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Thursday 22 August 2024 16:19 Press release
We are making a number of changes to enhance our lending criteria. All these changes will come into effect on 28 August 2024.
To discuss what these changes mean for you and your cases, please contact the IST team on 01799 582925 or ist@saffronbs.co.uk . Alternatively speak to your BDM using our BDM finder
Minimum Loan Size
Residential minimum loan will increase to £100,000.
Retirement (RIO) and Lending Into Retirement Downsizing minimum loan remains £30,000.
BTL minimum loan remains £30,000.
BTL Minimum Income
£25,000
At least one applicant must meet this minimum income requirement.
Passive Income
There is underwriter discretion to consider passive income sources for self-employed applicants who have no active day to day running / involvement of the business which the company accountant must confirm.
Only passive or pension income can be used for affordability lending over the age of 75.
Visas
We accept applicants on the following Visas who have resided in the UK for a minimum of two years:
Skilled Worker
Health & Care Worker
Global Talent
Spousal
Pre-settled status
Maximum of 90% LTV with a minimum income of £75,000 above 75% LTV.
No minimum remaining term of current Visa.
Top Slicing
Use of personal income (Top Slicing) can be utilised to cover a rental income ICR shortfall if:
• A minimum ICR of 110% is achieved on anticipated rental income, and
• One applicant earns a minimum income of at least £75,000, or
• Multiple applicants have a combined income more than £100,000
We will require receipt of a fully completed income and expenditure planner evidencing that the rental shortfall is serviceable.
Maximum Age
• Maximum age is 80 years, but underwriter's discretion can be applied over the age of 80 at the end of the mortgage term, but this is subject to supporting rational.
• We do not have a maximum age for BTL however the mortgage term will be based on ONS statistics.
Credit Score
We use Experian as our credit referencing agency and require a minimum credit score of 800.
We also review Indebtedness Index parameters as part of our lending decision.
Lending into Retirement
We offer a variety of retirement products suitable for older applicants.
We consider earned income up to the age of 75. Lending can be permitted with discretion from Underwriters over the age of 80 at the end of the mortgage term, but this is subject to supporting rational.
However the maximum mortgage term will be subject to ONS statistics.
Lending into Retirement - Downsizing
Minimum of £250,000 equity in property required – however £150,000 could be considered subject to due diligence around the proposal e.g. locality. Written confirmation of customer plan is required.
Income:
Defined Contribution Pension Scheme Pot (or Money Purchase/Personal Pension Scheme) and SIPPs
Current fund value may be used towards annual income if it is accessible to them based on 30% haircut and the remaining 70% being used to purchase a suitability annuity or taken as an annual withdrawal at a sustainable rate, net of the applicable tax rate, for the term of the mortgage.
Investments
Can be considered in both Retired Income and Secondary Income (for nonretired applicants). It should always be considered alongside another source of income.
Self Employed
Income used:
• Sole Trader; Net Profit
• Partnership; Share of Net profit and/or Salary
• Limited Company (where shareholding is >=20%); Dividends plus Drawings. Where ownership is 50% shareholder we may consider Net profit after tax and Salary subject to underwriter discretion based on a holistic view of the business and the potential impact of depleting business reserves.
Applicants with 1 years of accounts may be considered on our specialist Self-employed product range.
If they have been trading for more than 2 years, a standard residential product can be chosen, unless their income has risen by more than 25% in the last year. Applicants with 1 years trading, or with a rising income greater than 25% in the last year, will need to apply on the self employed product range.
A Self-Employed Ltd Director who has changed trading style from a sole trader can be considered for a mortgage without the need to wait for a full 12 months of Ltd co status.
See our Supporting Documents
Self Employed LTD Company Director
Affordability – Salary and Dividends
Add-back of voluntary pension contributions can be considered when calculating affordability.
If applicant is a minimum 50% shareholder we may consider Net profit after tax and Salary
• For applicants with a rising or downward trend of income we will typically use latest figures for affordability purposes. Where a rising trend is greater than 25%, the applicant will be considered on the specialist Self Employed product range, regardless of trading length
• For applicants with fluctuating income we will typically use average figures for affordability purposes
A Self-Employed Ltd Company Director, who has changed trading style from a sole trader, can be considered for a mortgage without the need to wait for a full 12 months of Ltd company status.
If they have been trading for more than 2 years with finalised accounts, a standard residential product can be chosen, unless their income has risen by more than 25% in the last year. Applicants with 1 years trading, or with a rising income greater than 25% in the last year, will need to apply on the self employed product range.
Self Employed Sole Trader
Net profit after tax
• For applicants with a rising or downward trend of income we will typically use latest figures for affordability purposes. Where a rising trend is greater than 25%, the applicant will be considered on the specialist Self Employed product range, regardless of trading length
• For applicants with fluctuating income we will typically use average figures for affordability purposes
See our Supporting Documents
If they have been trading for more than 2 years with finalised accounts, a standard residential product can be chosen, unless their income has risen by more than 25% in the last year. Applicants with 1 years trading, or with a rising income greater than 25% in the last year, will need to apply on the self employed product range.
