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TSB restricts criteria on furlough income

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Written by: Samantha Partington
17/07/2020
TSB is to stop accepting income from furloughed borrowers whose salary is not being topped up by their employer.

The bank said it had made the change on a temporary basis to make sure it was “lending responsibly”.

Where a joint application is still affordable on the other borrower’s earnings, the furloughed applicant’s employment details should still be recorded but the income should be keyed in as £1.

The changes will be brought in from 20 July.

Barclays has also made changes to its income assessment.

The bank introduced new income multiple caps, which came into effect Wednesday 15 July.

For example, for sole applicants who earn £75,000 or more, or joint borrowers who earn £100,000 or more between them, the income multiple is 5.5 times, up to 85 per cent loan to value (LTV). For Help to Buy applications, the income multiple is 4.49 times.

Where the debt to income ratio is 20 per cent or more, the maximum income multiple cap is four times.

The maximum loan to value on part and part mortgages has been increased from 75 per cent LTV to 80 per cent LTV.

Non Barclays borrowers no longer need to be with the same employer for three continuous months before the mortgage application. The three consecutive months of employment can be with different employers.

The bank has also confirmed it will accept housing benefit as a source of income, but only if the benefit continues after the new mortgage completes. Barclays said in the majority of cases, housing benefit stops when the recipient moves out of rented accommodation.

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