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What Happens If I'm Made Redundant While Applying for a Mortgage?

Have you found yourself facing redundancy midway through a mortgage application? Our brokerage team explains the essential steps to take, what it means for your financing, and how to communicate the change of circumstances to your prospective lender.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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You Just Got Redundant - What Does It Mean For Your Mortgage Application?

Redundancy is stressful at the best of times and can be a blow if you are in the middle of a mortgage application or just about to buy a new home.

The critical step is to consult an independent, experienced broker to steer you through the options available. If you find yourself in this position, contact Revolution Brokers on 0330 304 3040, or drop us a message at [email protected].

How Can I Manage a Mortgage Application Alongside Redundancy?

First up, it's crucial to communicate with your lender immediately - they will be far better placed to help you if you let them know straight away the issues you are dealing with.

You might be able to withdraw the application without incurring fees or delay the application process until you find a new role.

Generally, we would not recommend going ahead with a mortgage application if there is any doubt about your financial situation. If you are asked about the risk of redundancy and omit to share this on your application, you could be at risk of a fraud prosecution.

However, if you have another income stream or savings that will cover the repayments, you might still be ok to proceed, provided you let the lender know about the circumstances.

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What Happens if I am Made Redundant with a Mortgage Agreement in Principle?

Your agreement in principle is an initial offer to lend in advance of finalising the purchase process. A lender might decline the full application or decide to change the offer.

If your redundancy renders your mortgage unaffordable, the lender will likely withdraw the offer.

Remember that every lender has a different affordability assessment policy. Therefore, if one provider withdraws a mortgage offer owing to redundancy, another might consider the loan depending on how you plan to make the repayments.

Can I Accept a Mortgage Offer if I am Redundant?

We advise thinking very carefully before accepting a mortgage offer if you have been made redundant or think it might happen. If you cannot keep up your repayments, you could end up in a repossession scenario.

That means losing your home and having a severe issue on your credit record.

Is Remortgaging an Option in a Redundancy Situation?

If you already have a mortgage and are facing redundancy, you might decide to remortgage. A lot depends on the circumstances and what you owe, but there are many options out there.

Remortgaging over a longer-term could extend the end date of your mortgage and reduce your monthly payments.

You might not be offered a remortgage deal if your loss of an income impacts your ability to make repayments, but if you have a joint mortgage, for example, and your partner can cover the costs, you are more likely to be approved.

Lenders can also offer mortgage holidays, whereby you have a period of not having to make payments without remortgaging while you search for alternative employment.

A further option is to switch to an interest-only mortgage, even if just in the short-term, to reduce your monthly cost until you stabilise your finances.

Does it Make a Difference to my Mortgage If I Accept Voluntary Redundancy?

Voluntary redundancy is sometimes offered with a generous settlement package. You can consider remortgaging or potentially downsizing in advance of volunteering in this situation.

Expert Advice with Mortgages and Redundancy

Being made redundant can be challenging, but by acting quickly and seeking expert support, you are likely to find a solution to avoid ending up in financial difficulties.

Contact our mortgage advisors on 0330 304 3040, or email the team at [email protected] to explore the options.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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