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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Cladding

This section relates to customers who are looking to purchase, or who already own a property impacted by potentially unsafe cladding or balconies. These are known as External Wall Systems (EWS).

Multi storey buildings which have multiple occupancy and are either:

• Under 11 metres AND 4 storeys or less, anywhere in the UK, or
• 11 metres or more OR 5 storeys or more, in Wales, Scotland or Northern Ireland

Our valuation policy will ensure that a professional valuation is undertaken for these properties. Where the valuer has fire safety concerns with the External Wall System or any other fire safety concerns, they will request a completed External Wall Fire Review Form (EWS1), in line with RICS guidance. Our appointed valuer will check their database to confirm the property’s EWS1 status. Where they are unable to do so, we will request the EWS1 form. The EWS1 form should be sent directly to us.

The EWS1 form is the responsibility of the building owner (property owner in Scotland) to undertake. They must appoint a qualified member of one of the appropriate professional bodies to complete and sign the form. The form will confirm that the EWS has been assessed and provide it’s safety rating. The rating will determine whether we are able to progress the case.

A rating of A1, A2 or B1 will mean that the valuer will determine whether the case can progress and where acceptable, provide an amended valuation report.

A rating of A3 or B2 will mean that the property will be declined where affected by cladding and remediation is required.

Multi storey buildings in England which have multiple occupancy and are either:

• 11 metres or more, or
• Have 5 or more storeys

Where a valuer has identified any significant fire safety concerns, or the EWS1 form rating is either A3 or B2, they’ll let us know if remediation of the property has been agreed to be funded by either Government funding or by the Developer, if known. We’ll then get in touch requesting the following:

• An executed Leaseholder Deed of Certificate.
• An executed Landlord Certificate (for applications where the building is being fully remediated under the Building Safety Act or by the Developer, this certificate will not be required).

Please note that we aren’t accepting applications from non-qualifying leaseholders.

We must be satisfied with the information provided to allow us to proceed. You can find more guidance on this documentation on the government website.

Existing Mortgage Customers

We are here to support our existing customers who have a mortgage on a property that is impacted by potentially unsafe EWS. When their current mortgage deal ends we will offer a new mortgage product, just as we always would.

For changes to an existing Virgin Money mortgage we will assess each case based on individual circumstances. As a responsible lender, any application for additional borrowing from customers impacted by unsafe EWS will be carefully considered before a decision is made.

For any other questions relating to EWS please refer to the FAQs provided by RICS or visit the Government’s website to view their guidance on cladding.

Consent to Let

This section relates to letting properties mortgaged with Virgin Money on a residential basis. For our policy and requirements on letting properties mortgaged elsewhere please see “Let to Buy”.

Qualifying residential mortgage customers are able to seek permission from Virgin Money to let their property on a temporary basis.

• The mortgage must be at least 6 months old
• Minimum personal income £25,000
• Maximum LTV 80% (for loans greater than £350k the maximum LTV is 75%)
• The maximum period we can agree is 12 months (customers can apply for an extension at the end of that period)
• Lodgers/holiday lets are not acceptable
• Affordability will be based on rental calculated at 125% of the mortgage interest at a notional rate of 5% or product rate plus 1%, whichever is higher
• Personal income cannot be used to support the affordability assessment
• To confirm the monthly rental income we will require:
  
  If the property is yet to be let:
  • A letter from a reputable letting agent which would include:
    • Members of Association of Residential Letting Agents (ARLA)
    • Members of The Property Ombudsman scheme
    • Members of The Royal Institution of Chartered Surveyors (RICS)
  If the property is already let and the request is for an extension:
  • A current Assured Shorthold Tenancy agreement (or Scottish / Northern Ireland equivalent)

Contractors

Can be classed as employed for income and affordability purposes providing they can meet the following criteria:

• Minimum income of £50,000
• Minimum of 12 months contracting experience or a two year track record employed in the same line of work
• A minimum of three months remaining on current contract or evidence of renewal
• No more than 6 week break between contracts
• It is acceptable for a professional contractor to have a limited company providing they do not employ other contractors or have more than one contract

Income for professional contractors must be evidenced by the current and previous contract (or previous P60s where they have been contracting less than 12 months) and three months’ bank statements evidencing the credits from the contract. Bank statements must evidence receipt of the full contract value. If a lower amount is received, please provide a detailed explanation for any deductions. Where a contractor is paid via an umbrella / payroll services company, please also provide the last 2 months’ payslips.

For contractors who earn less than £50,000 or are employed on a fixed term / agency basis, evidence of a two year track record of this income type must be provided.

Umbrella / payroll services companies & IR35:

• Contractors falling inside IR35 are acceptable.
• Use of a payroll service (umbrella) company is acceptable.
• Bank statements must evidence receipt of the full contract value. If a lower amount is received, please provide a detailed explanation for any deductions.
• Where a contractor is paid via an umbrella / payroll services company, please also provide the last 2 months’ payslips. We will deduct any statutory employer costs (including employer National Insurance contributions and Apprenticeship Levy) and any payroll service costs from the gross pay before multiplying by 46 weeks.

If the above criteria cannot be satisfied then contractors will be treated as self-employed. Therefore two years accounts or two years HM Revenue & Customs (HMRC) SA302 and corresponding Tax Year Overviews* will have to be provided to evidence income. In this instance you should input your clients as self-employed

*HRMC SA302’s and corresponding Tax Year Overviews are acceptable if printed by HMRC or from your customers online HMRC Account. The Tax Calculation document printed from the customer's online account must indicate the tax return is 100% complete for each year evidenced.

Debt Consolidation

If your customer is looking for additional borrowing for debt consolidation the maximum LTV for residential and BTL is 80%.

Dependant Relative Purchase

Where a second property is purchased for a dependant relative the maximum LTV we will lend is 75%.

Two expenditure forms will be required for each property and must show all essential outgoings to cover each household.

Dependants

A dependant for Virgin Money Mortgage purposes is a person who is not named on the mortgage but is supported financially by a party to that mortgage.

For example a dependant could be a child who is under 18 years of age, a child over 18 years of age but whose parents are funding them at University, a spouse or partner with no income who is not named on the mortgage, or an ageing relative in permanent care or living with the customer.

Discounted Purchase

We will accept 100% of discounted purchase price, or the maximum LTV permitted on valuation. No additional deposit is required from applicant.

We will only accept this if the concessionary purchase or equity gift is from an immediate family member for example, Mother / Father / Siblings / Grandparents.

Virgin Money will not accept any application where the vendor will continue to live in the property being sold.

Execution Only

We accept execution only applications in addition to advised mortgage business. Execution only is restricted to specific customers and the following qualifying criteria must be met:

• High Net Worth Customers: Please send us a signed written statement from a suitably qualified professional adviser of the applicant confirming the high net worth definition is met. Whilst we will accept high net worth applications on an Execution only basis, we will not be able to provide bespoke Illustrations or offers in accordance with the ‘tailored provisions’ rule in the MMR

• Mortgage Professionals: Please send us credible evidence that the applicant(s) meets the definition of a mortgage professional. For Example, for a Mortgage Advisor we would need to see evidence of their professional qualifications, such as CeMAP certificate

• Existing Virgin Money Customer Porting: These applicants will only be available on a straight balance swap basis. Any porting cases requesting additional borrowing must be on an advised basis, unless the customer meets the high net worth or mortgage professional criteria

Expenditure

The following non-exhaustive list shows the items of expenditure that must be gathered at the time of application and taken into account when assessing affordability:

• Household and Communications (Council Tax, Utilities (Electricity, Gas, Water etc), Telephone and Internet, TV and Satellite)
• Annual ground rent and service charges
  
• Housekeeping (Food, Drink, Tobacco, Clothing and Footwear, Pets, Medical/Glasses/Dental)
• Childcare/Education (School/College/University Fees, Childcare/Babysitting)
• Car & Travel (Vehicle Tax/Insurance, Vehicle Maintenance, Fuel, Public Transport, Travel Season Ticket - if deduction appears on the customer payslips)
• Insurance & Investments (Buildings and Contents, Life Assurance/Endowment Policies, Private Pension, Company Pension / AVC's (if deductions appear on the customers payslips), Household Insurances)
• Maintenance/CSA Payments

Where appropriate the household expenditure must relate to the new property. There may be other regular expenditure relevant to a particular customer to be considered within the lending decision (e.g. utility bills of second home).

Any essential deductions from payslips for example, pension, student loan, or childcare vouchers must be included in the affordability assessment.

To avoid delays in processing your application please ensure the Monthly Essential and Regular Expenditure form is fully completed and sent to Virgin Money as follows:

Email: docs@virginmoney.com

Fax: 0345 603 5885

As a responsible lender and in order to fully assess that the mortgage is affordable in all circumstances, the declared level of expenditure will be assessed by Virgin Money and must be reasonable based on the context of the profile of the customer, it is therefore important that an accurate level of expenditure is declared.