Mortgage offers for those on reduced pay

robrymond

We were due to start the process of getting a mortgage in principal last month as part of our moving/buying a new home. However my wife has now been cut down to 80% of her pay for a period whilst home-working but they haven't put an end date on this. Is it likely mortgage providers will take the original earnings and a letter explaining the temporary change into account or will they have to base it on the new earnings?

PixelPound

The problem is the end date. If you were getting a mortgage when it was all ending soon you could show that the last six months income was less due to furlough but in future would be normal. If there is no end date then the provider would be remiss if they let you start on a mortgage you couldn't afford until it was over.

However if you weren't getting the mortgage until she'd back on 100% they might. What LTV are you looking at as there is some restriction on these at present.

robrymond

nic_c said:

The problem is the end date. If you were getting a mortgage when it was all ending soon you could show that the last six months income was less due to furlough but in future would be normal. If there is no end date then the provider would be remiss if they let you start on a mortgage you couldn't afford until it was over.

However if you weren't getting the mortgage until she'd back on 100% they might. What LTV are you looking at as there is some restriction on these at present.

LTV would be around 75-80% which I know were restricted. In all honesty it'd be better for a delay in applying but we're at the mercy of the housebuilders as we were meant to reserve around the same time lock-down occured. We have an early bird reservation on a plot, which now may be useless as we would be about £15,000 short on the new earnings.

Thrugelmir

Have you spoken to the housebuilders? These are challenging times for all. Forbearance, within reason, is part and parcel of daily life. Something that everyone is going to have to adapt to for the time being. 

robrymond

Thrugelmir said:

Have you spoken to the housebuilders? These are challenging times for all. Forbearance, within reason, is part and parcel of daily life. Something that everyone is going to have to adapt to for the time being. 

No, Redrow are currently on hold in construction so this bides us time but I expect they'll be back sooner than her wages return to normal. I doubt they'll knock any money off, they'll just look at extra incentives instead which is good, but not from a mortgage pespective.

I suppose they'll be looking to secure sales in an uncertain climate, but they were doing pretty well until all this kicked off. Of course others buying may be in the same boat which then leaves the builder with a bunch of unreserved homes, so hopefully they adapt somehow.