The changes include accepting up to 100 per cent of regular variable income, like quarterly bonuses where a similar amount is given semi-regularly, into a customer’s income calculation.
The lender will need 12 months’ evidence in the form of a P60 or payslip for the income to be considered.
For non-regular variable income, such as overtime or sales commission which is seasonally affected or occurs irregularly, the lender will include 50 per cent of this as part of a customer’s income calculation, or 100 per cent if the income is established as “sustainable”.
To ascertain non-regular variable income the lender will ask for two years’ worth of evidence.
The lender changed its criteria during the pandemic, having previously accepted up to 100 per cent of guaranteed other income if a borrower could provide two years’ worth of evidence.
It changed this to 50 per cent across the board during the pandemic due to uncertainty around job stability and other income such as bonuses and commission.
The lender said that if borrowers had received furlough or a Self-Employed Income Support Scheme grant it would need two years’ of evidence and would take the lower of the last two years when income fell, or an average if it increased, into its assessment.