Mortgage lending challenge for those who accepted Covid support

The property market might be thriving at the moment, but it seems not everyone is able to secure the mortgage loans required to move or buy a new home.

The self-employed and those in receipt of furlough payments during the pandemic are finding it increasingly difficult to secure a mortgage deal, a recent BBC investigation has found. Many of the high street lenders approached are viewing those who have received Covid-related grants as a higher risk and against their affordability criteria.

Those who took the Government’s self-employed income support scheme (SEISS) are being asked to present evidence of their business having recovered from the pandemic with many seeing requests for a larger deposit too, sometimes as high as 25%. With lenders traditionally using the last two years of accounts to verify earnings this could have ramifications well into 2023.

The difficulties are mirrored for those who have been furloughed. Most of the leading mortgage lenders contacted by the BBC were refusing mortgage applications due to not including furloughed income in their affordability assessments. As restrictions have been lifted and applicants have returned to work the policy for many lenders has remained the same despite many furloughed employees having returned as if they had never had a break.

Existing mortgage customers coming to the end of their existing deals are also struggling to secure new ones, even with their current lenders. Increasing borrowing or remortgaging to a lesser term all require a reassessment of affordability to ensure new mortgage repayments will be settled. Despite a full income and payment history of their customers some lenders are still reluctant to approve.

We asked Caroline from our mortgage team if they had experienced the same challenges as outlined in the BBC report.

‘From our experience it certainly isn’t a blanket ban across the sector and our independence in the mortgage market has allowed us to find suitable options for our clients. We have a number of lenders who will consider those who have received furlough payments and the SEISS grants, preferring to look at each case individually.’

If you’re a first-time buyer or looking to remortgage, contact our team to make an appointment.

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