Lending Criteria – Employment & Income

This section of our criteria is all about the applicant(s) employment and income. We have broken each element down, please click the required link from the list below to read each element.


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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
  • Continuous employment for at least 12 months on a permanent contract
Probationary Periods
  • Acceptable subject to 12 months continuous employment and remaining in a similar role
Pending pay Rise
  • Acceptable subject to written confirmation from the employer that this has taken place within 3 months
Fixed Term Contract
  • Applicants must have been employed on a fixed term contract basis for a minimum of 18 months or more (continuous service) in the same line of work.
  • There should be at least 6 months remaining on the current contract.
  • Contracts are acceptable directly from the company for which the employee is providing services and not via a third party.
Zero Hours Contract
  • A contract of employment to be in place (latest 6 months pay slips in the last 12 months)
  • The Society will calculate income using the total of the 6 months income as a monthly average to calculate the annual income
  • Not acceptable on an Interest Only Basis
  • Not acceptable for Near Prime applications
Bank Hours (applied to NHS professionals only e.g. Doctor / Nurse)
  • Latest 6 months pay slips in the last 12 months
  • The Society will calculate income using the total of the 6 months income as a monthly average to calculate the annual income
  • Not acceptable on an Interest Only Basis
  • Not acceptable for Near Prime applications
Self Employed
  • The applicant must have been self-employed for a minimum of 2 years
  • Not acceptable for Ex Pat lending
  • Where the applicant has a shareholding of 25% or more the criteria for self-employed will apply
Maternity/ Paternity Leave
  • Applicants on maternity/paternity leave will be considered (written confirmation from their current employer stating their return to work date and salary will be required)
  • Affordability will be based on the maternity/paternity income received
Second Job
  • Income from a second job may be considered either on an employed or self-employed basis provided this has been held concurrently with the main job for a minimum period of 12 months for employed (24 months for self-employed income)
Benefits Income
  • Income derived from benefits may be considered where it is not the sole income and where earned income is a minimum of £10,000
  • The amount of benefits received cannot exceed earned income

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Proof of Income

We reserve the right to ask for additional accounting information at the discretion of our underwriters.

Type Acceptable Proof
  • The latest 3 months payslips (12 if paid weekly) will be used to assess permissible income
  • Where this is not representative the P60 can be requested as evidence (e.g. in the case of annual bonus)
  • Online payslips are acceptable
  • Handwritten payslips are not acceptable
  • An employment reference will be requested where there is any doubt
Fixed Term Contract
  • Current and previous contract
Zero Hours Contract
  • Contract of employment
  • Latest 6 months payslips
Pension Income
  • Latest annual statement from the pension provider (in the case of a state pension the latest letter from DWP)
Maintenance Income
  • A copy of the court order
  • 3 months bank statements
Benefits Income
  • A letter from the relevant department to confirm the level of benefit income
Car Allowance
  • Latest 3 months payslips or Employers Reference
Large Town Allowance (London Weighting)
  • Latest 3 months payslips or Employers Reference
Second Job
  • See employed/self-employed
  • Must be proven as per normal proof of income requirements
Self Employed
  • Latest 2 years Audited / Certified Accounts or Accountants reference OR latest 2 years tax calculations and 2 years tax overviews
Directors with <25% shareholding
  • Employed criteria applies
Directors with >25% shareholding
  • Self-employed criteria applies

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Acceptable Sources of Income

Type What we can use
  • 100% of basic salary
  • 100% of guaranteed contractual shift allowance
  • 100% of guaranteed overtime/bonuses
  • 50% of regular overtime/bonuses/shift allowance
  • 50% of regular commission
The 50% commission/bonus earnings cannot exceed the annual basic salary
Fixed Term Contract
  • 100% of basic salary
Zero Hours Contract
  • 100% of average pay
Pension Income
  • State, Private and Occupational
  • 100% of the confirmed pension income
  • Self Invested Personal Pension (SIPP)
  • 4% of SIPP value (used as annual income) with minimum fund value of £100,000 is required
Maintenance Income
  • A maximum of 25% in respect of payments made to the applicant under a Court Order but not payments awarded in respect of children by the Child Support Agency
Benefits A maximum of 50% of the below benefits types is permitted:-
  • Child Benefit
  • Child Tax Credit
  • Working Tax Credit (or equivalent stated under Universal Credit)
  • Disability Living Allowance (DLA)
  • Disability Income Support
  • Industrial Injuries Disablement Benefit
  • Personal Independence Payment (PIP) (or equivalent stated under Universal Credit)
Car Allowance
  • Latest 3 months payslips or Employers Reference
Large Town Allowance (London Weighting)
  • 100% of guaranteed allowance
Second Job
  • 100% of basic pay.
  • The total hours for both jobs cannot exceed 50 hours per week
  • No overtime can be used for either job
Self Employed We will use the following for the purposes of calculating income:
  • Average of the latest 2 years net profit which cannot be greater than the latest years figure.
  • Average of the latest 2 years’ salary and dividends
Declining profits are not normally acceptable and cases should be referred prior to submission.
Directors with <25% shareholding
  • Employed criteria applies
Directors with >25% shareholding
  • Self-employed criteria applies

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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)

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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

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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.

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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