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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Offers

An Offer is valid for 26 weeks (six months) from the date of issue.

Offers – new build

An Offer for a new build property is valid for 30 weeks (seven months).

We will be able to provide an Offer extension for 30 weeks (seven months) subject to the application being re-underwritten against current lending policy.

In order to request an offer extension, you must provide the following:

• A new credit score, updated affordability, income verification and an update of any requested supporting documentation requested in the original application.
• A referral to the valuer seeking confirmation that 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 lower of the updated valuation or purchase price.
• The customer will also be required to choose a new mortgage product from those currently available.

Please note, when assessing a new build Offer extension, your client will not be charged an additional valuation or Application Fee.

Parental Leave

If a customer is anticipating a temporary reduction in their income, for example, when on parental leave, 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 examples below 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 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.

Pensions

Pension Income

Where the term of the mortgage takes the customer beyond their anticipated retirement age, or the customer is already retired, details of pension income are required.

The maximum age we will consider accepting employed income is age 67 unless the customer declares a lower anticipated age of retirement.

Acceptable pension income paid in GBP / £Sterling is:

• Occupational pension (final salary, money purchase)
• State pension
• Annuities
• Personal pension plan, e.g., Stakeholder Pension, SIPP (Self Invested Personal Pension)
• Pension Tax Credits

The pension scheme must be approved by HM Revenue & Customs (HMRC).

Evidence of Pension Income

Evidence of pension income, and confirmation it is paid in GBP / £Sterling, must be in the form of one of the following:

• Latest annual pension statement (must be dated in last 12 months)
• Latest pension slips
• Latest months' bank statements showing pension credits
• Latest P60, or HMRC SA302 and corresponding Tax Year Overviews.*
• Pension Tax Credits

The pension scheme must be approved by HM Revenue & Customs (HMRC).

Please note, if a pension slip is provided to support the application, and this clearly states what the customer's annual pension is, then it can be accepted in lieu of an annual pension statement.

Pension Contributions

Contributions to Private Pensions, Company pensions and Additional Voluntary Contributions (AVC’s) must be included as expenditure for the purposes of affordability.

See the Expenditure Section for more details.

*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.

Porting (Moving Home)

Products launched before 12 May 2008
Customers who completed onto products launched prior to 12 May 2008 will be able to port their existing mortgage balance, or a reduced balance, subject to any applicable Early Repayment Charge. If your customer requires additional borrowing to purchase their next property, they will be able to apply for the additional amount at the same rate as their existing product. Applications must fit all lending criteria, including maximum LTV, credit scoring and affordability assessments.

Products launched on or after 12 May 2008
Customers who completed onto products launched on or after 12 May 2008 will be able to port their existing mortgage balance or a reduced balance subject to any applicable Early Repayment Charge.

If your customer requires additional borrowing to purchase their next property, they will be able to apply for a new product for the additional amount from the purchase product range available at that time. The additional borrowing product must be from the same product family as the main loan, i.e., Everyday or Flexible.

• 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.
• Customers redeeming and completing on different days
  If a customer does not repay the loan on their property on the same day as they complete the loan on the next property, then any applicable Early Repayment Charge will be payable in full on the day they redeem. If they complete the loan on the next property within three months of redeeming, then the Early Repayment Charge will be refunded. If there is a reduction in the balance, any applicable Early Repayment Charge will be payable on the difference.
• Existing Virgin Money mortgage customers moving home and purchasing a Shared Ownership property
  Customers buying a Shared Ownership property must select a Shared Ownership product from our current product range. Providing the new loan completes within three months of redeeming their existing loan, the customer will receive a refund of 100% of any applicable Early Repayment Charge. If there is a reduction in the balance, any applicable Early Repayment Charge will be payable on the difference.

Please refer to the Offer documentation issued to your client(s) for confirmation of their terms and conditions when moving home.

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

Where an existing customer is moving home, please call us to complete a Decision in Principle. This includes porting an existing product and taking a new product. All applications must also be made using a paper application.

Procuration Fees

If your clients choose to take an entirely new mortgage product from our current range for all borrowing, or transfer the remaining terms and conditions of their current product to their new property, you will be entitled to the full procuration fee for that product.

Please refer to your club or network for details of our procuration fee package.

Premium Leases

Premium leases occur where the tenant pays rental income to the landlord in advance resulting in a long-term rental agreement.

These situations will always be referred to an underwriter where additional conditions may apply.

Probation

Virgin Money will consider probationary income where the customer has a track record of income or where permanent status is confirmed by the employer. To establish a track record of employment, the last two years' P60s must be provided.

Professional Sportsperson / Entertainers

For applicants classed as a professional sportsperson / entertainer, the following criteria will apply:

• Maximum LTV is 75%
• The applicant must have at least 12 months to run on their existing contract
• A copy of their contract and / or two years of business accounts will be required
• All cases will be referred to an Underwriter

Properties

Standard Properties

Properties should be of conventional construction.

A property is considered to be of conventional construction if it is built of stone, natural stone, reconstituted stone, cob and flint, modern timber frame, concrete block and/or brick, with either solid or cavity walls that consist of an inner and outer skin. The outer skin will usually be of stone, brick or block. The roof will be of slate, tile, thatch or felt.

The following forms of construction are considered as acceptable:

• Cavity outer walls of brick or stone with inner walls of brick or block
• Cavity outer walls of brick, stone or concrete block rendered with inner walls of brick, stone or block
• Timber framed property with outer walls of brick or stone built 1970 or after
• Timber framed property with rendered outer walls of brick, stone or block built 1970 or after
• Craft techniques and period timber framed dwellings built prior to 1900
• For pitched roofs: tiles, slate, thatch or copper
• For flat roofs: copper, lead, zinc, asphalt or mineralised felt

Leasehold properties must have an unexpired term of at least 85 years at the point of application.

We will lend up to a maximum of 20% of the units in any one block / development.

In all instances, a satisfactory valuation report is required before Virgin Money will confirm a property is acceptable.

Non Standard Properties

Some properties constructed using non conventional methods of construction may be acceptable to Virgin Money subject to a satisfactory valuation report and valuer comment.

These include properties falling into the following construction types:

• Prefabricated reinforced concrete (PRC)
• In-situ poured concrete
• Steel framed
• Timber framed
• Craft techniques and period timber framed dwellings
• Mundic properties
• Modern methods of construction (MMC)

If you believe a property is of non standard construction, please contact us for clarification prior to submitting an application.

In all cases, a satisfactory valuation report and positive valuer comment is required before Virgin Money will confirm a property is acceptable.

For full details of our policy criteria for flats and apartments, please view the Flats section.

Unacceptable Properties

The following property types are considered unacceptable for mortgage purposes. This is not an exhaustive list.

• Houses in multiple occupation (HMO)
• Leasehold properties must have an unexpired term of at least 85 years at the point of application.
• Mobile homes/caravans/park homes/houseboats
• Working farms, smallholdings and houses subject to an Agricultural Occupancy Restriction
• Affordable Housing properties, including the First Homes scheme (except Shared Ownership)
• Uninsurable properties
• Properties with expanding foam or other patented systems for internal roofing systems
• Properties built using high alumina cement or mundic properties where the property is not graded A1, A2 or A3 following a petrographic test
• Properties directly above or adjacent to premises categorised as:
  • Food and drink
  • Hot food and takeaway
  • General industrial use
  • Storage or distribution
  • Assembly and leisure
• Freehold flats (except Tyneside flat scenario)
• Properties with a gross internal floor area of less than 30m² not including balconies or covered external areas
• Studio flats
• Landlocked properties
• Properties constructed using large panel systems (LPS)
• Live/Work Units
• Properties adapted or altered for commercial use
• Prefabricated reinforced concrete (PRC) homes not repaired under an approved scheme and / or where the adjacent property has not been repaired.
• Properties with overage clauses
• Properties with pre-emption clauses (except Shared Ownership)
• Properties with ongoing structural issues
• Properties with more than five acres of land as part of the title
• Properties where power lines or electricity supply apparatus are located directly over and / or on the site which are not for domestic supply to the subject property
• Properties with more than one annexe
• Properties not recommended as suitable security by the valuer
• Timber frame properties constructed between 1900 and 1969 for the private or public sector.
• Custom build properties are not acceptable whilst the property is still under construction.
• Charges of part, this means where our mortgage won’t cover the whole of the property or title number.

Property Issues

The following non exhaustive list refers to the more common property matters which may be raised either within the content of the Mortgage Valuation Report or subsequently by the acting solicitor. These may require further underwriting as part of the processing of a mortgage case.

• Adverse comments regarding the property’s suitability for mortgage purposes
• Proximity to high voltage electrical supply apparatus (including overhead/nearby power cables, sub stations, transformer houses and communications masts)
• Adverse findings within a mining search (e.g., presence of a mineshaft in proximity to the property)
• Flooding
• HS2 or other large infrastructure projects
• Adverse findings within an enviro search where obtained (e.g., reference to contaminated land that has not been subject to remediation)
• Section 106 Agreements affecting a property
• Reference to hazardous materials including asbestos, methane gas and radon gas
• Deficiencies in the title to the property
• Short leases, i.e., properties with unexpired lease terms of less than 70 years at the point of application, will not be considered acceptable security

Where any of these issues may be suspected on a case, please contact your BDM to discuss before submitting your application.

Purpose of Loan

Capital raising is permitted; however, customer(s) cannot borrow additional money for the following:

• Debt consolidation is not permitted on an interest only basis
  
• The purchase of a time share property
• Currency speculation
• The purchase of stocks and shares
• Business purposes
• Accident, sickness and unemployment premiums
• Tax bills