TSB will also accept mortgage applications with a joint partner as long as they “remain affordable” – but, the person on furlough will have their salary listed as £1
Furloughed workers may find themselves unable to get a mortgage through TSB after the lender started listing their salary as just £1.
TSB typically offers a loan of up to 4.5 times an applicant’s wages – meaning furloughed staff may only be able to borrow £4.50 for a new home.
The lender says it will only consider furloughed workers if their employer is topping up their salary.
TSB will also accept mortgage applications with a joint partner as long as they “remain affordable” – but again, the person on furlough will have their salary listed as £1.
The furloughed worker will be required to provide proof that their boss is committed to keeping them employed.
TSB says this evidence can be provided in the form of a letter dated within four weeks of the date of the full mortgage application.
This letter must say when the employee will return to work and whether they’ll be returning full-time or part-time.
TSB will also need to know that your boss plans on contributing toward your national insurance, pension contributions and salary, as per the requirements of the furlough scheme for anyone continuing to be furloughed beyond July 31, 2020.
For self-employed workers, applications will only be considered if the borrower can provide proof of business turnover.
Applicants who haven’t been furloughed can apply for a mortgage as normal.
The bank has toughened its rules due to fears that furloughed workers are at higher risk of being made redundant.
It’s likely the restrictions will affect thousands of employees in the travel and hospitality industries, which have both been crippled by coronavirus.
TSB says on its website: As part of our responsible approach in helping customers to borrow well, we no longer accept furloughed income where the customer’s salary isn’t being topped up by their employer. For joint applications which remain affordable on the other customer’s income, employment details should be captured and income keyed as £1 for the furloughed customer.
Where the customer’s employer is topping up their furloughed income to 100 per cent, the employer must provide confirmation that they are committed to ongoing employment, it states
It comes after property asking prices topped £320,000 in a record high due to an “unexpected mini boom” surge in demand.
The average asking price in July stood at £320,265 – 2.4 per cent or £7,640 more than the previous record high in March before lockdown – according to property portal Rightmove.
In March the average asking price was £312,625, which was a record.
Nationwide and NatWest have also tightened their lending and require additional evidence of furloughed earnings.
Nationwide has started offering a 10 per cent deposit again after the stamp duty cut gave the housing market a boost earlier this month.
Yorkshire Building Society’s Accord brand has also come back at this rate.
Virgin Money, Loughborough Building Society and Bluestone Mortgages are refusing to offer mortgages to furloughed staff.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.