Furlough Mortgage Advice

London68164

Hi All,
I'm just after a bit of advice really. My partner and I had reserved a new build prior to COVID using the HTB scheme and had a mortgage offer ready to go for exchange but the pandemic struck. The build was then stopped and completion window moved from initially Aug-Sep 20 to Jan-Feb 21. Unfortunately my partner has been furloughed and this mortgage offer has since expired. We therefore haven't exchanged and will be unable to do so without a mortgage offer. We are trying to arrange for another mortgage offer but despite being way under the possible affordability threshold of our mortgage (even taking into account my partner's furlough salary) our lender is insisting on a letter from their company to explicitly state that they will be returning to work after the furlough scheme ends in October. Apparently they are viewing the furlough scheme as a 'temporary employment' and therefore need evidence of that they will be bringing people back to work when the scheme finishes. The company is in events which has been very badly hit by the virus and have given very little indication as to whether they will bring back staff in October or start making redundancies. Apparently even if we were to reapply with another lender, they would also require this letter of confirmation. This is despite one salary able to cover the mortgage payments and even the possibility of putting down more than a 5% deposit. I am doubtful that my partner will be able to get this letter because the company doesn't appear to have made many decisions r.e. their staff and the furlough scheme as of yet and therefore without this we are currently unable to get a mortgage offer. Without this we are unable to exchange contracts. So the new build we have been waiting for over a year to be ready and which was delayed because of the virus, is now apparently in danger of falling through completely?

I wondered if anyone might be in a similar position and had any advice on how to proceed? Thanks for your help!

firsttimebuyer2020x

Hi
I was on furlough when my partner and I applied for our mortgage with NatWest. They did require a letter from my employer stating my income whilst on furlough, but there was no requirement to state when I would be returning to work. 

Thrugelmir

London68164 said:

 Apparently they are viewing the furlough scheme as a 'temporary employment' and therefore need evidence of that they will be bringing people back to work when the scheme finishes. 

The end of furlough is currently a cliff edge when many organisations are going to have to make tough decisions. Lenders naturally will factor this in when underwriting. As poses a very real commercial risk. 

tweeto

My partner was fully furloughed, but is now back part time 3 days per week with the other 2 days on furlough at the normal 80%. We've just applied to HSBC where they will only take the 3 days pay into consideration and won't accept the other 2 days furlough pay which substantially lowers our borrowing limit. Luckily we are just under the 4.5x factor so hoping it will be ok. 

London68164

firsttimebuyer2020x said:

Hi
I was on furlough when my partner and I applied for our mortgage with NatWest. They did require a letter from my employer stating my income whilst on furlough, but there was no requirement to state when I would be returning to work. 

I see. Can I ask when this was exactly? 

London68164

The unfortunate nature of all this is that I worry we won’t be able to get a letter of employment confirmation and wondered what the possible options are then? Any lenders not requiring this letter and relying on furlough income as affordability alone? 

csgohan4

London68164 said:

The unfortunate nature of all this is that I worry we won’t be able to get a letter of employment confirmation and wondered what the possible options are then? Any lenders not requiring this letter and relying on furlough income as affordability alone? 

unfortunately lending criteria has tightened up due to the current situation and being furloughed doesn't guarantee your future job and in fact may put it at risk understandably

You will have limited options, but a broker on here may be able to advise further

firsttimebuyer2020x

London68164 said:

firsttimebuyer2020x said:

Hi
I was on furlough when my partner and I applied for our mortgage with NatWest. They did require a letter from my employer stating my income whilst on furlough, but there was no requirement to state when I would be returning to work. 

I see. Can I ask when this was exactly? 

Application was made 22 July and we heard last Wednesday that it was approved subject to valuation