Gerard Boon, managing director of Boon Brokers, said his firm was starting to see a trend of clients enquiring about what their borrowing prospects would be if they were to be made redundant.
He said some clients had already been made redundant, which was probably a knock-on effect of higher costs for employers. Boon said conversations about the current job market could also be adding to people’s nervousness.
Last week, data from the Office for National Statistics (ONS) showed the unemployment rate had risen from 4.4% to 4.5% in Q1, and the number of payrolled employees fell by an estimated 47,000 in March and by an estimated 33,000 in April.
Some analysts said tax changes that came into effect in April, namely the higher National Living Wage and employer National Insurance, could be behind this.
“Lots of things are being offered by employees because of the tax changes and companies are struggling with their margins,” Boon said, such as firms making employees redundant, then rehiring them as contractors.
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He urged people to contact their broker to navigate this change.
Daniel Bell, mortgage adviser and founder of Bell Financial Solutions, said his firm was seeing a rise in clients affected by job losses or redundancy, which was “having a tangible impact on the mortgage advice process”.
Complexities when applying for a mortgage after redundancy
Deepak Shukla, CEO of Pearl Lemon Properties, said clients who had lost their jobs and were qualified to apply for a mortgage were having “great difficulty” with the application process.
Shukla added: “Because many lenders would expect current employment, redundancy will be putting strains on finances immediately, making it difficult to meet the requirements for lending. It is a growing issue, especially with the fluctuating job market, making many brokers have difficulty in finding ways and means to help these clients land their loans.”
Bell had a similar view, saying: “One of the biggest challenges is around employment history. While many mainstream lenders prefer applicants to have passed their probationary period – typically three to six months – there are lenders who will work off an employment contract from day one, especially if it’s a permanent role and within the same industry. These cases often require careful packaging and may come with slightly tighter criteria or affordability calculations, but they offer a vital route forward for those re-entering employment after redundancy. That said, for clients changing sectors or with longer employment gaps, lenders may still want to see several months of payslips, which can delay the process or limit available options.
“For clients still between roles, the situation becomes more restrictive. Most high street lenders require current employment as a non-negotiable, which often means we need to explore specialist lenders who can offer solutions but tend to charge higher interest rates and may require larger deposits.”
Luther Yeates, head of mortgages at Orton Financial, said when it came to securing a high-value mortgage, for most people, “no job means no mortgage”.
He added: “If a client has recently started a new job, whether they qualify for a high-value mortgage will depend on the nature of their role. Eligibility will also depend on whether any large gaps in their employment history can be clearly explained.
“Lower-skilled work may present an issue, as it may be harder for clients to find work if they unfortunately fail their probationary period. Probationary periods are less relevant when it comes to professional roles.”
Bell said that because affordability was already being squeezed, some clients who relied on short-term loans or credit cards during unemployment could find “these new liabilities reduce the amount they are able to borrow”.
“Lenders are taking a much closer look at debt-to-income ratios, and it can be a stumbling block even if employment has since resumed,” he added.
Boon said stigma and shame towards job loss meant people took on more debt, such as credit cards, or engaged in habits that could have a negative impact, like gambling.
He also said these habits became more common in an uncertain economy.
Being aware of options
Shukla said these circumstances might require more niche lending solutions, such as providers with more allowances around employment gaps.
He added: “It is sometimes not about getting mortgages but about providing such a financial picture that, even after redundancy, lenders feel comfortable extending their services.”
Boon said people needed to understand they did not necessarily need to have been employed in a particular role for a certain length of time, as some lenders would consider their employment history in a certain career instead.
Bell said it was not uncommon for borrowers to assume that if they were not working, they would need to stay on a lender’s SVR, but he added “that’s not the case”.
He added: “While switching to a new lender might not be an option without income, existing lenders will almost always allow clients to move onto a new product, such as a fixed or tracker deal. Because the lender already holds the security and knows the client’s payment history, product transfers are still possible even during a gap in employment – which can help avoid the higher costs of sitting on the SVR.
“In short, while job losses are creating more complex cases, the key message is this: don’t assume you have no options. With the right advice, tailored to your circumstances, there are often workable solutions, even during uncertain times.”
Boon also encouraged clients not to sit on the reversion rate, but to get in touch with their adviser for guidance.
Boon Brokers sent a mass email to its clients telling them to contact the brokerage if they were facing redundancy.
“It’s totally free, there’s no shame,” Boon said.
Boon said it was better for borrowers to seek help as soon as possible, and his firm “always tries to be positive with clients”. Boon said he did not see the point in panicking, saying the most important thing was to keep in touch, even if it was just to talk.
He said when people were made redundant, they did not want to let their family or friends down because of the stigma that could come with it.
“There shouldn’t be that stigma,” he added.
Boon said this also emphasised the need for protection, which was something he noticed his clients were taking more interest in.
