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Can You Get a Mortgage on Furlough?

Written by, Marija Petkova

Updated May, 26, 2022

During the coronavirus crisis, many employees were placed on furlough, which knocked the confidence of many potential buyers in the mortgage market. 

So, how does being on furlough affect your chances of getting a mortgage, can you get a mortgage on furlough, and what happens after you return to work? 

Let’s find out.

Can You Get a Mortgage While on Furlough?

It is possible to apply for a mortgage while being on furlough, though it might be tricky to get a good deal.

The process of applying for a mortgage while on furlough is the same as applying for a mortgage with a full income.

If you want to get a mortgage while you’re still on furlough, you can:

  • Get a joint mortgage on furlough.
  • Get a mortgage with furlough restrictions.
  • Get a mortgage on furlough with your bank.

Can You Get a Mortgage After Being On Furlough?

There’s no reason why you shouldn’t be able to get a mortgage after being on furlough. In fact, your chances of getting a mortgage will improve after you get back to work

The lender will still ask you to provide:

  • Your most recent payslip(s) covering 1-3 months of being back at work.
  • A letter from your employer confirming that you’re back to work. Some lenders might ask the employer to include the date of your return and state any plans they might have to furlough workers again.
  • Proof that your income hasn’t been reduced.

Will Furlough Affect Your Mortgage Application?

While getting a mortgage on furlough is not impossible, relying on furlough income can significantly shrink the pool of lenders. 

Some lenders do not accept applications from furloughed workers and those that do require applicants to provide proof that their boss is committed to keeping them employed. Others only accept applications from people whose employers top up their wages.

The furloughed income also limits the amount you can borrow because loans are calculated based on how much you’re earning at the time of your application. 

For example, if you earn £25,000 a year, you’ll likely be able to borrow a maximum of around £112,500. But if you’re on furlough and are only receiving 80% of your salary, which would be around £20,000, then you wouldn’t be able to borrow more than £90,000.

Regardless of whether you’re applying for a mortgage with furlough or any other type of mortgage, your eligibility depends on a few factors, including:

  • Age.
  • Loan amount and duration. 
  • The type of property you’re buying. 
  • Credit history.
  • The size of the deposit. 
  • Residence (tenant vs homeowner).
  • Debt-to-loan ratio.
  • Credit status and other debts.
  • History of County court judgments and IVAs.
  • The predictability of your income. 

Ultimately, if you want to speed up the application process, there are several documents you should prepare to ensure furlough mortgage approval:

  • Evidence of any benefits or pensions.
  • Utility bills dated within 3-6 months.
  • P60 form from your employer. 
  • Last 3 months’ payslips. 
  • Passport/driving licence.
  • Bank statements of your current account for the past 3-6 months. 

Worth noting: It’s advisable to ask your mortgage adviser to check your documents and eligibility before you start sending applications.

Which Mortgage Lenders Are Accepting Furlough?

Mortgage lenders that do not accept furloughed income are:

  1. HSBC
  2. Nationwide
  3. NatWest
  4. TSB
  5. Halifax
  6. Virgin Money
  7. Clydesdale Bank
  8. Yorkshire Bank
  9. Yorkshire Building Society
  10. Accord Mortgages 
  11. Leeds Building Society

Mortgage lenders that accept applicants on furlough income are:

  1. Santander – Considers applicants with furloughed income, unless you’ve been regularly placed on furlough leave.
  2. Barclays – Accepts applicants based on 80% of the furloughed basic salary (up to £30,000).
  3. Skipton Building Society and Metro Bank – Accepts applicants that receive furloughed income, but limits their loans to 60% and 80% of the value, regardless of the credit score.
  4. Bank of Ireland and Post Office – Accepts furloughed applicants as long as the borrower has confirmation when exactly they’ll be returning to work. 
  5. Coventry Building Society – Considers existing borrowers only.
  6. Aldermore Bank – Review applications on a case-by-case basis. If you want to borrow, you need to fill out a questionnaire and conduct a telephone interview. 
  7. Darling, Ipswich, Family and Principality Building Societies -Accept furloughed applicants but applies certain restrictions. 

*Correct as of 14 April 2021

Bottom Line

Being furloughed doesn’t mean you can’t apply for a mortgage, but finding a good deal will likely prove more challenging. Lenders primarily consider the current income of the applicant when deciding whether to approve the applicant so it’s best to speak to a mortgage advisor before diving into the mortgage market. 

Frequently Asked Questions And Their Answers

Will my bonus or commission still count towards how much I can borrow?

Before the pandemic hit, most lenders accepted 50%-60% of variable sources like bonuses or commissions. They stopped accepting variable income during the pandemic but some of them later relaxed their restrictions.  

Can I remortgage after a furlough?

As long as your employment situation is stable, it’s possible to remortgage after a furlough and you might even secure a more favourable interest rate. 

What’s happening to the furlough scheme?

After being extended several times since it was officially introduced in 2020, the furlough scheme ended in September 2021. 

Can you get a mortgage on furlough?

Yes, it is possible to get a mortgage while being on furlough, though your income will directly affect the amount you can borrow. Also, not every lender accepts applications from furloughed employees.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.