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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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.

Reduction of Income

The customer must notify us of any known reduction in their income. 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 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 and the employer must provide confirmation of the return to work date and salary. Where confirmation is not received from the employer any unsustainable income, such as maternity or sick pay, will be excluded for affordability purposes.

Regular and Essential Monthly 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 and travel (vehicle tax/insurance, vehicle maintenance, fuel, public transport, travel season ticket (if deduction appears on the customer payslips))
  • Insurance and investments (buildings and contents, life assurance/endowment policies, private pension, company pension/AVCs (if deductions appear on the customer’s 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).

To avoid delays in processing your application please ensure the monthly essential and regular expenditure form is fully completed and sent to us, where requested.

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.

Remortgages

Remortgage residential and selected BTL products are offered with a free basic valuation report and free standard legal costs. For some Remortgage transactions up to 65% LTV we may use an Automated Valuation Model (AVM) where it fits our criteria.

Purchase customers will be required to pay the valuation fee. For more information and valuation fee scale, please see the Fees section.

Free basic valuation

Where remortgage products come with a free valuation incentive, customers will be entitled to a free basic valuation report on properties under the value of £3m. For properties over £3m please view our valuation fee policy. The valuation must be instructed by Virgin Money. If it is instructed by any other party, the cost of the basic valuation will not be covered by Virgin Money. If a Homebuyer’s Valuation report is chosen, your client will be required to meet all costs relating to this survey.

Free standard legal work available to clients remortgaging

We will appoint a solicitor from our panel who will act on our behalf to undertake the legal work involved. We will cover all standard legal costs but your client will be responsible for paying the costs of any additional or non-standard legal work that may be required e.g. transfer of equity, Land Registry fees, etc. If your client wishes to appoint their own solicitor they will be required to meet all legal costs.

We also consider a remortgage to include borrowing against an unencumbered property.

Rental Calculation

The rental income must cover 145% of the mortgage interest and this will be calculated in one of the following ways:

  • All products, with the exception of five year fixed rate, will be calculated at the product rate +2% or a notional rate of 5.50%, whichever is higher.
  • 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.

We will not take personal income into account to meet rental shortfalls on portfolio landlord applications, 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 a notional interest rate of 5.50%.

Repayment Methods

Virgin Money accepts the following methods of repayment:

  • Repayment (Capital and Interest) up to 95% LTV on residential and 80% LTV on BTL
  • Interest only up to 75% LTV on residential and 80% LTV on BTL
  • Part & Part (combination of both repayment and interest only) up to 85% LTV on residential and 80% LTV on BTL. Interest only element available up to a maximum of 75% LTV on residential

Please ensure you use our affordability calculator before submitting a Decision in Principle.

Replacement Property

When a purchase falls through (residential or BTL) and the client wants to transfer their application to a new property the applicant's details can be transferred to a new application.

Please use the "pre-populate" function within VMO or MTE to transfer existing application details from the DIP to a new case.

Input details of the new property within the form and select from currently available products. Give our Intermediary Relationship Support team a call on 0345 600 1516* to let us know the new application number and we will transfer any unutilised valuation fees (if the valuation has already been carried out, unfortunately we will require the fees to be paid again).

The existing application will then be cancelled.

If the original case has already been cancelled, we will allow the fees (if applicable) to be transferred up until six weeks after the date of cancellation.

When we receive the application it will be re-assessed and you will be advised of our documentary requirements in the normal way.

*Lines are open 8.30am-6.00pm, Monday to Friday excluding Bank Holidays. 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.

Retirement

If the term of the mortgage extends beyond the oldest customers anticipated retirement date, or age 67 and the customer is within 10 years of retirement, evidence of HM Revenue & Customs (HMRC) approved pension income must be obtained. Affordability will be assessed over the full term of the mortgage on the lower of the customer's current income or pension income.

The following evidence will be required:

  • Employed customers in a final salary scheme must provide their latest pension statement, or where they have made their own pension arrangements a copy of a personal pension plan is required
  • If the customer is relying on State Pension then a forecast confirming (a) the amount payable, and (b) the age from which it would be payable is required

The maximum age that VM will accept employed or self-employed income is 67

If the customer is more than 10 years from their anticipated retirement date or age 67 and the term of the loan extends beyond this age, evidence they are currently paying into a private/employer Pension Plan must be provided.

For customers whose anticipated retirement age extends beyond the age 67 then the term will be restricted, to the age of 67, if pension income cannot be evidenced.

Please note: If the customer is employed in a position where there is a compulsory retirement age this should be declared as the customers anticipated retirement age. E.g. Police Officer, Fire Fighter etc.

Statements must be dated within the last 12 months. Requirements may differ if a customer has stopped, or intends to stop, making contributions to a scheme.

Sale of property is not acceptable in place of a private/employer pension scheme.

Right to Buy

We will lend up to 100% of the discounted purchase price, providing this does not exceed 85% LTV based on valuation. No additional lending above the discounted price is permitted.

All borrowers must be named on the Right to Buy papers, which must be submitted with the mortgage application.

Flats in blocks of greater than three storeys are not acceptable.

Where the property is within an ex Council estate there must be a minimum of 50% private ownership.