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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Second Home Purchase

Virgin Money will consider lending on a second home up to 75% LTV. The customer must be able to afford all credit commitments including any mortgages.

Self Build and Custom Build

Virgin Money does not accept Self Build or Custom build properties whilst they are undergoing construction and the property is not in a habitable condition.

Virgin Money will accept a Self Build or Custom build property once construction is complete and the property is in a habitable condition. This is subject to the property having the benefit of a New Build Warranty or Professional Consultants Certificate in the standard CML format, acceptable to Virgin Money, and a satisfactory valuation report and valuer comment.

The Virgin Money definition of a property being habitable is:

• Wind and weather tight
• Plastered out

All services functioning and connected with at least one:

• Kitchen with functioning hot and cold water supply to a sink and adequate food preparation and storage facilities
• Functioning bathroom with bath or shower and WC

Self Employed

The customer is considered as Self Employed if they have a shareholding of 20% or more in a business, or a customer with a small shareholding in a large Limited Liability Partnership (LLP).

We will require access to two years of business accounts, during which period we will need to see that the business has been profitable. Also, the business must have been solvent i.e. the capital amount must be positive / assets must outweigh the liabilities, in each of the last two years.

The types of self employment that Virgin Money will consider are:

• Sole Trader / Partnership
• Limited Company

Where the loan is greater than £1million the company must have been trading for three years.

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.

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.

Shared Ownership

Shared Ownership allows a buyer to purchase a share of a home (typically between 25% and 75%) whilst a Registered Provider (Housing Association) retains ownership of the remaining share. Rent is paid on the unsold share, and buyers obtain a mortgage to fund the purchase of the share they buy. Buyers can purchase further shares in the future, through a process known as staircasing, until they own the property in full.

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

• Lending is Available in England and Wales.
• We will lend on a maximum of 15% of the total number of shared ownership units on individual sites unless previously agreed.

Repayment of the loan

All loans must be arranged on a capital and interest basis.

Income and affordability

• A maximum household income of £80,000 applies in England (£90,000 in London).
• Maximum income multiple of x4.49 (based on allowable income e.g. 60% of bonuses).
• The monthly rental payment for the remaining share must be included in the affordability calculation as a financial commitment.

The lease

• The landlord must be a registered provider of social housing.
• 2015 (or later) Homes England model lease or Welsh Government model Lease must be in place for the property and this must contain the Mortgage Protection Clause.
• Restrictions on ownership are acceptable provided they only apply to the initial sale of the property and are subsequently dis-applied to any future sale.
• There must be no compulsory requirement in the lease for the customer to purchase additional shares in the property at a future date.

The following pre-emption rights are acceptable:

• The owner of the property must have the right to assign the lease free of any nomination right or sale restriction if either the landlord fails to nominate a buyer or exchange of contracts does not take place within six months of the intention to sell being provided by the owner.
• The sale price under the pre-emption right must be at the open market value.
• The proceeds of the sale must be payable to the vendor on completion of the sale.

The following nomination rights are acceptable:

• The owner of the property must have the right to assign the lease free of any nomination right or sale restriction if either the landlord fails to nominate a buyer or exchange of contracts does not take place within six months of the intention to sell being provided by the owner.

The Property

Our usual criteria including for flats apply, with the exception of:

• New build houses and flats are acceptable up to 95% LTV
• We don’t cap the LTV for flats based on storey height
• We won’t lend on office or ex-local authority conversions

The loan

• Maximum loan to value is 95% of the share of the property being purchased by the customer.
• Customer must purchase a minimum of 25% of the property and be able to purchase additional shares in the property (staircasing) to 100%.
• We must have a first charge over the customer’s leasehold interest in the property and consent to any second charge.
• We do not accept remortgage applications unless a customer is purchasing an additional share to take their ownership of the property to 100%.

The customer must obtain the permission of the Registered Provider for further advances which are only available in the following circumstances:

• The purchase of additional shares in the property.
• To buy out another leaseholder (Change of Parties).
• Comply with a covenant in the lease.

Consent is also required for:

• A straight balance swap Product Transfer
• A change of term of the mortgage
• A payment Holiday
• Consent to Let

Solar Panels

Virgin Money will lend on properties where solar panels have been installed, subject to no materially detrimental impact on the value of the property, satisfactory valuation report and valuer comment.

Where the customer wants to purchase and install solar panels on a property in mortgage to Virgin Money, this will be acceptable provided this does not have a material detrimental impact on the value of the property.

Where Virgin Money receives a request from solar panel providers to install solar panels on a property in mortgage to Virgin Money, then consent will only be provided where the terms of the lease meet the minimum requirements set out by the Council of Mortgage Lenders (CML).

The terms of lease must include a valid break clause, which Virgin Money can exercise in the event of possession. We will not lend on properties in Scotland or Northern Ireland where an existing lease of roof space is in place following the installation of Solar Panels.

Sole Trader/Partnerships

The business must have been in operation for two years and have been profitable during that period. Also, the business must have been solvent i.e. the capital amount must be positive / assets must outweigh the liabilities, in each of the last two years.

We will require the last two year’s HMRC SA302s accompanied by the corresponding Tax Year Overviews. The latest month’s business bank statement must also be provided.

If net profits are increasing - Average share of net profits over the last two years will be used.

If net profits have decreased - The most recent year will be used.

Student Lettings

Accepted in the following circumstances:

• Property is let on a single AST with a maximum of four tenants
• The property has not been adapted from a single family dwelling in any way
• Property has private and investor demand as a single family dwelling
  

The following circumstances are not acceptable:

• The property is in a 'student suburb' and has limited Owner-occupier demand
• The property is Private Halls of Residence

Sub-sales and Back to Back Transactions

A Back to Back transaction takes place when a customer purchases/exchanges on a property then attempts to take out a mortgage based on an enhanced market value within six months of the original purchase/exchange. Virgin Money Policy in these cases is to lend against the lower of either the original purchase price or valuation.

A sub-sale takes place when a customer is purchasing a new build property from a third party (not the builder) and is paying a premium price but the third party is purchasing from the builder at a lower price or in a Stamp Duty Land Tax (SDLT) / Land and Buildings Transaction Tax (LBTT) mitigation scheme. Our policy for sub-sales is to lend on the lower of the purchase price or property valuation in the original transaction until a minimum of six months from completion and as such, the third party must be noted at the Land Registry as the registered owner for a sub-sale to proceed.

A Back to Back purchase occurs where a customer is purchasing from a third party who has purchased the property within the last 6 months at a discounted/lower price. We will only lend on the lower of the purchase price or property valuation in the original transaction unless significant improvement has been carried out to the property.

Term

	Minimum	Maximum (*)
Residential	7 Years	35 Years
BTL	7 Years	35 Years
(*) Subject to age of customer at application
Please note: The minimum mortgage term is 7 years; therefore the maximum age at the time of application is 68 for Residential and 78 for BTL.

Two Mortgages

Virgin Money will lend up to a maximum of 90% LTV where a customer has more than one residential mortgage.

Virgin Money will consider mortgages for second properties in the following circumstances:

• If the property to be mortgaged is the customer's main residence, the maximum LTV is 90%. Where the property to be mortgaged is not to be the main residence the maximum LTV is 75%
• There is no LTV restriction where the property is the customer(s) main residence and they have any BTL mortgages in the background.
• Customers must provide a copy of their mortgage statement if no active mortgage is showing on the credit file
• Customers must be able to afford both loans. Please make sure the current mortgage details are added to the affordability calculator.

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 house subject to an Agricultural Occupancy Restriction
• Affordable Housing properties, including the Frist 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 over or adjacent to commercial premises are acceptable subject to valuer assessment including that the commercial premises doesn’t detriment demand or enjoyment of the property. The entrance must not be via the commercial premises and properties immediately above or adjacent to food, drink or dry cleaners will usually be unacceptable.
• 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 with internal floor space of less than 30sqm
• Landlocked properties
• Properties constructed using large panel systems (LPS)
• Live/Work Units
• Properties which have been altered or adapted for commercial use are not acceptable, this includes properties where part of the land has been leased to a third party for commercial and/or other purposes
• 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
• We have no maximum acreage but for valuation purposes we will not include any land over 2 acres
• 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
• Timer 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.
• Properties with a flying freehold element over 15% of the gross floor area