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TSB raises LTI multiples in self-employed criteria update

  • 20/08/2021
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TSB raises LTI multiples in self-employed criteria update
TSB has made significant changes to its self-employed criteria, including increasing its loan to income (LTI) multiple, to ensure its treatment of such borrowers is “clear and straightforward”.


The changes come into effect from today, with its LTI multiple increasing from 4.25 to 4.49.

The lender said self-employed income will be accepted when a business has been trading normally for the last three months and the borrower has not used government support grants.

Regarding government assistance, TSB said if a borrower had received a Self-Employed Income Support Scheme (SEISS) grant in the 2020/2021 tax year these would be subtracted from their overall income. It also said a screenshot from the HMRC showing SEISS grant history was required for every applicant, regardless of whether it had been claimed or not.

It also said if borrowers were referred to underwriters and used Bounce Back Loans or Coronavirus Interruption Loans they would be examined to determine affordability but not considered a commitment.

Additionally, if a borrower’s income had fallen by 10 per cent in the last year, their application will automatically be referred to underwriters.

For joint applications, self-employed income could be entered as zero and no evidence will be required if it the mortgage is affordable on the other applicant’s income.

Sole traders, partnerships, or limited liability partnerships will need to provide income evidence for the last tax year, and limited company directors need to show evidence from the latest trading year which is no more than 15 months old.

TSB said it would not accept signed company accounts as evidence of self-employed income.

Self-employed borrowers’ income has come under scrutiny during the pandemic, with some lenders refusing to lend if government support has been used.

This has led self-employed borrowers to believe it will be more challenging for them to borrow, with the majority saying lenders were not doing enough to support them.

However, lenders have been changing their criteria, with HSBC and NatWest both changing their criteria in the past week.

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