remortgaging on a like-for-like basis won’t need to undergo ‘affordability assessments’ which, if furloughed on a lower income than your usual one, might previously have caused significant problems for those looking to remortgage. This means there should be no negative effects for people looking to remortgage with their existing lenders.
Also, UK Finance has confirmed that banks and building societies have collectively agreed to allow customers who’ve taken mortgage payment holidays to make product transfers without requiring an affordability assessment. This is good news and should mean that taking a mortgage repayment holiday due to the COVID-19 situation should have no impact on your ability to switch with your current lender.
However, if you are looking for a new mortgage or wish to remortgage with a different provider then you will need to comply with affordability assessments. Each lender seems to be approaching this issue in a different manner. Some lenders are taking each case on its own merits. Others are limiting Loan to Value to 65% or only assessing based on the furloughed salary. Others still, are taking into account any top-up paid by employers although in some cases lenders are requesting letters from employers confirming their intent to re-employ.
Whatever your situation, it makes sense to explore the options open to you sooner rather than later. We usually recommend that we have a chat with our clients about 4 - 6 months before they need to remortgage so as to give them time to make an informed decision.
For more information please contact us on 01628 507477 or click here to book a free phone or video appointment.
Yesterday
The new Delayed Start Mortgage launched by Skipton Building Society allows first time buyers to postpone the first three mortgage payments. This product has been designed to help soften the blow of moving in costs for first time buyers.
3 days ago
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
13 days ago
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
20 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
23 days ago
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.