Income criteria
Lending criteria
Income
Page contents
Main income
- Employment must be permanent
- There is no minimum time in current employment
- 100% of gross basic salary accepted
Second job income
- 100% can be accepted
- Employment must be permanent and sustainable
Probationary period
All probationary periods can be disregarded.
Bonus/Overtime
We accept 60% of sustainable overtime and bonus as long as the total amount doesn’t exceed the basic income.
Commission
We accept 60% of sustainable commission, as long as the total amount doesn’t exceed the basic salary.
Confirmed pay increase
Pay increases are acceptable and must be confirmed by the employer. Increases must be within a reasonable time frame and will be reviewed by your underwriter.
Future employment
Income can be used as part of the affordability assessment as long as the employment begins within the next 3 months and this can be evidenced by provision of a signed contract. The future employment must meet all other standard employment criteria.
- For 75% LTV and below, we require the latest payslip plus corresponding bank statement
- For above 75%, we’ll need the latest 3 payslips, plus a corresponding bank statement showing the salary credit for just the latest payslip.
Salaried directors are treated for income purposes as employed applicants.
Salaried directors with less than 25% shareholding
Treated for income purposes as employed applicants and the same evidence of income is needed as employed applicants.Salaried directors with more than 25% shareholding
Latest full month personal bank statement. We’ll also write to your client’s accountant for confirmation of income. If the accountant is not on our list of recognised accountants or your client doesn’t have an accountant, we’ll require the latest 2 years SA302s.Limited company directors with more than 25% shareholding or less than 25% where income is derived from dividends
Latest full month personal bank statement and latest full month business bank statement. We’ll also write to your client’s accountant for confirmation of income.- For clients with an accountant with acceptable qualifications (recognised accountants), an accountant’s reference, the latest full-month personal bank statement, and the latest full-month business bank statement are required.
- For clients with an accountant without acceptable qualifications (accountants not on the list of recognised accountants), an accountant’s reference, the last two years' SA302 documents, and the supporting Tax Year Overviews (if the SA302s are online documents) must be provided.
- For clients without an accountant, the required documents include the latest full-month personal bank statement, the latest full-month business bank statement, and the last two years' SA302 documents with Tax Year Overviews.
Applications may be considered where a two-year track record of this type of income can be demonstrated.
- A letter from the umbrella company confirming the total amount earned during the last two years and the potential income in the forthcoming year.
For affordability purposes we will use the average of the last two years net profits or the latest year, whichever is lower.
- A two year track record of income is needed to accept self employed income.
Day rate contractors are acceptable for lending purposes if the following criteria are met:
- Contracts must relate solely to the applicant
- Up to 2 contracts can be considered subject to sustainability
- Minimum 6 months track record of contract work
- A maximum of 46 weeks income used from the current contract
- Minimum income £300 per day or £50,000 per annum.
Please note umbrella company deductions will need to be taken into account when calculating affordability.
- Current and previous contract (s) covering at least 6 months.
- If no previous contract is available and current contract started less than 12 months ago, previous industry experience and pay should be evidenced via P60’s/ employment contract.
- If there are less than 2 months remaining on current contract, evidence of contract extension or new contract is needed.
Can be accepted provided that at least 12 months of a contract are remaining, or where there's a track record of income from contract work.
- A copy of the current contract
- A copy of the most recent bank statement
- To obtain a 12 month track record of contracts or p60s can be used (where <12 months remains on current contract)
- If <2 months remaining on current contract then evidence of contract renewal/new contract is required
- 75% LTV - Latest payslip
- Above 75% LTV - Latest 3 payslips
- Umbrella: Latest 3 months payslips/invoices and latest 3 months personal bank statements.
Applicants who are on a zero hour contract will be accepted at 60% of earnings provided they have a minimum of 12 months evidence of sustainable earning on a zero-hour contract basis, and fall into one of the following occupations:
- NHS Bank nurses and locums
- Non-NHS Bank nurses
- Care Home Workers
- Supermarket Workers
- HGV Drivers
- Retained/On-Call Firefighters
- Armed Forces Reserves
- Supply Teachers.
- Your clients last 3 payslips plus the bank statement showing the salary credit from your most recent payslip
- Copy of their current contract
- Copy of their latest P60.
If the applicant is within 15 years of retirement, details of post retirement income is required. We will use the private pension/annuity income or current salary, whichever is the lower, to calculate the maximum lending.
The percentage of the mortgage term occurring after age 70 must be less than 25% of the overall mortgage term.
- Please note we may require a retirement strategy to detail how the applicant plans to meet his/her mortgage commitments, if the retirement income is not sufficient to meet mortgage repayments.
Foreign income
Accord Mortgages does not offer any loans which would be deemed as foreign currency.
This means that no foreign income or assets can be used for affordability or repayment strategy purposes.
We define foreign income as:
- Any income received by the customer which does not originate in pounds sterling
We define foreign assets as:
- Properties outside of the UK
- Assets e.g. property, investments, pensions; which would yield monetary values which are not based in pounds sterling.
We will need confirmation from the applicant of their intentions to return to work including any future increase in expenditure (such as child care costs).
- We will also require evidence of pre-maternity income.
Income is calculated using the surplus amount of rental income after deducting all costs of property management and mortgage interest payments.
Please note:
Investment income from land and property can only be used for self-financing portfolios (A portfolio is classed as self-financing where rental income is greater than 145% of mortgage payments on an interest only basis at 5.5%)
Where the BTLs are Capital and Interest, the income can be used within the assessment but the full mortgage cost must be taken as a deduction.
- To include rental income as part of the affordability assessment we will need the latest two years SA302's evidencing income from land and property.
Investment income
The nature of the investment will be reviewed by an underwriter and may be acceptable where there is a 2 year track record.
Rental income (Buy to Let/BTL)
Normal self-employed criteria applies.
Where a customer is receiving maintenance payments, this income can be used within affordability assessment however the following must apply;
- The customer is in receipt of other income to support the lending
- Maximum 50% of the income to be used in the calculation
- The maintenance must have a minimum of 2 years remaining
Informal agreement
- The latest 3 months bank statements to showing evidence of the maintenance income.
Formal agreement (optional alternative)
- CSA agreement, Court Order, solicitors letter or Consent Order
- The latest bank statement to show evidence of the income.
We can accept 100% of the following benefits:
- Widows pension
- Retirement pension
- War widows pension
- War disablement pension
- Child Benefit
- Foster carers
- Special Guardianship
We can also accept 60% of the following benefits:
- Disability living allowance (DLA)
- Personal independence payment (PIP)
- NI Contributions based Employment Support Allowance (ESA)
- Carer’s allowance (CA)
- Industrial injuries disablement benefit (IIDB)
- Scottish Child Disability Payment (CDP)
- The award letter will be required to evidence this income along with bank statements.
- Bank statements will be required to evidence the last 3 benefit credits. Where Employment and support allowance is utilised, we will require a copy of the award letter and the latest bank statement evidencing the benefit credit.
100% of foster care income can be used within the affordability calculation.
- Bank statements to evidence that the allowance is being paid for each child
- Letter to confirm children in care, how long in care, how long care is intended to be provided for and how much the customer will receive for each child and a breakdown of the allowance. The letter must be on letter headed paper from the fostering agency/local authority
- Respite Foster Carers will usually provide care on an ad-hoc basis. For this type of income, we would require a letter from the foster care agency or local authority confirming what income they have received so far in the that tax year and also confirmation of income that has been received in the last 2 years.
- Foster carers are classed as self-employed and have to complete a tax return to the Inland Revenue (See self-employed income section)
100% of special guardianship income can be used within the affordability calculation.
- If using basic allowance, this can be evidenced through a bank statement confirming the income along with child benefit credit.
- If receiving any further payments, please provide a letter from the local authority or agency confirming the Guardianship, weekly payments and any further income the Guardian is entitled to, we also need an end date for this income.
60% of sustainable variable income from self employed Locums (excluding bank nursing) is acceptable where they have a minimum of 6 months history as a Locum.
- 6 months invoices or payslips and latest 3 months personal bank statements.
Deductions from income
The following outgoings must be declared:
- Monthly repayment cost of any HP agreements or loans, (including self financings)
- Credit card balances
- Monthly cost of property charges such as ground rent and service charges
- Monthly costs of child minding, nursery or school fees
- Monthly cost of IVA
- Monthly cost of other significant outgoings: these are outgoings that the applicant/s could or would not stop paying if they needed to reduce expenditure
- Monthly cost of mortgage payments that do not meet self-financing rules
- Monthly cost of maintenance payments
- The monthly costs of all debts which will remain in place on completion of the mortgage are included as a deduction within affordability
- Any credit cards to remain in place on completion of the mortgage are included as a deduction with 3% of the total credit balance being taken
- Monthly costs of any childcare/school fees
- Monthly costs student loans
- Monthly costs of any mortgage payments that do not meet the self-financing rules or are not going to be let out
- Overdraft - 3% deduction of the highest overdrawn balance
- Monthly costs of any property charges - ground rent/service charge/estate rent charge(s)
- Monthly costs of any regular maintenance payments
- Monthly costs of any other significant outgoings including running costs of second properties
You need to tell us if the applicants are aware their income will reduce at any time in the future. Some examples may include:
- Loss or reduction of overtime/bonus
- Notice of redundancy
- Planned reduction in working hours
- End of contract working
Any financial dependants that reside within the same household will also be included within the affordability assessment.
100% of income can be used subject to income being sustainable.
All cases will require underwriter assessment.
- Details of contractual income for the last 3 years
- Where income is based on competition wins, sponsorship, evidence of the last 3 years earnings should be obtained through contracts, self-assessment documents, and or accounts.
- Details of pension provisions
- Details of injury insurance
LTI and income multiples
The table below details the maximum applicable income multiples available for different transactions. Please note in order to obtain an accurate affordability figure it is important to complete the affordability calculator accurately.
| Transaction Type | Income below £75,000 (joint or sole basis) | Income above £75,000 (joint or sole basis) |
|---|---|---|
| Standard Purchase and Remortgage up to 90% LTV | 4.49x | 5.0x |
| Standard Purchase and Remortgage up to 95% LTV | 4.49x | 4.49x |
| New Build Purchase up to 90% | 4.49x | 5.0x |
| New Build Purchase above 90% (Deposit Unlock) | 4.49x | 4.49x |
| Standard Purchase over 95% LTV (The 5K Deposit Mortgage) | 4.49x | 4.49x |
Please note: cases that utilise the cascade score product range will be capped at 5.0x LTI maximum. Those that require a LTI ratio of over 5.0x will require a boost LTI product.
Deductions from Income
The following outgoings must be declared:
- The monthly costs of all debts which will remain in place on completion of the mortgage are included as a deduction within affordability
- Any credit cards to remain in place on completion of the mortgage are included as a deduction with 3% of the total credit balance being taken
- Monthly costs of any childcare/school fees
- Monthly costs student loans
- Monthly costs of any mortgage payments that do not meet the self-financing rules or are not going to be let out
- Overdraft - 3% of latest total outstanding month end balance
- Monthly costs of any property charges - ground rent/service charge/estate rent charge(s)
- Monthly costs of any regular maintenance payments
- Monthly costs of any other significant outgoings
- The latest payslip and corresponding bank statement required if employed.
- Normal self-employed or limited company director documentation required for self-employed applicants.
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