Lending policy

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 in 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 must provide confirmation of the return to work date and salary.

Additional Borrowing

We offer additional borrowing exclusively to our existing mortgage customers who wish to release additional equity without remortgaging or carrying out a product transfer.

Our additional borrowing has the following key features:

• Borrowing available from five to 35 years, but must not exceed the term of the main mortgage
• A minimum loan of £3,000
• Residential additional borrowing is available up to 85% LTV, except for the purpose of debt consolidation where a maximum of 80% LTV applies
• BTL additional borrowing is available up to 80% LTV

If your client wants to release additional equity, they can contact us on 0345 600 6622**.

**Calls to 03 numbers cost the same as calls to 01 or 02 numbers and they are included in inclusive minutes and discount schemes in the same way. Calls may be monitored and recorded.

Adverse Credit

Applicants should have a strong credit history and this will be assessed during our underwriting process.

If a customer has any adverse credit then their application will be subject to assessment, but just so you know here are some of the situations where we won't be able to help:

• Where someone has had 2 months' arrears on an item of credit within the last 6 months.
• Where someone has had arrears with a value of 3 months' payments on a mortgage, secured loan or unsecured loan in the last 2 years.
• Where someone has had more than 2 defaults, or total defaults of more than £5,000 in the last 6 years. This applies whether or not they are currently satisfied.
• Where someone has had any defaults of any value in the last 6 years which are currently unsatisfied.
• Where someone has had a CCJ, IVA or Bankruptcy in the last 6 years. This applies whether or not they are currently satisfied / discharged.

For borrowing over 90% LTV no defaults are permitted, the customer must be up to date on all items of credit and have no missed payments in the last 6 months.

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.

Please send completed forms to us using one of four options:

• You will be prompted within VMO to upload your documents once you have submitted your application.
• You can upload supporting documents to VMO at any time once your application has been submitted.
• Use the Secure Document Transfer link which we will email to you following completion of an application. Secure Document Transfer links are unique and case specific and should only be used to upload supporting documents for the case referenced in the email you receive.
• Use the existing unsecure method by emailing your documents to docs@virginmoney.com for new business and PTdocs@virginmoney.com for product transfer business.

Alternatively documents can be sent via post.

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

	Minimum age	Maximum age at the end of mortgage term
Residential	18 years	75 years and 364 days
BTL	First named customer - 21 years. Additional customer(s) - 18 years	85 years and 364 days

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
• Limited Company Directors are required to provide the latest month’s business bank statements. Sole Traders and Partnerships are required to provide three months’ business bank statements.

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 Experian, the last six months’ bank statements, copy of employment 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
• Customer must be paid in GBP/£Sterling

Buy-to-Let & 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. For information relating to our BTL Portfolio Landlord criteria view the separate section below.

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:

• Where personal income is used for affordability we require a minimum personal income of £50,000 (excluding income received from BTL properties).
• The rental income must cover 145% of the mortgage interest and this will be calculated in one of the following ways:
  • Two and three year fixed rate products will be calculated at the product rate + 2%, a notional rate of 5.50% or the BTL Variable Rate, whichever is higher.
  • Five year and longer fixed rate products will be calculated at the product rate + 1% or a notional rate of 4.50%, whichever is higher.

If there is a rental shortfall between 100% and 145%, calculated at the product rate + 2%, a notional rate of 5.50% or the BTL Variable Rate, whichever is higher, we will accept personal income to cover this. Personal income is not considered for BTL portfolio landlords, LTVs greater than 75% or where the term extends beyond 75 years of age.

The rental income for a straight balance swap BTL remortgage must cover the mortgage payment by 125% calculated at the product rate plus 1% or a notional rate of 5.00%, whichever is higher.

• The estimated monthly rental is calculated by the valuer on the basis of an unfurnished property, with a single tenancy agreement and the property being let as a single family dwelling
• 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 80%
• No minimum loan size and maximum loan size of £1million on any one property. Where the LTV is greater than 75% the maximum loan size is £350,000.
• Maximum borrowing with Virgin Money is £3 million or five mortgages
• Maximum number of mortgaged BTL properties with any lender we will accept is ten
• Minimum property value for loans up to 75% LTV is £50,000. For loans greater than 75% LTV, the minimum property value is £100,000.
• A maximum secured loan to income cap of 30 will apply to BTL applications. This is based on allowable income and the calculation will take into account residential mortgages, as well as the new application.
• The following Tenancy Agreements must be in place:
  • In England and Wales, an Assured Shorthold Tenancy (AST) is required as a condition of the loan. This must be set up within three months of completion. We also accept Department for Communities and Local Government (DCLG) tenancy agreements.
  • In Northern Ireland, an Uncontrolled Tenancy agreement is required as a condition of the loan, which must be set up within three months of completion.
  • In Scotland, a Private Residential Tenancy is required as a condition of the loan with effect from 1 December 2017. This must be set up within three months of completion. Prior to 1 December 2017, an AST was acceptable.
• In England and Wales if the rental income is less than £100,000, an AST is required. If the rental income is greater than £100,000 then a standard tenancy agreement may be put in place.
• The property must be let on a single AST with a maximum of four tenants. We do not impose a maximum tenancy length.
• Letting to tenants in receipt of housing benefit is acceptable.
• 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

Buy-to-Let Portfolio Landlords

A portfolio landlord is defined as having four or more mortgaged BTL properties on completion of the new transaction. For joint applications, this includes mortgages held together or separately.

• The maximum LTV we will accept is 75%
• The maximum BTL exposure with Virgin Money is five BTL mortgages or £3m
• Minimum 24 months experience of letting properties is required at the time of application
• Personal income will not be considered to meet any rental shortfalls on portfolio landlord applications

Existing portfolio checks:

• The maximum number of mortgaged BTL properties (across all lenders) is 10 including Virgin Money security.
• At an aggregate level, the Portfolio must not exceed 75% LTV, with a minimum interest cover ratio of 135%, at an interest stress rate of 5% excluding Virgin Money security.
• Landlord criteria (including Virgin Money security) no more than five BTL properties, either mortgaged or mortgage free, can be within the same post code e.g G1 2HL.

We require the following forms to be completed for each of your landlord clients:

1. Business Plan and Cashflow which can be downloaded from the useful downloads section
2. Property Schedule, which must be submitted through BTL Hub. A template can be downloaded from the useful downloads section, or you can use your client’s own

Portfolio landlord balance swap remortgages and product transfers

If your portfolio landlord client is wishing to secure a new deal without taking any additional borrowing, either through a remortgage to Virgin Money or through a product transfer:

• We do not require a Business Plan and Cashflow form
• You do not need to upload details of their property portfolio into the BTL Hub
• The additional criteria for BTL portfolio landlords will not apply i.e. existing portfolio checks and landlord criteria.

Please see the table below to confirm when the additional portfolio landlord criteria applies:

		BTL customer type
		Non-Portfolio Landlord	Portfolio Landlord Purchase*	Portfolio Landlord Remortgage / Product Transfer, increasing balance	Portfolio Landlord Remortgage / Product Transfer, no increase in balance
Lending criteria	Maximum BTL exposure with Virgin Money	3 properties	£3m/5 properties	£3m/5 properties	£3m/5 properties
	Minimum 24 month's landlord experience	n/a			n/a
	Maximum ten mortgaged BTL properties (across all lenders)	n/a			n/a
	Maximum five BTL properties in the same postcode e.g G1 2HL	n/a			n/a
	Maximum 75% LTV across portfolio (at an aggregate level)	n/a			n/a
	Assess your aggregate portfolio using a minimum rental calculation of 135% ICR stressed at 5%	n/a			n/a
	Personal income accepted to cover any shortfall		n/a	n/a	n/a
Documentation	Property schedule - upload to our BTL Hub	n/a			n/a
	Business Plan and Cashflow form	n/a			n/a

^* For customers choosing to port their existing Virgin Money mortgage to a new property, our portfolio landlord purchase criteria and documentation requirements apply.