Important information: For all new cases please check affordability through our calculators before running an agreement in principle or full mortgage applications.
Self Employed Customers
What you need to do
Criteria - examples of customers
- Customers who have not and do not expect to experience a change in their self employed income.
- Customers who have and/or expect to have a reduction in their self employed income, including those eligible for the Self Employed Income Support Scheme (SEISS).
- Customers that cannot provide evidence of their revised income or fail the affordability assessment, please explain we will not be able to assist them at this time and please do not submit an application. There are no exceptions to this policy.
When completing the affordability calculator for a new application you must calculate income using the lower of:
- The average of the last two years net profit
- The most recent years profit
- The confirmed government income support amount
For Directors of a Limited Company (more than 20% share) you must use the lower of:
- The average of the last two years salary and dividends
- The most recent years salary and dividends
For all self-employed customers , the following evidence must be provided on submission of application. If applications are received without full packaging this will delay processing and if do not receive with in 15 days we will lapse the case.
Important points to note:
· To assist the underwriter in making a decision please explain the customers personal and business circumstances and how they will be able to meet their on going mortgage obligations in the current climate including all additional liabilities taken on during the lockdown period.
· Where additional funds are being requested, ensure you capture the reason for further borrowing as we may ask for evidence of purpose of funds. Debt consolidation will not be accepted for additional funds as this time.
· You should be clear with your customer that their application may be declined at underwriting stage where we are not satisfied with the income calculated and/or that on-going affordability cannot be evidenced. This decision will be final and cannot be appealed.
· Where your customer’s income has been negatively impacted by COVID-19, they are not eligible for the government Self Employment Income Support Scheme and their revised income fails affordability assessment, please explain we will not be able to assist them at this time and do not submit an application.
These changes also apply to applications that have already been submitted but have not yet completed:
- Where you inform us of a material change to the application
- Where the customer has contacted us to make us aware of a change to their self employed income
We do not expect you to proactively review your pipeline.
As a responsible lender, we have been able to make these changes whilst ensuring that we maintain our risk appetite and the quality of business we accept.
Q. The customer’s employed income has changed permanently or temporarily AND/OR they are now on the Government scheme (Coronavirus Job Retention Scheme), how do we assess?
a. We will use the customer’s new revised income for affordability assessment and you will need to provide evidence of the customer’s new income.