Updated: May 22, 2020
Remortgaging on Furlough: What can you do?
Lockdown has had quite an effect on a lot of us across the UK. With as many as a quarter of employees in the UK furloughed according to The Guardian on the 4th of May, that equates to a considerable amount of people currently sitting at home wondering about their financial future. 6.3 million jobs being laid off isn’t an insignificant number by any means. But despite these changes, the world doesn’t stop turning – and personal finances, like your mortgage, aren’t stopping anytime soon either.
So, can I remortgage while on furlough?
If your current mortgage rate is reaching an end in the next few months, you may have already been thinking about your remortgaging plans long before the pandemic hit. After all, you don’t want to be paying out extra when a better deal might be on the horizon. But with furlough throwing a spanner in the works for thousands of homeowners, what can be done to avoid those increased monthly payments and higher variable rates?
The good news is that, while furlough isn’t a positive for any person, there are still lenders out there that will help you with your remortgage. Even while you’re temporarily out of work. The downside is that not every lender is currently offering this service. Out of the 90+ lenders we have in the UK, just over 20 are reportedly offering a mortgage during furlough – but that’s all likely to be on the temporary side. As the financial world settles into the ‘new normal’ a little better, it’s likely more and more lenders will get clued into remortgaging furloughed employees.
How does it all work?
As with any mortgage, lenders will be checking for affordability when it comes to getting your remortgage arrangement in place. The difference here is that they’ll be comparing that affordability against the amount of pay you’re receiving during furlough. For those earning under £2500 per month, that’s 80% of your salary under the Coronavirus Job Retention Scheme – and for those earning above that threshold, it’s a flat £2500 in total. If your employer is topping up your furlough pay to bring it back up to 100%, all the better.
According to a Which? Report, The 10 biggest lenders in the UK have confirmed that their existing customers will be able to switch their products without the need for these assessments. So, if you’re planning to stick with your current lender, you might be able to simply go for something like-for-like. But if you want to make sure you’re getting the best deal in the market and looking to going elsewhere, those affordability checks are likely to be a part of the process.
For self-employed individuals, it’s business as usual when it comes to remortgaging. Proof your income over the previous three years, in addition to your bank statements over the past three months. This may make it a challenge to get the remortgaging ball rolling, especially for those waiting for self-employment furlough income that won’t be arriving for another month.
What about payment holidays
For homeowners that have had to take advantage of mortgage payment holidays, UK Finance has confirmed that there will be no negative consequences in terms of remortgaging. This will be a relief to many, especially considering current circumstances and uncertainty. It’s also been confirmed that those currently in their holiday period will be able to complete product transfers as usual – no affordability checks required. Of course, if you’re looking elsewhere, those checks will be a must, but you may not be able to access the same payment holiday immediately once you make the switch.
Ready to get going?
If you’re ready to get the remortgaging process going while under quarantine, we’re the team to call. Get in touch with us today by calling 0330 22 333 10 to discuss how we can help arrange your remortgage or fill in our Contact Form. We look forward to hearing from you soon.
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