Furlough. What does it even mean?
The term furlough refers to a 'leave of absence' and is not really a term that is used too often. If you're anything like me, you will have only heard this mentioned in the movies when service men and women are given the weekend off, basically.
Today, however, whilst the definition is still the same, it has a much broader meaning.
If you are employed, to help provide you with an income, your employer may be using the schemes recently introduced to help maintain a workforce whilst their income stops coming in. This is a bold move by Number 10 and a really good way to help minimise the amount of people made unemployed by the current COVID-19 pandemic.
But what does that mean if you are buying a house?
Great Question! Understandably the mortgage market is still trying to find its feet. It is a position that many lenders have never seen themselves in and no amount of contingency planning can prepare you for. Even a really strong fiscal policy and a non-fluctuating currency, are no match for the wave of bacteria that is bringing the globe to a halt.
Criteria is Changing Every Day
It is important. I repeat, IT IS IMPORTANT, that you speak to your broker to see how this can affect you.
Mention the word furlough and some lenders won't accept your application. Some will want to confirm you will still be employed in 6 months. Some will use the reduced income for affordability. And some will look past the short term change.
The worst case scenario would be to have exchanged and then have your borrowing capability removed or reduced.
I am always available for a no obligation chat, but it is imperative you get professional advice.