Mortgage concerns for furloughed workers

Mortgage concerns for furloughed workers

Consumers who have been furloughed are increasingly concerned about their ability to secure a mortgage, according to broker First Mortgage.

A survey of more than 2,000 homeowners and renters this month showed a third thought being on furlough would have a significant impact on their mortgage approval rating and make it very difficult to secure a loan.

It also found one in five had had to forsake their plans to buy a property as a result of the coronavirus and rent a property instead. 

David McGrail, compliance director at First Mortgage, said: “Due to the pandemic, the financial situation many now find themselves in will be different to when they applied for their mortgage.

“This means that the maximum amount they can borrow for a mortgage is likely to be reduced in line with the salary they are now receiving.”

Mr McGrail added that prospective buyers should check with the lender before placing an offer on a property.

He also urged potential mortgage customers, who were unsure of their circumstances due to being furloughed, to seek advice so they are “well placed to act when the situation becomes clearer”.

Mr McGrail added: “There will likely be a rush for advice as the financial struggles ease, so get in touch now to ensure you are not delayed in the future”.

Figures from mortgage criteria database Knowledge Bank found that ‘Covid-19: furloughed workers’ was the third most common search in the residential category among brokers in April.

Meanwhile a survey by The Family Building Society in April found that four in 10 brokers noticed a fall in demand from self-employed clients. Almost half felt it was harder to place a case.