Halifax Update

Income sustainability and affordability referrals

Following the introduction of additional referrals to our underwriters as described in the communication issued on 14 May and additional income documentation in June, we’re now making further changes to our treatment of certain income types.

As the current situation continues to impact the level and types of income being received by clients and at this time of continued uncertainty, temporary changes are being made to ensure we continue to lend responsibly and support our clients during this difficult time.

The changes detailed below clarify our approach and will support quicker decisions by reducing the number of referrals needed to our underwriters.

From tomorrow, Wednesday 8 July, the following changes will apply:

Bonus, Commission and Overtime income

The allowable proportion of Bonus, Commission and Overtime income used in our affordability assessment is being reduced from 60% to 30% to reflect there may be an increased element of variance in these income types.

Bonus, Commission and Overtime must continue to represent a regular and sustainable feature of the client’s income. These income types should be keyed as per existing guidance and usual income verification requirements apply.

Self-employed income

For certain self-employed cases, where a review by our underwriters is not deemed necessary, the additional requirement to obtain three months’ supporting bank statements will no longer be required.

The system next step messages will advise when the latest three months’ bank statements are required on a particular application.

For pipeline cases that previously showed bank statements were required but no longer require an underwriter review, our system will be updated to remove the request for the supporting bank statements.

As a reminder where bank statements are required they should meet the following requirements:

Contractor income

The majority of contractor cases will no longer require review by our underwriters, with income verification undertaken as part of standard processing.

For contractors providing a copy of the contract as proof of income, a latest bank statement showing the salary credit or latest payslip must be provided.

Income should continue to be keyed as per existing guidance and applications must meet our current contractor lending criteria.

These changes are being made to ensure we continue to lend responsibly by reviewing the allowable proportion of variable income types used within our affordability assessment.

Furthermore, changes are being made to the types of cases requiring review by our underwriters ensuring that only cases where further assessment around the income sustainability is needed are referred for review.

We continue to monitor the situation closely to ensure we continue to make the right decisions to support our customers during these difficult times.

The website Affordability Calculator will be updated to reflect the change for variable income and the Criteria section will show the documentation requirements for self-employed incomes and contractors.

The change to the amount of variable income used for affordability will apply only to new cases started from the above date and will not impact any pipeline cases started before this date i.e. if a DIP was previously keyed the application was started before this date.

On self-employed the removal on some cases of the requirement for bank statements and an underwriting referral will also apply to pipeline cases already started.

If you have any queries please contact your BDM.