The pandemic has affected the income of many borrowers, with a large proportion of the workforce being furloughed. But, where salaries are topped up by the Treasury. Lenders respond differently to furloughed borrowers, with some refusing to take income from those on furlough into account when working out the affordability assessment. Other lenders won’t lend to those who were recently furloughed if they require a high loan-to-value mortgage. This application was complicated because one of the clients had been furloughed. He has since returned to work on full pay and the couple required a £588,000 mortgage to buy a new main residence. Both clients are employed full-time and have income from a buy-to-let property that would also need to be taken into account.
Loan to value mortgageNumerous lenders were sourced but this was a complex case as we needed a lender who would also consider the last two years’ bonus for one of the clients as additional income to make the loan fit on an affordability basis.
Key requirements: –• A lender happy to agree to a £588,000 mortgage where one borrower has been recently furloughed and since returned to work on full pay. • A lender prepared to take a mix of employed and buy-to-let income into account. As well as the last two years’ bonuses of one of the applicants. • A lender who would add the arrangement fee to the mortgage. After sourcing the mortgage market, we identified a lender who would agree to lend the £588,000 required. The application process: To support the mortgage application. The clients provided details of their earnings, buy-to-let income and bonus payments. Where applicable, along with evidence of their identities. We were delighted to inform them that the lender had issued a formal mortgage offer for the full amount requested. Property value: £980,000 Loan amount: £588,000 LTV: 60% Rate: 1.34% fixed for five years Lender product fee: £999 added to the loan Monthly payment: £1,757