Income Criteria Changes and Pipeline Update

In these uncertain times, we are continually reviewing our policies to enable us to consider the very different circumstances that your clients may find themselves in today compared to where they were at the start of 2020.

We’ve made some changes to our lending criteria in response to the Coronavirus crisis and the different levels of governmental support offered to different groups.  These changes are designed to help us to continue to lend responsibly to our members alongside our usual full Lending Criteria and are detailed in the sections below.

Employed Applicants Who Have Been Furloughed

For applicants that have been furloughed under the Coronavirus Job Retention Scheme for Employed workers, we’re outlining what income we will accept.

To claim, employers must designate affected employees as ‘furloughed’ and notify employees of this change. The employee remains employed by their company while furloughed but can’t undertake work for them.

The employers will be given 80% of furloughed employees wage costs, up to a cap of £2,500pm (£30k per annum). The employer can opt to fund the difference between the payment and the employee’s salary but isn’t obliged to do so.

For example:

  • An applicant earning £20,000pa (£1,667pm) gross will receive the equivalent of £16,000pa (£1,333pm).
  • An applicant earning £60,000pa (£5,000pm) gross will receive the equivalent of £30,000pa (£2,500pm).

Criteria

If your client is employed and has been furloughed, we may consider the application, subject to the following:

  • We’ll accept 80% of their basic income up to a maximum of £2,500 pm (£30k per annum gross)
  • If an applicant’s employer is paying any top-up amount (up to 20% of an applicant’s salary), this will be considered for affordability as  long as there is documentary evidence to confirm this.
  • Bonus, overtime or commission will only be considered for ‘key workers’.

Self Employed Applicants

In addition to our existing self-employed criteria, applicants will now need to provide the last 3 months of business banks statements in order for us to assess income.

Pipeline Applications - Pre-Offer

We will contact brokers to confirm the following:

  • The applicant still wishes to proceed with their mortgage application
  • If there has been a significant change in the customer(s) income since the submission of the application. If there has been a significant change we will request confirmation of the relevant details.

Pipeline Applications - Post Offer

If the applicant has received an offer from the Society we will not proactively request information about any changes in customer’s circumstances, however, if there are any significant changes then then we would request that we are notified to ensure we continue to lend responsibly.

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