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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Identity Verification

A customer's identity can be confirmed either electronically, with documentary evidence, or a combination of both.

Electronic evidence:

• One active Voters Roll 'hit' and one active credit item - at current address
• Two active credit items - both at current address

When sending supporting documents electronically we will accept scanned copies or photographs sent from your business email. Don’t forget to send one email per case and include the 8-digit mortgage/case number in the subject line, along with supporting documents as attachments.

Documentary evidence:

Where the customer(s) cannot be identified electronically, documentary evidence must be provided. One document from List A and one from List B must be provided.

List A - Government issued Documents

List B - Other Documents

Valid passport. Valid photocard driving licence (full or provisional, as long as the photo and licence are valid). Full old-style driving licence issued before 1998. Valid firearm certificate or shotgun licence. National identity card (if you are a non-UK national). HM Revenue & Customs letter (coding confirmation/assessment letter/tax credit) quoting your National Insurance Number. Local Authority Housing Benefit letter to you confirming your benefits at time of issue. State or Local Authority Educational grant (e.g. educational grant) letter. Department for Work & Pensions letter confirming your benefits or pension entitlement at time of issue. Current Northern Ireland Electoral ID Card. Immigration Status Document (ISD) / Biometric Residence Permit (BRP).

Current Bank or Building Society statement issued to the customer's home address. This can not be downloaded from the internet or be from Virgin Money Utility bill (e.g. gas, electric, water, home telephone bill – we can’t accept mobile phone bills) no more than 3 months old Current Council Tax demand letter or statement

Incentives

Clients buying a new build property may receive an incentive from the builder or developer to purchase the property. This must be declared at the time of application, or later if the incentive changes.

Cash incentives

Cash incentives of up to and including 5% of the purchase price are acceptable up to 90% LTV without affecting the loan amount. For LTVs up to 90% where the value of the cash incentive is greater than 5%, the balance of the incentive above 5% must be deducted from the purchase price when calculating the maximum loan amount. Where the LTV is greater than 90%, cash incentives must be deducted from the purchase price when calculating the maximum loan amount.

We accept the following cash incentives:

Acceptable cash incentives	Houses & Flats up to 90% LTV	Houses over 90% LTV
Cashback deals
Stamp Duty (Land and Buildings Transaction Tax in Scotland) paid
Payment of fees to professionals, such as solicitors and valuers
Guaranteed rental payments for a period after completion
Gifted deposit from the builder or developer (please note, family gifted deposits are acceptable in line with standard policy and do not need to be deducted from the purchase price)

Non-cash incentives

Acceptable non-cash incentives	Houses & Flats up to 90% LTV	Houses over 90% LTV
White goods (where not included as standard specification)
Carpets and curtains
Kitchen upgrade (including tiling and worktops)
Bathroom upgrade
All electric upgrades (i.e. additional sockets, TV points, etc)
Turf and landscaping

Part-exchange transactions

Where the builder or developer is purchasing the customer’s existing residential property part-exchange transactions are acceptable. We will accept this in addition to cash and non-cash incentives.

Part-exchange is not available on a Help to Buy: equity loan.

Declaring incentives

Incentives must be clearly set out on the application form.

If the valuer confirms they have seen the CML Disclosure of Incentives form and has quoted the property valuation as net of any incentive above the 5% limit, no further discount applies.

The below examples demonstrate how to calculate the maximum loan when the customer is in receipt of incentives:

House – Purchase price £200,000 with 5% cashback from the builder.

Valuation amount	Purchase price	Net purchase price	VM lend maximum 85% LTV
£200,000	£200,000	£200,000	£170,000

House– Purchase price £200,000 with 15% cashback from the builder.

Valuation amount	Purchase price	Less 10% incentive (15% – 5%)	Net purchase price	VM lend maximum 85% LTV
£200,000	£200,000	£20,000	£180,000	£153,000

Flat – Purchase price £200,000 with £830 rental contribution per month paid by the developer for 2 years (i.e. £19,920 an incentive of 9.96%).

Purchase price	Less 4.96% incentive (9.96% - 5%)	Net purchase price	VM will lend maximum 75% LTV
£200,000	£9,920	£190,080	£142,560

Income Verification for Contractors

If the customer is employed on a fixed term contract and earns over £50,000 per year and has no more than a six weeks break between contracts the following income verification must be provided:

• Copy of the current contract with a minimum of three months remaining or evidence of renewal.
• Previous contract (or previous P60’s where they have been contracting less than 12 months)
• Three months bank statements evidencing the credits from the contract.

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.

For those contract workers 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. If the above criteria cannot be satisfied then contractors will be treated as self-employed.

Example of how to calculate income for Contractors:

• Current contract £500/day, bank statements show average £480 / day
• Which is lower, bank statements or contract value? £480/day

Therefore affordability will be based on earnings of £480/day which would mean the customer's total gross annual income will be calculated as:

• Weekly - £480 multiplied by 5 = £2,400
• Annually - £2,400 multiplied by 46 = £110,400 (a 46 week year must be used to account for holidays)

When assessing a Contract Worker for a residential loan (or further borrowing) we will only consider income being used to assess affordability paid in GBP / £Sterling. We will require evidence of this income.

* HMRC 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 customers online account must indicate the tax return is 100% complete for each year evidenced.

Income Verification for Employed and Retired Customers

For employed and retired customers:

Employment Type	Income Verification Requirements
Employed (Standard)	Last monthly payslip or last four weekly payslips.
Employed (Weekly/Monthly Variable Income)	Last two monthly payslips or last eight weekly payslips.
Employed (Annually/Half-yearly or Quarterly Variable Income)	Latest P60 or payslip(s) showing the bonus paid. If bonus is more than the basic pay we need the latest 2 P60s or payslip(s) showing bonus over 2 years.
Retired	Latest annual pension statement (must be dated within the last 12 months), or latest two monthly pension slips, or latest two monthly bank statements showing pension credits, or latest P60 or SA302

*If the loan is greater than £1million we need the last two years P60’s to evidence variable income.

Last two 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
• 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)

Please note the income verification required is determined by the customers employment status. 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.

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

Income Verification for Limited Liability Partnerships

Employment Type

Income Verification Requirements

Limited Liability Partnerships

Last two years' compensation statements (which provide a breakdown of the customer's total remuneration for that particular year), or letter from HR/Finance Director verifying the total remuneration for each of the last two years, or last two years HM Revenue & Customs (HMRC) SA302 and corresponding Tax Year Overviews* The latest month’s business or personal bank statement showing remuneration received. Bank statements are not required for non-equity partners.

*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.

Income Verification for Self Employed Customers

Virgin Money require the last two years accounts, or last two years HM Revenue & Customs (HMRC) SA302 and corresponding Tax Year Overviews.*

Virgin Money will consider 100% of the average of the last two years net profit after corporation tax for Self Employed customers, as long as the following conditions are met:

Income - 100%

For Limited Company Directors the last two years’ full accounts and latest month’s business bank statements will be required. We will also request an accountant’s covering letter on your behalf. For Sole Traders and Partnerships we require the last two years’ SA302s and corresponding Tax Year Overviews. The latest month’s business bank statement must also be provided. Where the loan is greater than £1million we will require two years full accounts or SA302’s and the company must have been trading for a minimum of three years. Where net profit is decreasing the lower figure will be used provided the business is on track to make the same or increased profits in the next financial year. Evidence from a suitably qualified accountant must be provided.

The customer's drawings do not exceed the net profit of the business for two years running and the company has a positive net worth (i.e. positive capital account or assets outweigh liabilities). The company's capital account is not in deficit / Asset's must outweigh the liabilities in each of the last two years. The company and their auditors must be registered in the UK Acceptable Accountants qualifications are amongst the following - ACA, FCA, CA, ACCA, FCCA, AAPA, FAPA, ACMA, FCMA, MAAT, FMAAT, AAIA, FAIA, AFA or FFA.

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.

*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. Please note - If the customer is classed as self employed by way of having a 20% or more shareholding in a Limited Company, HMRC SA302's are not acceptable as income verification.

Income and Affordability

The maximum loan to income (LTI) is 5x, subject to affordability. The following exceptions apply:

Maximum 4.49x

• Remortgage with no additional borrowing where the LTV is over 85%
• Purchase or remortgage with additional borrowing where the LTV is over 80%
• Total allowable income of all applicants is less than £50,000
• The mortgage is interest only or part & part
• The mortgage is Shared Ownership
• Any applicant is self employed or a contractor

Maximum 5.5x

• Total allowable income (sole or joint) is £100,000 or more, no applicants are self employed or contractors, the LTV is 80% or less, borrowing is on full C&I, and the case is not Shared Ownership
• Remortgage with no additional borrowing where the total allowable income (sole or joint) is £50,000 or more, the LTV is 85% or less, borrowing is on full C&I, and the case is not Shared Ownership

The above income multiples are based on our usual allowable types of income, e.g. 60% of bonuses

To understand how much your client may be able to borrow please visit our affordability calculator.

Income - 100%

Variable - 60%

Gross Basic Salary Housing Allowance Mortgage Subsidy Large City Weighting Disability Living Allowance Disabled Persons Tax Credit War Disablement Pension Employment and Support Allowance Permanent Shift Allowance Pensions Pension tax credits Annuities Maintenance (in existence for 2 years and payable under a court order / CSA - should cover the full term of the mortgage) Car Allowance Other contractual Allowance Agency / Fixed term contract employment Parental leave

Monthly bonus Non-permanent Shift Allowance Monthly commission Performance related pay Monthly Overtime Quarterly bonus Annual / half-yearly bonus

For variable pay received annually, six monthly or quarterly, we will use 60% of the most recent year. If the variable income exceeds basic income, we’ll use 60% of the 2 year average (most recent year if lower).

For variable pay received monthly, we will use 60% of the variable pay from the lowest of the most recent two payslips. If the year to date figure is lower, we’ll use 60% of the variable pay showing in the YTD.

Exceptionally, we may be able to use up to 75% of variable income where a 3 year track record of stability is held (2 years if monthly or more regular). This must be agreed with us before applying.

We will accept 50% of income from 2nd Job (including Territorial Army reservist allowance)

For details of how Virgin Money assess acceptable income types, view our Employed Income useful guide.

Virgin Money will not consider the following, non exhaustive list of income:

Seasonal Overtime State Benefits (other than pension or disability) One-off payments Dividends Piece work Third jobs Bursaries Expenses Investment income

Care Workers Allowance Probationary Income (Where no track record or permanent status is proven) Child Tax Credit Working Tax Credit Temporary work Housing benefit Income from lodgers Income not paid in GBP/£sterling

If the customer has not been in their current job for the past year then providing they have been in similar employment in the past, and can evidence a consistent level of income from both their current and previous job, by way of their last P60, this income can be taken into consideration.

Interest Only

Residential mortgages are available on an interest only basis up to maximum 75% LTV (65% if repayment vehicle is sale of property).

All of our Buy-to-Let products are available on an interest only basis up to maximum 80% LTV (LTV restrictions also apply, please see Maximum LTV section).

Residential Interest Only key criteria

• Maximum 75% LTV (65% if repayment vehicle is sale of property).
• Applicants must have a combined minimum gross income of £75,000 (including 100% of additional income such as bonuses, overtime etc).
• Interest only and part and part loans.
• A maximum loan-to-income multiple of x4.49 applies to interest only and part and part loans.
• Minimum £300,000 equity where using sale of mortgaged property as repayment vehicle.
• Capital raising for debt consolidation is not permitted.
• We do not currently offer interest only mortgages to first time buyers.

Repayment strategies

All interest only applicants must have at least one of the following repayment strategies in place, to cover the balance of the loan at the end of the mortgage term. The repayment strategy must be in the name of the applicant(s), and substantiated with documented evidence:

• Endowment Plan
• Managed Investment Plan
• Personal Pension Plan
• Sale of mortgaged property – maximum 65% LTV. Minimum £300,000 equity required. Lending into retirement not allowed if repayment vehicle is sale of property
• Sale of other property – not main residence – to cover 110% of the interest only element (maximum 65% LTV on residential)
• Managed share portfolio (must cover 110% of the interest only element at the time of application)

It is the customer's responsibility to monitor the chosen repayment strategy to ensure it is on track to repay the mortgage balance at the end of the term. Periodically we will ask for information on the performance of the repayment plan.

This table shows the evidence required substantiating each repayment strategy, and how we will assess it.

Acceptable Repayment Strategies	Evidence Required	Assessment
Managed Investment Plans (including Unit trusts / Open Ended Investment Companies (UK), Investment Bonds (UK), Stocks and Shares ISA (All stocks and shares held in a Stocks and Shares ISA must be FTSE listed. The investment and return must be in Great British Pounds / UK Sterling Only).	Copy of latest projection statement dated within last 12 months.	Allow up to 100% of projected amount using the middle % figure currently 6%. Amount must be equal to or greater than the Virgin Money mortgage.
Pension (Company or Individual Plan).	Copy of latest statement dated within last 12 months.	Allow 100% of the tax free lump sum (which is 25% of the projected value at retirement age). Amount must be equal to or greater than the interest only element it is being used to cover.
Sale of mortgaged property	Virgin Money will carry out a valuation of the property.	Must meet agreed lending policy including LTV and minimum equity.
Sale of other property (Must be located in the UK).	Virgin Money will check property ownership via Land registry check and determine value. A copy of the latest mortgage statement dated within last 12 months is required.	Customer's equity must be equal to or greater than 110% of the interest only element if being used to cover. This is to allow for property fluctuations and sale costs.
Managed Share Portfolio (Only UK based investments quoted within the FTSE index held in sterling are acceptable).	Copy of share certificates, nominee account statement or confirmation from an authorised stock broker containing evidence of share holdings together with their valuation (must be dated within the last 12 months).	Allow the face value which must be equal to or greater than 110% of the interest only element it is being used to cover. This is to allow for fluctuations in share prices and sale costs.
Endowment Policy (Both with profits and unit trusts).	Copy of latest projection statement dated within last 12 months.	Allow up to 100% of projected amount using the middle % figure currently 6%. Amount must be equal to or greater than the interest only element it is being used to cover.

Important Notes:

1. For stocks and shares ISA it is not possible to obtain a projection therefore current values must be used.
2. The repayment vehicle must be in Great British Pounds (GBP)/£ Sterling. For example a second home in Spain is not acceptable as a repayment strategy.
3. The maximum LTV for sale of mortgaged property and sale of other property is 65%.
4. Sale of VM mortgaged property (either main residence or non main residence) must not be used with any other repayment vehicle.

Joint Borrowers (Non Resident)

This will occur where a customer (must be UK resident) joins the mortgage as joint borrower rather than Guarantor, but will not be residing in the property.

They must be able to afford all existing mortgages and credit commitments in addition to the mortgage on the property they are not occupying.

As the property will not be the main residence of one customer, the maximum LTV available is 75%.