Getting a Mortgage After Redundancy

If you're at risk of redundancy, or are being made redundant, this will impact your ability to get a mortgage. This is because you will need to declare to the lender that you are not expecting any change of circumstances. If you lie on your application, this will be taken seriously and could constitute fraud, so always be upfront about your employment situation.

Here you will learn if it’s possible to get a mortgage post-redundancy, ways to pay a mortgage after one and how we can help you find the right support.

Can you get a mortgage if you have been made redundant?

It can be possible to get a mortgage if you are made redundant or at risk of it, but you will need to provide detailed information on your financial situation and how you plan to make the mortgage payments. Some scenarios where you might still be approved include:

• Applying for a joint mortgage and your partner's income is secure

• Having other sources of income, such as benefits or freelance work

• Being able to provide proof that you have another job lined up

• Applying for a family support mortgage product, such as a guarantor agreement

Mortgage lenders can turn down your application or offer a higher interest rate if they feel that the risks surrounding your application are too significant.

You must take expert advice before applying for a mortgage after being made redundant. If your redundancy or unemployment is likely to be short-term, then it might be best to wait until your situation has stabilised to give yourself the best chance of approval.

What if you’ve taken voluntary redundancy?

If you have taken voluntary redundancy, this means that you are choosing to leave your job. Voluntary redundancies are often due to a better opportunity elsewhere or restructuring within the company.

Lenders don't see voluntary redundancies in the same way as compulsory ones. Therefore it should be easier to get a mortgage after leaving a job in this way. However, it's worth noting that if you are unemployed for a while, this will impact your ability to get a mortgage later on.

If possible, wait until you have found another job before applying for a new mortgage after being made redundant.

Keep in mind that you may not get an insurance payout after a voluntary redundancy.

Should you apply for a mortgage while at risk of redundancy?

If you are at risk of redundancy, the timing is not ideal for applying for a mortgage. Whether or not you will be successful in your application depends on your circumstances and the terms of the mortgage you're applying for.

You will be required to declare that you are not expecting any changes to your financial situation, which is difficult if you're at risk of losing your job. If you're looking for a mortgage and are concerned about redundancy, review all of your options before contacting lenders.

If you find yourself in this situation, it may be best to apply for a mortgage when your employment and financial situation has stabilised. It would help if you prioritised getting professional advice before jumping into an application - and risking being declined.

Being declined for a mortgage can impact future lending decisions.

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Do you have to tell your mortgage lender if you are made redundant?

Yes, you do. Lenders base their decisions on risk, and you are a potential liability to them if they think that your situation has worsened or will worsen due to the redundancy.

You're not obliged to inform your mortgage lender that you have been made redundant, assuming that you can continue to make mortgage payments as usual.

However, if you are made redundant, you may struggle to make your monthly payments, so it is wise that you inform your lender before you default on mortgage payments.

Does redundancy affect your credit rating?

No. being made redundant doesn't impact your credit rating. This is because your credit rating is based on how you've managed your credit accounts, not your income.

As long as you're managing to keep up with monthly payments, your redundancy does not reflect poorly on your credit file.

What if I'm in arrears on an existing mortgage?

If your employment is at risk, you must speak to your lender as soon as possible. It might be possible to renegotiate the terms of your mortgage so that you can manage payments until you've found a new job. If your payments are not in danger of defaulting, you should continue making regular repayments.

If your payments are already in arrears or you find yourself in financial difficulties, you must take action immediately to avoid repossession. Your lender will work with you to establish a payment plan that allows for enough time for you to find another job.

You should consider seeking professional debt advice from a service such as StepChange if you're struggling to pay your mortgage or other financial commitments. The stress of financial hardship can lead to periods of depression or anxiety.

If you're worried about your debts and the impact that redundancy might have, get in touch with a professional for advice and support. Many people seek debt advice every day in the UK and people are there to help.

What to do if you’re made redundant after receiving an agreement in principle?

If you were already in the process of applying for a mortgage when you got made redundant, this could complicate things. This is because it's difficult to predict what your financial situation will look like after you've lost your job.

It might be possible to continue with your application under these circumstances, but this depends on the terms of the mortgage agreement and your circumstances. If you're worried about making your payments and getting a mortgage after redundancy, it's important that you get in touch with your mortgage broker or lender as soon as possible.

If you continue with your application without advising your lender of your change of circumstances, this can confuse things further in the future. It could even be classed as mortgage fraud if you withhold this information.

We recommend getting professional mortgage advice before making your application.

Redundancy after receiving a mortgage offer

If you've been made redundant after your mortgage offer, this can be a cause for concern. Lenders will closely analyse your situation and may decline your mortgage application. Most lenders have stricter lending criteria to ensure less chance of the loan defaulting.

You must be honest about your change in financial circumstances. Get in touch with your mortgage broker or lender as soon as possible to discuss what options are available.

If you decide to continue with your application, maybe because you feel that your redundancy is temporary, lenders will ask you for documentation of your unemployment. You might be asked for evidence of how long you expect to remain unemployed and proof of ongoing job seeking or any employment offers you may have received.

How to pay your mortgage after redundancy

If you fail to keep up mortgage payments, you could lose your home in a worst-case scenario. If you have been made redundant, you may be worried about this very scenario.

You can take steps to reduce the impact on your personal situation. Here are tips to consider:

• It might be possible to renegotiate your mortgage term with your existing provider. If you get in touch with your lender, they may offer support such as a mortgage holiday or other financial support.

• You can get free advice from a debt charity such as StepChange.

• You can also get in touch with an independent financial advisor specialising in helping people struggling financially.

You may also have the option of transferring your mortgage to a different lender if you think they will offer better terms than your existing provider.

Mortgage redundancy checklist

Here's a checklist of things to do if you are newly redundant:

• Work out all of your household bills, mortgage and repayments on other debts to get a good understanding of your financial position and calculate your monthly budget.

• Find out how much your mortgage is currently worth by asking your lender or checking your mortgage statement.

• Estimate the value of any equity in your home, by using a property evaluation service online.

• If you are suffering financial problems, contact your mortgage provider as soon as possible to discuss your options.

• Do some research and find out if it's possible for you to transfer your mortgage to a new lender or broker who can offer you better terms than your current deal.

• Find out if you are eligible for mortgage protection insurance.

• Find out if you are eligible for certain benefits such as universal credit, tax credits, support allowance or pension credit.

• Think about whether it makes sense to use the proceeds of your redundancy to pay off any outstanding credit card balances, store cards and personal loans, or even make overpayments on your mortgage.

• If you are struggling with debt, it may be beneficial for you to speak to an independent financial adviser before making any decisions about how to use your redundancy pay. They are likely to be able to offer impartial guidance that will help you make more informed choices about your situation.

How to get a mortgage after redundancy

Redundancy is a situation in which a person is laid off or forced from a job through no fault of their own. This can be a scary time for you and your family, but with the right mortgage advice, it's possible that you could find options and have financial security.

This is where we come in. Our brokers have a strong track record finding mortgage solutions for borrowers in difficult financial situations, and they may be able to help find a lender who is willing to explore flexible options in the event of a redundancy.

Get started here to compare the mortgage deals currently available and book in a free, no-obligation chat with a broker who specialises in mortgages after redundancy.