Lending Criteria – Employment & Income
Employment Criteria
Cases which do not meet the criteria listed below will be considered by the Society on their individual merits. The applicant must be paid in Sterling (GBP) and hold a UK bank account, with the exception of Ex Pat applicants. Please refer to BTL – Employment and Income for additional criteria for these applicants Please note earned income will NOT be taken into account for RIO, the mortgage is based on retirement income, income from investments and rental property only. These are evidenced via tax assessments.
Type | Criteria |
Employed – Duration |
|
Probationary Periods |
|
Pending pay Rise |
|
Fixed Term Contract |
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Zero Hours Contract |
|
Bank Hours (applied to NHS professionals only e.g. Doctor / Nurse) |
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Self Employed |
|
Directors |
|
Maternity/ Paternity Leave |
|
Second Job |
|
Benefits Income |
|
Proof of Income
We reserve the right to ask for additional accounting information at the discretion of our underwriters.
Type | Acceptable Proof |
Employed |
|
Fixed Term Contract |
|
Zero Hours Contract |
|
Pension Income |
|
Maintenance Income |
|
Benefits Income |
|
Car Allowance |
|
Large Town Allowance (London Weighting) |
|
Second Job |
|
Self Employed |
|
Directors with <25% shareholding |
|
Directors with >25% shareholding |
|
Acceptable Sources of Income
Type | What we can use |
Employed |
|
Fixed Term Contract |
|
Zero Hours Contract |
|
Pension Income |
|
|
|
Maintenance Income |
|
Benefits | A maximum of 50% of the below benefits types is permitted:-
|
Car Allowance |
|
Large Town Allowance (London Weighting) |
|
Second Job |
|
Self Employed | We will use the following for the purposes of calculating income:
|
Directors with <25% shareholding |
|
Directors with >25% shareholding |
|
Income from Multiple Sources
Please see references to Second Job in the following tables Employment Criteria, Acceptable Sources of Income <– Back
Maternity/Paternity Leave
Please see references to Maternity/Paternity in the following tables Employment Criteria, Acceptable Sources of Income <– Back
Approved Accountancy Bodies
Accountant’s certificates should be prepared by an Associate or Fellow of an approved accountancy body:
- Association of Accounting Technicians (AAT)
- Association of Authorised Public Accountants (APA)
- Association of Chartered Certified Accountants (ACCA)
- Association of International Accountants (AIA)
- Chartered Institute of Management Accountants (CIMA)
- Chartered Institute of Public Finance & Accountancy (CIPFA)
- Chartered Institute of Taxation (CIOT)
- Institute of Chartered Accountants (ICA)
- Institute of Financial Accountants (IFA)
- Fellow of Chartered Accountants (FCA)
Affordability
The amount we will lend is based upon your income and expenditure. A fully completed Individual Affordability Assessment (IAA) form is required with all applications. The income on the IAA will be cross referenced to bank statements, committed expenditure to the credit file and non-committed outgoings will be sense checked against statistical data. The mortgage payment will be calculated by applying a stressed rate of interest. We will take the gross annual income and deduct any financial commitments before applying a multiple as set out below. Income multiples are used as a guide only. For all Consumer/Regulated BTL applications and those Standard BTL applications where the rental income (confirmed by the valuer) does not meet the rental criteria a full affordability assessment is required. BTL – Applications based on affordability. There are specific requirements for RIO applicants RIO – Affordability <– Back
Income Multiples
Basic income multiples (for guidance purposes)
Loan to Value up to 95% Further Advances up to 90% Near Prime up to 70% Consumer/Regulated BTL 80% Self-Build to 80% | |
Single | Income x 5 |
Joint | Joint income x 5 |
Financial Commitments
The monthly commitments and balances outstanding in respect of the following should be declared on the application form and IAA form:
- Bank Loans, Hire Purchase, Car Loans, Student Loans, Second Mortgages, Buy to Let Mortgages, Child Maintenance, car lease agreements, CSA payments, nursery education, education fees or any other financial commitment.
- For credit cards, store cards and mail order accounts 3% of the current balance will used as the monthly commitment.
- Commitments can be ignored in the affordability calculation if there is less than 3 months to run.
Gambling
Gambling transactions will be taken into account for affordability. Bank statements will be checked and an average of the amount gambled over the last 3 months will be used. Additional bank statements may be requested at the underwriter’s discretion. <– Back
Proof of Mortgage/Rent Payment
The conduct of Mortgages/Loans (secured/unsecured) are checked against Credit Bureau information for the last 2 years. Where this cannot be evidenced mortgage statements/bank statements to cover this period will be required. The conduct of tenancy agreements will be checked using the latest 12 months bank statements and/or a tenancy reference. <– Back
Background Properties/Buy to Lets
Background properties/buy to lets are not permitted for shared ownership lending. Applicants must have no more than 3 BTL properties (per application). The following will apply: Background BTL will be treated as self-funding where:
- There is at least 3 months rental history (AST and bank statements showing rental income required) AND
- The rent received is equal to or more than the stressed mortgage payment (e.g. £100,000 x 5.5% x 145%)
If an existing BTL is let on a HMO basis the rent will be evidenced via tax assessments. The expenditure associated with a Background BTL will be included in affordability if:
- There is no rental history (if this applies the stressed mortgage payment will be used for affordability, but no rental income taken into account) AND/OR
- There is a shortfall between the rent received and the stressed mortgage payment. The shortfall amount will be included for affordability.
Background BTL The mortgage at the current pay rate will be included for affordability <– Back
Lending in Retirement
Lending in retirement is where all borrowers are a minimum of 60 years old, have already retired, and the only source of income is retirement income and that derived from investments, including rental property. The maximum LTV is 70%. Lending into Retirement Lending into retirement is where the mortgage term goes past the age of 70 for either borrowers. The maximum term is 40 years. The maximum LTV is 80%. <– Back
Useful Information
- Lending Criteria Home
- Lending Criteria - Applicant
- Lending Criteria - Property
- Lending Criteria – Loan Criteria
- Lending Criteria - Loan to Value
- Lending Criteria - Buy to Let
- Lending Criteria - Shared Ownership
- Lending Criteria - RIO
- Lending Criteria - Further Advance
- Lending Criteria - Self-Build
- Lending Criteria - Custom Build