From Monday, a self-employed applicant will fall under this definition if their business is not currently trading or has been re-opened for less than three months.
It will also apply if they have taken a Self-Employment Income Support Scheme (SEISS) grant or if a limited company has received a Job Retention Scheme (JRS) grant. Those who have taken a bounce-back, BBIL or CBIL loans in the 12 months prior to the date of application will also be deemed adversely affected by the health crisis.
They will be considered impacted if their staff have previously been furloughed due to business trading conditions in the 12 months before the date of application.
Those borrowers falling under the new definition will be subject to additional evidence requirements such as how business turnover and income has been affected and confirmation of outstanding Covid-19 liabilities.
All self-employed mortgage applications are still limited to 75 per cent loan to value (LTV).
Pandemic year cut-off
Santander also confirmed the cut-off date to submit self-employed income evidence for 2019/2020, overlooking the impact of the pandemic on finances, would be 6 October.
The bank introduced this policy in April and reiterated that the most recent year-end for self-employed income must not be more than 18 months before the date of the application.
From Monday, all applications will require standard income evidence to show the borrower has returned to work after being put on furlough.
If the latest payslip shows any furlough income, Santander will be unable to use this for the mortgage affordability.