Virgin Money is the latest lender to ask self-employed mortgage borrowers to complete an additional form as part of its Covid-19 responsible lending process.
The self-employed supplementary form has been introduced to help the bank understand what impact the Covid-19 restrictions have had on businesses and to get more information on the changes they have made to their companies.
Virgin Money will also require three months' business bank statements as evidence of the current trading levels.
Aaron Strutt, product director at Trinity Financial, says: "More of the lenders are starting to look at applications from the self-employed more closely and request additional documentation.
"We are still helping lots of self-employed borrowers to purchase properties and remortgage, but they have to provide more information. NatWest recently started asking self-employed borrowers to complete a similar form to Virgin's to ensure it understands how businesses are coping in the current trading conditions."
Virgin Money will only consider applications from customers where their business has been actively trading for the last three months, and the customer can demonstrate current trading levels.
The bank will use the information provided in its new supplementary form to undertake a tailored assessment of the applicant. If a customer’s business has not been impacted by Covid-19 the bank will undertake its usual assessment and these changed do not apply to day rate contractors where the applicant meets its contractor policy.
Call Trinity Financial on 020 7016 0790 to secure a self-employed mortgage or book a consultation.
For borrowers trading through a limited company, they will need to provide the last two years’ full accounts, and for sole traders or partnerships, the last two years’ HMRC SA302s accompanied by the corresponding Tax Year Overviews.
Applicants will also need their latest three months business bank accounts if they are sole traders or partnerships or limited companies. The latest statement must be dated within two weeks of the application start date and online statements are acceptable, or three months personal bank statements for limited liability partnerships. Again, the latest statement must be dated within two weeks of the application start date and online statements are acceptable.
If your business has been temporarily affected by the coronavirus but continues to or is now actively trading and you expect a negative change or gradual build-up in income... Where available an accountant produced or reconciled management information document should be submitted in the form of Profit and Loss showing actual performance for the past 12 months (month on month).
If the business suspended trading as a result of the virus, Virgin Money expects a minimum of three months trading period to review the post-COVID performance before submitting an application.
Virgin Money will not provide a self-employed mortgage:
- Where your income has been negatively impacted by the virus and your current income fails the affordability assessment. Virgin will typically lend up to five times single and joint income.
- Where the business is not actively trading.
- Where there has been a loss in the last two years or where the company's net worth has been negative in the last two years.
- Where the profit and loss (where provided) shows the business was loss-making pre-coronavirus.
What business sector do you work in? You will need to provide details on experience and track record.
If your business been impacted by COVID-19 and what changes have been made?
If you have applied or received financial support from the government? This included any type of loan, grant or furloughing employees.
Where you have taken a payment holiday on any of your current financial commitments like mortgages, loans or credit card. You will also need to explain why you chose to take the payment holiday.
Virgin Money will even want to know if your income has not been hit by Covid-19.
Where you had to reduce or suspend trading as a result of the coronavirus Virgin Money will want to understand the current trading and operating levels. Also if you have put any additioanl capital into your business.
To give an overall understanding of the business the form will ask you to explain how the changes will impact your income going forward and whether you have plans to move to online or change your customer base.
Virgin Money is offering employed and self-employed borrowers some of the cheapest rates in the market with two-year fixes below 1.20% and five-year fixes below 1.5%. Borrowers will need a 35% deposit to access these rates, although the lower deposit mortgages are not much more expensive.