Thousands of potential buyers are worried they could find their hopes of getting a mortgage dashed if they have been furloughed, Firstmortgage.co.uk have warned.
Firstmortgage.co.uk warned that even potential buyers who had agreed a home loan in principle are likely to have it withdrawn, because affordability will be based on current income, not pre-coronavirus pay.
David McGrail, compliance director at Firstmortgage.co.uk, said: “Due to the pandemic, the financial situation many now find themselves in will be different to when they applied for their mortgage.
“This means that the maximum amount they can borrow for a mortgage is likely to be reduced in line with the salary they are now receiving. Therefore, it is essential to check with the provider before placing an offer on a property.”
The warning comes as a study shows that many Brits who have been furloughed or who have an interrupted financial history due to the global crisis are fearing for their chance of getting a mortgage.
One in five brits have been forced to abandon their dreams of becoming homeowners and will instead turn to rented accommodation because of COVID-19.
A third said that being placed on furlough would have a significant impact on their mortgage approval rating and would make it very difficult to secure the loan.
McGrail added: “Although there may be less deals than there were four months ago, the deals are and will remain available for you should you wish to purchase a property or re-mortgage.
“If you are considering a mortgage but are unsure of your situation due to furlough, you should seek advice now so that you are well placed to act when the situation becomes clearer.
“There will likely be a rush for advice as the financial struggles ease, so get in touch now to ensure you are not delayed in the future”
Despite the housing market showing a slight resurgence in enquires since it re-opened, almost half (45%) feel COVID-19 will have a negative effect on the housing market.
Although the market may be open, one in three say they have been put off the idea of moving since COVID-19 started, with social distancing concerns (31%) and job insecurity (24%) being top reasons for not moving. Many are also concerned by the lack of properties available.
Whilst COVID-19 might have put the brakes on many moves, it seems it has not deterred brits thinking about their next move and what they might like in their property. With the time spent indoors maybe influencing 86% of Brits say having a garden at a future property is important.