Important information: For all new cases please check affordability through our calculators before running an agreement in principle or full mortgage applications.
Affordability calculators
What’s happening
Following the Government’s recent announcement to extend the furlough scheme to the end of March 2021 for the employed workforce impacted by the latest lockdown, we would like to update you on our current position.
What you need to know
Our current position is:
We will not accept Furlough income for mortgage application purposes for employed customers.
Employed customers will need to have returned to work following any period of Furlough and received their first full month’s payslip before mortgage applications can be submitted and underwritten.
For further details please check our:
employed packaging guidelines
For all customers either Self Employed or Employed, we are reviewing our guidance for the current scheme and extension period. We will update you further if there are any changes to the current guidelines for mortgage applications.
Finally, as a reminder it is your responsibility to let us know if there is a change in the customer’s circumstances at any point during the mortgage process
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.
From 24/11/2020, the following income cannot be used to assess mortgage affordability:
Income derived from a business that has applied for or received a SEISS grant on or after 14 July 2020.
We will continue to consider other forms of income to support an application for self-employed customers whose business have been impacted, i.e. rental, employed income or other businesses where SEISS grants have not been applied for or received.
Limited companies are not impacted by this change.
Affordability
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
For Directors of a Limited Company (a shareholding of 20% or more) you must use the lower of:
- The average of the last two years salary and dividends
- The most recent years salary and dividends
Packaging
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.
Mandatory self employed customers supplementary sheet
Packaging guide
IMPORTANT INFORMATION FOR CUSTOMERS IN PAYMENT HOLIDAYS - CLICK HERE
Employed Customers
What’s happening
With the current restrictions and the UK Government extending the Job Retention Scheme until March 2021, we have reviewed and updated our employed policy to ensure we are doing the right thing for customers.
At this time our primary purpose remains to ensure that any mortgage we provide to customers is affordable.
What you need to know
We continue to support customers who have returned to work following furlough, providing they can demonstrate at least one full month’s evidence of their income e.g. payslips. For customers who cannot provide this evidence, we are unable to accept an application at this time.
A return to work letter from the customer’s employer is no longer acceptable evidence.
These changes in policy are effective from 01/12/20 for all new employed applications. These changes do not impact employed applications submitted prior to 01/12/20
We will continue to review our policy in light of any appropriate changes which affect employed customers.
For all customers not impacted by furlough, there are no changes to our current policies.
What you need to do
Review and follow the revised policy guidelines for:
employed customers
Self-employed policy remains the same
Please remember to let us know if there is a change in the customer’s circumstances at any point during the mortgage process.
For more information, please view our:
FAQs
Government Extension of Furlough Scheme
What’s happening
Following the Government’s recent announcement to extend the furlough scheme to the end of March 2021 for the employed workforce impacted by the latest lockdown, we would like to update you on our current position.
What you need to know
Our current position is:-
We will not accept Furlough income for mortgage application purposes for employed customers.
Employed customers will need to have returned to work following any period of Furlough and received their first full month’s payslip before mortgage applications can be submitted and underwritten.
For all customers either Self Employed or Employed, we are reviewing our guidance for the current scheme and extension period. We will update you further if there are any changes to the current guidelines for mortgage applications.
Finally, as a reminder it is your responsibility to let us know if there is a change in the customer’s circumstances at any point during the mortgage process.
Guidance for furloughed customers
Mandatory self employed customers supplementary sheet
Packaging guide
IMPORTANT INFORMATION FOR CUSTOMERS IN PAYMENT HOLIDAYS - CLICK HERE
