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Lending policy

View our full intermediary lending policy online

A-Z lending policy

The purpose of this search facility is to provide guidance on Virgin Money's Lending Criteria. You can either browse alphabetically or enter a keyword you would like to search from the panel on the left hand side.

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Absence from Employment

If a customer is anticipating a temporary reduction in their income, the customer's return to work salary will be used for affordability purposes providing the customer is due to return to work within the next three months.

For periods of absence between four and twelve months, the customers return to work salary will be used, providing the customer evidences how they intend to cover the shortfall in income e.g. savings. The shortfall is defined as the lower of the total contractual mortgage payment or the reduction in net income, for the total period of absence.

The below examples show how we would calculate the shortfall:

  • The customer will experience a drop in income of £300 for six months and the contractual mortgage payment is £700. Required savings = £1,800 (£300 x six months)
  • The customer will experience a drop in income of £1,000 for five months and the contractual mortgage payment is £600. Required savings = £3,000 (£600 x five months)

We will require evidence of how the customer will cover the shortfall, including savings accounts, bank statements and share certificates. Please note these can be in the name of either borrower, if a joint application.

When a customer is on or due to go on maternity or paternity leave the dependant field must be updated accordingly and childcare costs included as part of the customer's regular and essential expenditure, or an explanation provided as to why they do not apply.

For all periods of absence the customer and the employer must provide confirmation of the return to work date and salary. Where confirmation is not received from the employer any unsustainable income, such as maternity or sick pay, will be excluded for affordability purposes.

Adverse Credit

The mortgage application will be declined in the following circumstances:

  • Arrears are recurring or likely to recur
  • Where a CCJ is declared or detected, whether satisfied or unsatisfied
  • If insolvency e.g. Bankruptcy, Sequestration or an IVA is identified or pending

In addition to the above you must declare on the application if the customer has had any of the following:

  • Court Order for non-payment of debt
  • Mortgage, rent or loan arrears
  • Refusal of a mortgage or credit
  • Repossession where they were party to the mortgage
Affordability

Our lending decisions are based upon a full affordability assessment whereby we will assess if the loan is affordable based on the applicant's income, loan/credit card commitments and regular and essential household expenditure.

Please note, for all residential loan applications the income being used to assess affordability must be paid in GBP / £Sterling. We will require evidence of this income.

Please ensure you use our Online Affordability Calculator before submitting a Decision in Principle.

We require a Monthly Essential and Regular Expenditure Form for some customers who have low levels of outgoings in relation to their circumstances. An automated prompt on the Online Affordability Calculator will tell you when to fill this in for your client.

Providing the income and expenditure information input is accurate the calculator will provide you and your clients with an accurate illustrative borrowing figure.

To help you complete this process more easily, forms can be e-mailed to docs@virginmoney.com. If you are unable to email the form you can fax or post as usual.

If supporting documentation is not received in a timely manner, we reserve the right to cancel the original application including the product requested.

Age Requirements

For all customers, including Guarantors, the maximum age at the end of the mortgage term is 75 years and 364 days.

The minimum age requirements are as follows:

  • Residential - 18 years
  • BTL - First named customer 21 years, additional customer(s) 18 years
  • Guarantor - 25 years

For full details of our retirement policy, please view the Retirement section.

Applicants (number of)

The maximum number of customers per application is 4. In these circumstances income and affordability is assessed on the income of the two highest earners.

Where there are more than two applicants, a paper application will be required.

Armed Forces Personnel

Applications will be considered where they meet the following criteria:

  • The property to be mortgaged is not a former or current MoD property
  • The customer has a minimum of two years left to serve
  • The customer can afford the mortgage and any accommodation costs if they stay in an MoD property, and spouse/partner occupies the mortgaged property
  • Deposit must be from own resources
  • Sole customers must occupy the property full time
Bank Statements

For income verification purposes we require two of the last four months bank statements (to correspond with the payslips provided) to evidence salary credits if the customer:

  • Is employed by a family business
  • Is paid in cash
  • Provides handwritten payslips and/or P60

Where your client is unable to provide a copy of the last P60 one of the following substitutes can be used in its place:

  • Last payslip in previous tax year
  • Duplicate P60 from employer
  • P45 from previous employment
  • Letter from HMRC to evidence last year’s earnings
  • Statement of earnings from the employer to confirm all information which would be on a P60 (note this must be on company letterhead)

For more details about employed income types Virgin Money accept and how they are assessed, check out our Employed Income useful guide.

Borrow Back

Your customers can borrow back any previously paid overpayments that total at least £500, subject to the terms and conditions of the mortgage and Virgin Money's prior agreement. Where the borrow back takes the LTV above 90% customers will be made aware of the risk of negative equity prior to the release of any funds.

Borrow Back is not permitted on our Everyday products.

British National Working Overseas

Virgin Money must be able to assess a track record to consider the application.

  • If the customer is not found on the credit search, the last six months bank statements, copy contract and CV must be evidenced
  • Overseas and UK living costs to be deducted from gross salary, which must be paid into a UK bank account
  • Customer and/or immediate family must occupy the property
  • Customer must be able to evidence a three year consecutive UK address history
Buy To Let Variable Rate

At the end of the promotional rate all buy-to-let loans will revert to Virgin Money’s Buy To Let Variable Rate which is 4.74% (effective from 1 September 2016 for existing customers).

Buy-to-Let and Consumer Buy-to-Let

We offer Buy-to-Let (BTL) and Consumer Buy-to-Let (CBTL) loans.

We consider both BTL and CBTL business to be a property that is occupied under a rental agreement and where there is no intention for the borrower or family member to reside. These loans are not regulated by the Financial Conduct Authority (FCA) under the Mortgage Conduct of Business (MCOB). If your client(s) or their family member(s) are to reside in the property at any time during the term of the loan it will be a FCA Regulated Mortgage Contract (RMC) under MCOB.

The following examples explain what we consider to be either BTL or CBTL.

BTL loans:

  • If a customer is purchasing a property with the sole intention of letting it out under a rental agreement, we would treat this as a BTL loan.
  • If a customer is remortgaging the property and meets either of the criteria below, we would treat this as a BTL loan:
    • They already own other BTL properties
    • They do not own any other BTL properties and since becoming the owner of the property (which includes inheritance for example) the customer or their family members have not lived in the property

CBTL loans:

  • If a customer is remortgaging the property and meets either of the criteria below, we would treat this as a CBTL loan:
    • They do not own other BTL properties and since becoming the owner of the property the customer or their family members have lived in the property (e.g. the customer is completing a Let to Buy transaction or has inherited a property and resided in it prior to letting it out)
    • They do not own other BTL properties and are looking to raise capital for themselves which amounts to 50% or more of the total loan amount (e.g. the property is unencumbered and the customer is raising capital to pay for a wedding or a car)

Policy criteria for BTL and CBTL loans

The below policy criteria, including affordability and rental assessments, applies to both, CBTL and BTL.

The following conditions must be met:

  • Evidence of a minimum personal combined gross income of £25,000 is required (excluding income received from BTL properties). We will accept non GBP / £Sterling income as part of this
  • The rental income must cover 145% of the mortgage interest and this will be calculated in one of the following ways:
    • All products, with the exception of five year fixed rate, will be calculated on a notional rate of 5.50%.
    • Five year fixed rate products, will be calculated at the higher of either the Buy-to-Let Variable Rate (currently 4.74%) or the Product Rate.
  • Minimum age requirement of 21. For joint applications at least one borrower must be 21 or over and additional borrowers must be 18 or over
  • Maximum LTV for repayment and interest only loans is 75%
  • No minimum loan size and maximum loan size of £1million on any one property
  • Maximum portfolio limit of £2m on four properties with Virgin Money and a total of 11 mortgaged properties.
  • Minimum property value £50,000
  • An assured shorthold tenancy (AST) or Scottish/Northern Ireland equivalent is set up within three months of completion and does not exceed 12 months if the rental income is less than £100,000. If the rental income exceeds £100,000 then a standard tenancy agreement must be in place
  • The property must be let on a single AST with a maximum of four tenants
  • We will only accept properties which are in a readily lettable condition at application

Virgin Money considers a property as ready to let if the following can be met:

  • The property is not in need of essential repairs and / or refurbishment
  • Its overall condition in respect of repair and fittings is to a standard which would be expected by the majority of potential tenants

Any property which does not meet the above requirements will not be acceptable to us on a BTL basis until further improvements have been made to bring the property up to the required minimum standard.

Restrictions:

  • Available to individuals only, not Limited Companies
  • Not available where customer intends to let the property back to the seller
  • We will lend up to a maximum of 20% of the units in any one block / development
  • We do not accept BTL applications for first time buyers
  • Applicants must be an owner occupier, and have had owner occupier status for at least six months on the date of decision (this applies to at least one applicant on joint applications). We may request evidence of this
  • Where a customer is remortgaging their main residence onto a BTL product a simultaneous completion must be made on a new residential property