HSBC has made a raft of changes to the way it assesses borrower affordability including the self-employed and those who have been furloughed.
Where a borrower has been furloughed, the bank will check affordability based on 80 per cent of income up to £30,000 per year.
If an employer is topping up a borrower’s income, this will be included in the assessment and the income will need to be verified.
Bonuses, commission and overtime will no longer be included in the income assessment unless the client works for the NHS.
Those who are sole traders, in partnerships or limited liability partnerships with less than 200 members must provide three months of business bank statements.
When completing the application, brokers should enter 100 per cent net profit amounts for the current and previous accounting years.
For those on a zero-hour contract, HSBC will only consider certain professions and the income must have been received for a minimum of 12 months.
For joint applications, the primary earner must not be on a zero-hour contract. The zero-hour earner will be limited to those who work as NHS bank nurses and locums, non-NHS bank nurses and locums, supermarket employees, delivery drivers and care home staff.
These changes are effective immediately. Pipeline applications submitted before 7 April will proceed as normal unless the applicant’s financial situation changes.
Applicants who have received an offer will also go ahead unless the bank is informed of any changes to the client’s income.
Metro will now require the self-employed to provide proof of the sustainability and profit of their business and only 50 per cent of any cash bonuses, commission or overtimes over the last two years will be included in any affordability assessment.
The bank will also ask for P60s from the last two years as evidence.
In line with restrictions on physical valuations, Metro is making use of automated valuation models and digital valuations.
The digital valuations cost up to £145 but customers will need to pay the standard valuation fees listed on the Metro website and the difference will be refunded to them.
Furthermore, the bank is only able to provide valuations on properties up to a maximum value of £3m.