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FOR THE USE OF MORTGAGE INTERMEDIARIES & OTHER PROFESSIONALS ONLY

FOR THE USE OF MORTGAGE INTERMEDIARIES & OTHER PROFESSIONALS ONLY

Changes to self employed lending criteria

We’ve made changes to our self employed lending criteria to ensure our treatment of 2020/21 income is clear and straightforward.

These changes are effective for all DIPs keyed from Friday 20 August 2021.

Self employed income

  • We’ve increased our loan to income multiple for self employed applicants from 4.25 to 4.49.
  • Self employed income will be accepted where the applicant’s business has been trading ‘normally’ for the last three consecutive months (not in receipt of government support grants such as SEISS or using the job retention scheme).
  • For joint applications, where affordable on the other applicant’s income alone, self employment income should be keyed as £0 and no evidence will be required in respect of self employment.
  • For sole traders, partnerships, or Limited Liability Partnerships (LLP) the latest year’s self employed income evidence must be for the 2020/21 tax
  • Directors of a Limited Company must provide evidence with a latest trading year end date no greater than 15 months old.
  • We will no longer accept signed company accounts to evidence self employed income.

Government assistance

  • If applicants have received SEISS grants in the 2020/21 tax year (grants 1 to 3) these will be deducted from the self employed income keyed.
  • We require a screenshot from HMRC showing SEISS grant history for all self employed applicants, whether claimed or not, (excluding Directors of Limited Companies). The information can be found on the government website.
  • If applicants have claimed SEISS grants (1 to 3) we require full details of the claim, available as a downloadable pdf.
  • This additional evidence should be uploaded to your case together with the income evidence as there won’t be a separate case requirement.

Underwriting

  • Where there’s been more than a 10% drop in self employed income in the last year, the application will automatically be referred to underwriters for review. The latest three months business bank statements must be provided.
  • If a case is referred to underwriters and the applicants have Bounce Back Loans (BBLs) or Coronavirus Business Interruption Loans (CBILS), these will be considered to ensure ongoing affordability but should not be keyed as a commitment.

For more information on our self employed policy please see our new Self-Employed Hub.