We have revised our approach to affordability

06 April 2016

At Virgin Money, we are committed to making it easier for our intermediary partners to do business with us. As part of that commitment, we have listened to your feedback and are delighted to tell you we have made changes to our lending policy.

We have enhanced the way we calculate the loan amount we will offer your clients based on affordability. This will allow us to better meet their needs with regard to the borrowing amount they require, while continuing to lend safely, responsibly and without compromising our credit quality.

Take a look at the key changes we have introduced:

  • Single applicants - We now offer a more tailored approach for single applicants, recognising their lower level of household expenditure when assessing affordability.
  • Unsecured debt – We have refined our approach to affordability assessment for your clients with small amounts of unsecured debt, improving our ability to help clients who have credit cards or loans alongside their mortgage. 
  • Higher income applicants - For your clients with an income above £40k, we will take into consideration their higher levels of disposable income when assessing affordability.
  • Higher LTV loans – We understand that the key to lending responsibly across all LTV bands is a strong understanding of affordability for customers, and applying this understanding through our new lending policy means we should be able to help more of your clients who need a high LTV loan.
  • Help to Buy: Equity Loans – We now calculate government fees as part of your client’s monthly financial commitments at 3% of the equity loan, compared to 4% today.  

Changes to our policy for loans over £500k

For loans above £500k, we have introduced a maximum loan to income multiple of x4, based on our usual allowable types of income. We only expect this to impact a very small proportion of our lending and we continue to offer competitive loan amounts to higher earning customers across the country.

When will these policy changes take effect?

Our new policy applies to our Affordability Calculator and any Decision in Principle (DIP) with immediate effect. Any DIP which has already been approved based on our existing policy will be honoured if converted to a full application within the usual 90 day validity period. These changes will solely apply to new lending going forward.

What does this mean for you and your clients? 

While we continue to carefully assess your client’s ability to repay their mortgage, now and in the future as interest rates rise, the changes we’ve made may enhance the amount we are prepared to lend to your client. So whether your clients are looking to buy a property or remortgage, our new affordability calculator should enable more of your high quality cases to fit with Virgin Money.

For full details, view our lending policy or download our A-Z Lending Policy App and get instant easy access to our policy on the go.

For any other queries you may have, your dedicated Business Development Manager will be happy to help.

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