Income

If lending is past the age of 70 or the applicant's intended retirement age (whichever comes first), the following applies:

1. If retirement is more than 10 years away, and the term does not extend beyond age 75 then we will use current income for affordability purposes, as long as the customer can prove they are paying into a private pension (payslip, bank statement or pension statement accepted). 

2. In all other circumstances affordability is reliant on a projected pension income, the applicant:

• Must have been contributing to the pension for a minimum of 10 years; and 
• Should provide the latest annual statement or projected pension income. 

This will be used for the affordability calculation. 

For joint borrowers, where the term extends beyond the oldest borrower’s 76th birthday, the underwriter must be satisfied that the loan is still affordable following the death of either borrower. If you would like to discuss this further, please contact your local BDM or the team on 0330 333 4021.

We consider non-regulated holiday let applications on an advised basis. 

We will accept applications from applicants who do not currently own and live in their own home.

Applicants: 

• Should be 21 years old or older
• Should have no more than 2 mortgaged holiday lets, whether in sole or joint names including the current application. 

There is no minimum income requirement.

The maximum LTV for a holiday let mortgage is 75% with the minimum property value and purchase price of £50,000 and a minimum loan size at £25,000.

For different lending scenarios, we will require as rental coverage:

If the application is a £4£ re-mortgage on a property purchased on a holiday lets basis before January 2017, we will require 125% @ 8.10% as rental coverage. 
If the application is a £4£ re-mortgage on a property purchased on a holiday lets basis after January 2017, we will require 145% @ 8.10% as rental coverage.

Rental income is calculated using an average of the projected low, mid and high season weekly rental yields.

This is usually multiplied by an assumed occupancy level of 30 weeks and divided by 12 months. This is then applied to the rental coverage calculation. 

The calculation is £15,000 / 12 months = £1,250 monthly rental. £1,250 / 1.45 = £862.07 / 0.0810 = £10,642.84. £10,449.33 x 12 gives a maximum lend of £127,714

For example

High season £700, Mid season - £500, Low season - £300,  Season Average = £500
Multiplied by 30 weeks ÷ 12mths = £1,250
Rental coverage calculation (RCC) is £1,250 ÷ 1.45 = £862.07
RCC divided by current stress rate is £862.07 ÷ 0.0810 = £10,642.84
RCC multiplied by 12 months is £10,642.84 x 12 = £127,714
Maximum lend value = £127,714
Applicants can stay in the property for up to 2 months per annum.

We accept Working Tax Credit (WTC) at 100%.

We will not accept child tax credits or child benefits.

We consider non-regulated buy to let mortgage applications on an advised basis. 

Properties must have an energy performance certificate rating of E or above.  We will accept applications from applicants who do not currently own and live in their own home.

Applicants 

• Should be 21 years old or older and 
• Collectively own not more than 3 mortgaged buy to lets. 

We consider Non-EEA applicants.

There is no minimum income requirement.

The maximum total borrowing must not exceed £2m including our lending. This should include any mortgages the applicant/s is included on jointly. This can exclude any residential and/or holiday let mortgages.

The maximum LTV for a buy to let mortgage is 75% with the minimum property value and purchase price of £50,000 and a minimum loan size of £25,000.

Interest Only applications are acceptable for buy to let up to 75% LTV. 

Standard applications:

For new purchases, we will require 145% @ 5.50% as rental coverage.

For different lending scenarios, we will require as rental coverage:

If the application is a £4£ re-mortgage on a property purchased on a BTL basis before January 2017, we will require 125% @ 5.50% as rental coverage*.
If the application is a £4£ re-mortgage on a property purchased on a BTL basis after January 2017, we will require 145% @ 5.50% as rental coverage*.
If the application is a re-mortgage with additional borrowing on a property purchased on a BTL basis, we will require 145% @ 5.50% as rental coverage*.

*This is for 5-year fixed products. For 2-year fixed products we will require 7.65% as rental coverage.

Consumer Buy to Let 

We accept consumer buy to let applications.
Note: The Society does not currently lend for regulated buy to let mortgage loans but continues to service existing accounts.

Lettings must be Assured Shorthold Tenancy Agreements (ASTA, England) / Written Statement of Standard Occupation Contract (WSSOC, Wales) with no more than 12 months remaining at application. Where a tenant (England) / contract holder (Wales) is continuing tenancy beyond the initial ASTA/WSSOC, a new rolling contract is acceptable. This will be verified by the solicitor in line with our mortgage conditions. All borrowers must be named on the tenancy agreement/Written Statement of Standard Occupation Contract. 

We won’t lend on third party or sub lettings, this includes company lets and local authorities.

Gifted Equity
For any purchases using gifted equity, please contact your local BDM before submitting your case.

For an applicant who is about to or has started parental leave their income will be based on their salary on return to work. 

We will need 

• The last 3 monthly or weekly payslips with corresponding bank statements; and 
• A letter from the employer to confirm the return to work date with confirmation of the applicant’s salary on their return to work. 

If savings are being used to pay the mortgage during parental leave, we’ll need to see evidence of the savings.

Applicants must have been in permanent employment for the last 3 months and paying UK income tax.

Only income paid in sterling and subject to UK taxation will be considered.  

Please provide 1 month’s personal bank statement showing income and all bill payments. Alongside this, we require the most recent month’s payslip or most recent 4 pay slips (if paid weekly) or 2 payslips (if paid fortnightly). 

If the income is split over more than 1 account, we will need to see the additional 
account statements. All statements must include name, address and bank account number. 

Confirmation(s) of income must accompany all applications.

Variable income will only be included for affordability purposes if the applicant can show that the income is currently being paid and has been regularly paid over a period of time. 
 

Applicants with rental properties

We will only consider earned income or rental income for affordability (not both). 

Applicants paid in cash must show the full credit being paid into their bank account. 

Income categories considered include:

• Basic salary; 
• Regional and/or car allowance;
• Rent/mortgage allowance; 
• 100% of regular bonus (at least 2 consecutive years) or shift allowance; 
• 100% of Working Family Tax credit; 
• 100% income from a second job; and
• Pension from previous employer or widow/er’s pension.

We do not accept applications from apprentices.

 

Overtime

We’ll consider up to 100% of overtime income in our affordability calculations if it does not exceed regular income.
To make a decision we’ll need:
•    The latest 3 month’s monthly or weekly payslips and one full month bank statement showing the salary credit.
•    Information for both applicants if it's a joint application.
We will take an average of the lower overtime across the 3 months period.

Second job income

We'll consider up to 100% of second PAYE job income in our affordability calculations. 

To make a decision we’ll need:

• The latest monthly or weekly original payslip, or three months where income is variable, for both primary and secondary income; 
• One full month bank statement showing the salary credit; and 
• Proof of employment for at least 6 months. 

If there is a joint application, we’ll need the information for both applicants. 

When assessing the application, we’ll consider if the income can be maintained over a period of time. We’ll do this by looking at:

• The number of hours and number of days worked;
• Whether the salary is consistent with the type of employment; 
• The travel distance from home; and 
• How long your customer has held both jobs. 

If 100% of the second PAYE job income can be maintained, it will be included in the affordability calculation.

Loan to income on standard products is 4.49x.

Medical workers
Thank you products are calculated at 5x loan to income. 
 

Newly qualified professionals
For newly qualified professionals, where at least one applicant has qualified in the following professions in the last 5 years, we can offer a loan to income of 5.5x for sole and joint applications.

• Financial sector - Accountant
• Building sector - Architect, surveyor
• Legal sector - Barrister, solicitor
• Health sector - Dentist, doctor, optometrist, pharmacist or vet

Affordability calculations are different for newly qualified professionals (NQP).

Our affordability calculator won’t calculate the NQP 5.5x Loan to Income feature. 

Please email your local BDM with a copy of a completed standard calculation and they will do the calculation for you. 

First time buyers
First time buyer products are calculated at 5.5x loan to income.

• Available for first time buyers only with an income of £30k (sole) or £50k (joint).
• Available on 5 year fixed rate standard residential mortgages except 95% new build mortgages.  
• Cannot be combined with any scheme or non-standard mortgage type (e.g. JBSP, Shared Ownership, HTB etc.) Not available on interest only.
• Applicants cannot be self-employed.
• We will accept variable income including overtime as well as basic income.

Submitting an application with a higher LTI

• Our affordability calculator uses a standard calculator and won’t calculate enhanced LTIs.
• MSO will automatically decline the case.  
• Please get in touch with your local BDM to make the calculation for you.
   

Medical professionals locums should provide 3 months proof of income e.g. invoices, remittance or pay slips with corresponding bank statements. We average and annualise the income shown.

Newly qualified medical students should provide their offer letter confirming their start date and salary.

We accept applicants employed on a fixed term contract providing the contract is for 12 months or more with 6 months or more remaining at the time of application.

First time contracts are acceptable. The applicant will need to provide 3 months of payslips.

We accept applications from foster carers.

6 months proof of income e.g. remittance slips or payslips with corresponding bank statements is required. We average and annualise the income shown. 

The number of dependent children within the applicant’s care is also needed for the affordability calculation.

Supply teachers should provide 6 months proof of income.

For loans more than 75% LTV, the affordability calculator will use the average of the most recent 2 years income.

For loans up to 75%, it will use the most recent year’s income. 

Applicants who are:

• Limited Company Directors i.e. they have a 33% or greater shareholding should provide 2 years accounts or an accountants certificate prepared by an appropriately qualified accountant*. The most recent accounts must not be older than 18 months. We will accept salary and dividend income. 
• Sole Traders should provide 2 years HM Revenue & Customs (HMRC) tax calculations, SA302 or online tax assessments supported by the corresponding tax year overviews. The SA302 and assessments must show the customer’s name, tax year, unique tax reference (UTR) and HMRC logo.**
• Partners in a large firm with multiple partners should provide written confirmation of income from the company accountant, finance manager or managing director. **
• Labour only contractors should provide 1 years accounts. They should have been contracted to no more than 2 employers over the last 12 months.**
• Construction Industry Scheme (CIS) contractors will be treated as self-employed. Affordability is assessed using the most recent set of accounts. We will require 1 years self assessment, SA302 etc.**

**We will use net profit for affordability purposes.

*Accountants must have one of these qualifications from the relevant professional body. 

AAPA - Association of Authorised Public Accountants 
ACA - Association of the Institute of Chartered Accountants in England and Wales 
ACCA - Association of Chartered Certified Accountants 
ACMA - Association of Chartered Institute Management Accountants 
AIA - The Association of International Accountants 
CA - Institute of Chartered Accountants of Scotland 
CIMA - Chartered Institute of Management Accountants 
CIPFA - Chartered Institute of Public Finance Accountancy 
FCA - Fellow of Association of the Institute of Chartered Accountants 
FCCA - Fellow of Association of Chartered Certified Accountants 
FCMA - Fellow of the Chartered Institute of Management Accountants 
ICA - Institute of Chartered Accountants 

Day rate contractors should provide a copy of the latest contract which must show a minimum annual income of £50,000. 

Applicants must have a minimum of 2 years in the industry they currently work in.

To calculate the income, we use the day rate x number of days worked x 48 weeks.

Bank nurses should provide 6 months proof of income e.g. invoices, remittance or pay slips with corresponding bank statements. 

We average and annualise the income shown.