Received mortgage offer and exchanged but now on furlough. What will happen to offer?

pinkcloud17

@annetheman thanks for your message. It may be possible to get the employer to top up if we explain the situation we would be in with the reduced income. It's worth a try. Hopefully barclays would then consider it as a full time salary, but since he would still be on furlough they might not.

I'm not sure it would be possible to move completion forward. I would think legally the developer can't sell the house until it had passed the build completion checks or whatever they do. I could be wrong though. Also, not sure the mortgage and help to buy we are also using would release funds for an incomplete build.

Seashell517

Help to buy definitely won't release until all the final checks are done on the building. Hope it works out for you.

MWT

pinkcloud17 said:

I'm not sure it would be possible to move completion forward. I would think legally the developer can't sell the house until it had passed the build completion checks or whatever they do. I could be wrong though. Also, not sure the mortgage and help to buy we are also using would release funds for an incomplete build.

That is correct, even if you were not using 'Help to Buy' your lender would not release funds on a new build that has not actually been finished.

pinkcloud17

Update: his furlough has now been extended to at least start of February. Completion still estimated for end of March. Mortgage advisor is now suggesting to keep quiet for now and review the situation next month. I'm extremely worried. 

MWT

Your broker originally advised you to inform the lender, did that happen?

pinkcloud17

@MWT the first person from the mortgage company I spoke to before Christmas was my client relationship manager. She said she would need to inform the lender and I need to provide her with a letter from the employer to confirm a return to work date. They then closed over the holidays and yesterday my actual mortgage advisor who applied for the mortgage emailed, and she said it would be best to hold tight until next month when we may have more information about whether or not he will return to work before completion. She seemed to suggest that if he does return to work before March then the lender need not know that this ever happened.

I'm worried about so many things
a) if he does go back to work before completion and we don't inform the lender if they could later find out and hold that against us
b) if we wait until February to review the situation with the mortgage advisor, but he is still not back to work, we still need to inform the lender and they could then withdraw leaving us very little time to sort things out before we would be expected to complete
c) if we inform the lender now, we could make things worse and they could withdraw the offer whereas, if we wait, he could go back to work before completion and they never know, or at least if they did find out it would look more favourable that he is back to work
d) we still have no idea of Barclays exact policy on furlough and my mortgage advisor has not helped to clear this up i.e. if they will automatically withdraw an offer because of any furlough near completion even if circumstances return to normal, if they will just pause the offer and wait to see if he goes back to work, if he remains on furlough if they would count his pay as zero or consider the 80%.

I recalculated the lending based on his salary being reduced to 80% and the lending reduces by £12000 which we do not have. I informed the mortgage advisor about this but she never really commented on it. One of my friends then told me they would not reduce the lending based on salaries, but rather on expenditure i.e. they will look at outgoings again and see how much income we could afford to lose based on that. So I'm not sure if that means we wouldn't need to increase the deposit by as much as 12k.

Also if they reduce lending does that mean a fresh application from the very beginning. Is the interest rate likely to be higher or would they keep the interest rate the same as our original offer.

I just have no idea and all of these scenarios are going round my head.

MWT

If the terms of your offer require you to advise the lender of any material change in employment circumstances I'm surprised that your advisor is comfortable telling you not to do that, but I have nothing but sympathy for the situation you find yourselves in.

In your opinion, is it likely that your partner could return to work in February if the country is still in lock-down, or is his return predicated on a relaxation of the lock-down when it is reviewed in February?

FaceHead

Agree with your mortgage advisor's advice to keep mum.

Your partner might be back at full time work by completion and this would have been a whole load of stress for no reason.

Alternatively, he might not be back at full time work, in which case you're faced with a choice: fail to complete and lose your deposit or neglect to mention the furlough to the lender (you might even outright lie to the broker so they don't tip off the lender).

I'd be inclined to take the second option - yes it's risky, but the alternative of losing years of savings is something worth some risk to avoid. 

pinkcloud17

MWT said:

If the terms of your offer require you to advise the lender of any material change in employment circumstances I'm surprised that your advisor is comfortable telling you not to do that, but I have nothing but sympathy for the situation you find yourselves in.

In your opinion, is it likely that your partner could return to work in February if the country is still in lock-down, or is his return predicated on a relaxation of the lock-down when it is reviewed in February?

Thank you. Yes I know, I was thinking the same. I guess some people could say at the moment it's not a material change of circumstances because for now, he is still expected to return to normal before completion. It would be material if it became permanent or definitely extended into a timeframe which would affect completion. But by that point we would be so close to completion we wouldn't have much time to look at other options.
We are in scotland so lockdown is currently until at least the end of January and then it will be reviewed. He works as a shop manager for a charity so he can not go back to work until Scotland go back to level 3.

Thrugelmir

pinkcloud17 said:

I just have no idea and all of these scenarios are going round my head.

Is the job at risk? A far bigger concern than temporarily being on furlough. Which is also the lenders greater concern.