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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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Cashback

We offer a range of products with a cashback incentive to help your clients with the costs related to buying a new property or taking a new mortgage. Your clients can use the money in any way they choose, for example to cover legal or valuation fees or to help decorate their new home.

The cashback will be paid upon completion of your client's mortgage and there will be no claw back associated with the incentive.

Please note the cashback incentive offered on selected products is not available to customers who are porting, including when taking additional borrowing.

Consent to Let

Consent to Let (CTL) must be supplied from the existing lender on a property that is to be let where the applicants are purchasing a new residential property.

In addition we require confirmation of rental income from a reputable Letting Agent confirming the potential rental income, a copy of the Assured Shorthold Tenancy agreement (or Scottish / Northern Ireland equivalent) or bank statements confirming the rental credits. Letting to tenants in receipt of housing benefit is acceptable.

Affordability will be based on rental income of at least 145% of the mortgage interest calculated in one of the following ways:

  • All products, with the exception of five year fixed rate, will be calculated at a notional rate of 5.50%.
  • Five year fixed rate products, will be calculated at 5.00%.

If there is a rental shortfall between 100% and 145%, calculated at a notional rate of 5.50%, we will accept the customer's personal income to cover this. Where personal income is used for affordability, a minimum combined gross income of £50,000 is required.

Contractors

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

Currently on a 12 month contract:

  • Current contract must have at least six months remaining, or evidence of new/renewed 12 month contract must be provided. The customer's previous contract must also be provided and show a term of 12 months, and continuous employment on this basis (i.e. no more than a two month gap between contracts)

Currently on a six month contract:

  • Current contract must have at least three months remaining, or evidence of new/renewed six month contract must be provided and evidence of 24 months continuous employment on this basis (i.e. no more than a two month gap between contracts)

12 & six month contracts:

  • The current contract value will be used unless its value is higher than the previous, in which case an average of the two will be used
  • Affordability must be based on the lower of the value of the contract or what has been paid to the customer, evidenced from six months bank statements (note: tax and NI will also be deducted)
  • Contracts of less than six months or for seasonal work will not be considered
  • A contract must be in place and the customer cannot be employed on a day-by-day basis

If the above criteria cannot be satisfied then contract workers 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.

Credit Score

A credit score will be performed for all customers. One of five initial decisions will be provided when a Virgin Money Credit Score is completed:

  • High Accept
  • Medium Accept
  • Low Accept
  • Refer - Application will be assessed by an underwriter. For an updated decision you can check VMO case tracking
  • Decline - Application cannot proceed

When we assess mortgage applications, we consider your client’s affordability, credit profile and previous credit conduct.

Custom Build

With custom build, buyers build their own home on a pre-approved serviced plot of land (for example, with all utilities on site). It gives customers the freedom to choose the plot, builder, design and layout of their new home.

We are working in partnership with BuildLoan to help your customers realise the dream of building their own home with our residential Custom Build mortgages.

Custom Build sites we will lend on will be proposed by BuildLoan and pre-approved by Virgin Money.

Exposure is restricted to a maximum of 20% of the Custom Build plots on the site unless previously agreed.

Standard lending policy applies in all instances subject to the following additional requirements:

Repayment of the loan

During the build phase or a maximum of 24 months the loan will be on an interest only basis i.e. the customer will only make interest payments and they will not repay the capital.

When the customer(s) opts to switch from an interest only loan to a standard residential loan they may choose to repay the loan on a capital and interest basis or on an interest only basis subject to them complying with interest only policy requirements at that time.

Affordability

We will carry out two affordability assessments before deciding how much a customer can borrow. The customer must meet both affordability criterias, including:

Capital and Interest Affordability Assessment

  • Affordability must be confirmed on a capital and interest basis, using the full loan amount to calculate the monthly mortgage payment.
  • This assessment must be based on the costs associated with the new property and all the customer financial commitments and expenses.
  • Where the customer has an existing residential mortgage in place at the start of the mortgage term, we will assume this property will be let out when the Custom Build property is completed. The loan will therefore be treated as self-supporting where the monthly rental income covers the mortgage payment by 145%. If the loan does not cover the mortgage payments by 145%, the shortfall must be included as a financial commitment.
  • To confirm the prospective monthly rental income a letter is required from a reputable Letting Agent, which would include Members of the Association of Residential Letting Agents (ARLA), Members of the Property Ombudsman Scheme and Members or Fellows of the Royal Institution of Chartered surveyors (RICS).

Interest Only Cash Flow Assessment

  • The customer will also be required to pass an initial cash flow assessment on an interest only basis covering the customer’s expenditure including the current mortgage/rent payment during the build phase of the mortgage, the customer’s financial commitments and essential expenditure. The full loan amount must be used to calculate the monthly mortgage payment.
  • The customers declared expenditure must cover the property in which they are living and any additional ongoing expense relating to the property being built.

The loan will be stressed in line with our standard lending policy.

The loan

  • Available to residential customers.
  • Maximum income multiple of x4.49 (based on allowable income e.g. 60% of bonuses).
  • Maximum loan £500,000.
  • Maximum LTV 85%. No staged release to be greater than 85% Loan to Cost (LTC) of the value of the property at that stage of the build. Maximum LTV and LTC for properties valued at over £500,000 is 80%.
  • Guarantors are not accepted.

Property

  • We will lend on Custom Build detached houses only.
  • Help to Buy Equity Loan is not available with a Custom Build mortgage.
  • The property must have a New Build Warranty, acceptable to us, in place from the start of the build.

Valuation

The property must be inspected at all stages. This includes:

  • A mortgage valuation will be undertaken at the start of the mortgage process. The report will include an estimated value of the property when complete and a valuation of the land (plot).
  • At each of the interim stages a re-inspection report will be required. The report provided by the valuer will include confirmation the build is proceeding to plan and to a satisfactory standard.
  • Prior to the final release a re-inspection report and valuation will be instructed and must include confirmation the property has been constructed in line with the plans and to a high standard and confirm the value of the property now it is fully constructed, before we will release the funds.

Staged Releases

  • We will consider a maximum of five staged releases during the building of the property depending on the circumstances of each build.
  • Maximum LTV 85% on purchase of the land and completion of the mortgage. A staged release cannot be greater than 85% LTC.
  • We will only make a staged payment when a signed request is received from the customer, an interim certificate from the warranty provider and satisfactory report including valuation from the valuer. A staged release payment can be made if this information is not received.
  • We will only release staged payments to the customer’s bank account used to pay their mortgage and this will be paid by Direct Debit.

Insurance

  • We require Build Out Cover Insurance and Mortgage Indemnity Guarantee Insurance to be in place during the build phase of the property. This will be arranged by BuildLoan on behalf of us on receipt of the Certificate of Title. Premiums will be paid by us.
  • The property and the build must have an adequate Contractors All Risk insurance cover (also known as contract works or self-build insurance) during the build phase.

The insurance cover must provide the following:

  • At least 125% of the professional reinstatement cost.
  • Public liability insurance of at least £5,000,000.
  • Employers’ liability insurance of at least £5,000,000.
  • Where possible we should be named as the joint insured, but where this is not possible our interest should be noted.

The customers solicitor must confirm Buildings Insurance including all perils is in place on completion of the build phase of the property.

New Build Warranty

An insurance backed New Build Warranty must be in place from the start of the build. The warranty provider must certify at each stage of the property build that it is proceeding to a satisfactory standard.

Offer

An Offer on a Custom Build mortgage is valid for 16 weeks.

We may be able to provide an Offer extension for a further eight weeks subject to the application being re-underwritten against current lending policy.

This requires:

  • A new credit score, updated affordability, income documentation and any supporting documentation requested on the initial assessment.
  • A referral to the valuer seeking confirmation the property value provided in the original mortgage valuation remains appropriate. If the valuer provides an updated property valuation, lending must be calculated using the updated valuation.
  • The customer will also be required to choose a new mortgage product from the current range.
Customer Types

Customers can be one of four types:

  • First Time Buyer (FTB) - not eligible for interest only or part and part mortgages
  • Next Time Buyer (NTB)
  • Remortgage
  • BTL (Remortgage and Purchase)
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.

Employment Types

Virgin Money considers customers will fall in to one or more of 4 employment categories:

  • Employed
  • Self Employed
  • Contractors
  • Retired
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
Existing Customers Moving Home (and taking an entirely new product)

All customers who are moving home also have the option to take a new mortgage product from our prevailing range for the entire loan for their new property. Provided the new loan completes within three months of redemption of the existing loan they may receive a refund of 50% on any applicable Early Repayment Charge, subject to their original terms and conditions.

Existing Customers Not Moving Home

All existing Virgin Money mortgage customers (residential and BTL) can request a pound for pound product transfer, at any LTV.

Additional borrowing may be available up to a maximum of 85% LTV, subject to full underwriting. Where funds are to be used for debt consolidation the maximum LTV is 80%.

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.