The changes to the self-employed lending policy will come into effect on 18 July.
On the gross income side, the lender will change how it assesses the gross income of limited company directors with a shareholding of 25% or more.
Clydesdale Bank will use the two-year average of the share of net profit after corporation tax, plus the director’s salary. If the most recent year is lower, it will use that.
It previously used the two-year average of the share of net profit before corporation tax.
The lender said that for all other trading entities, there will be no change to the income it uses.
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Looking at the LTI cap, the firm is expanding its maximum LTI cap for residential lending where the applicant is self-employed to five times income, up from 4.49 times income.
The cap for residential remortgage applications up to 85% LTV where there is no additional borrowing will remain at 5.5 times income for all employment types, including self-employed.
Clydesdale Bank is changing the minimum trading period to a minimum of two years’ business operation, a drop from three years previously.
For the age of financial accounts, the financial year-end date of the last accounts must be no more than 21 months prior to the date of the application. This is up from 18 months previously.
Earlier this week, the firm lowered pricing and added deals.
