- 19th April 2020
- Posted by: Mark
- Category: remortgage
When the government announced they would guarantee 80% of peoples wages everyone knew how serious the situation was. The aim of the unprecedented move was to help secure employment for those in work.
Furlough, a term most had not heard of suddenly become heavily searched for on search engine like google.
Furlough means you have been given leave of absence from your employer. The important aspect is you are still employed. So let’s look at how being furloughed will affect your ability to re-mortgage.
Will being furloughed affect my re-mortgage application ?
The simply answer is yes. It may not adversely affect your application depending what kind of re-mortgage you are looking to apply for. Lenders will base your income on your furloughed income e.g 80% of your normal monthly income. If your employer is topping up your wages some lenders will include the additional 20% income.
Factors to consider is how long have you had a mortgage on your property and the amount of equity you have in your property. The fact your application may be based on 80% of your normal income may not affect your re-mortgage if you have sufficient equity.
Can I release equity while I am on furlough ?
Providing you have a sufficient level of equity available, yes you can release equity. Indeed many are looking to release equity to see themselves through this pandemic. How much you will be able to release will depend on any valuation carried out by the lender.
I’ve taken advantage of the 3 month mortgage holiday can I remortgage
This varies between lenders. Some lenders will see the fact you have taken a mortgage repayment holiday as a sign you are having financial difficulties and this could count against you. A majority though will allow you to switch mortgages.
Providing you followed your existing lenders protocol for putting in place the mortgage repayment holiday your credit score will not be affected. If you cancelled your mortgage direct debit prior to this being agreed you may need to check your credit score before applying for a re-mortgage (which is a sensible thing to do anyway.
It is a good time to switch mortgages ?
Rates are at an all time low. Although your re-mortgage will take longer than usual due to the current situation we are in we don’t envisage any hiccups in completion. With rates from 1.19% for remortgages, there are some very tempting deals at the moment.
We can offer free advice as to whether now is the right time for you to remortgage. Everyone is in a different situation and this will affect whether now is the right time. For example if you are furloughed you may need the additional 20% of your income to get the amount you need to remortgage.
Speak to a remortgage advisor Today
You can use the form below to arrange for a re-mortgage advisor to call you back to discuss your option. Remember we offer free advice with no obligation. We will ask for certain details in order for us to assess your application and to carry out a comprehensive search with our panel of lenders.