We could accept up to 75% variable income
We’ve been working overtime on our mortgages, and have some good news for you.
At Virgin Money and Clydesdale Bank, in some cases, we can consider using as much as 75% of a customer’s variable income, such as bonuses, overtime or commission in our affordability calculations – that’s up from our usual 60%.
So you know, to get to that 75%, we’ll need to see a three-year track record (or two years if the income is received monthly or more regularly) and we’ll need to take a look at the details before you apply.
A real-life example
Here’s how we recently said yes to a customer, using 75% of their variable income:
Loan requested: A joint application for £1,250,000 (70% LTV).
Background: The customer works in a senior position for a professional services firm, on a basic salary of £65,000. They also receive an annual bonus, with a three-year track record to prove it. In the most recent year it was £175,000 and £130,000 the year before. The second customer was employed with a basic income of £60,000.
The outcome: Thanks to the customer’s strong track record, we were able to use 75% of a two-year average, instead of the normal 60%.
Time to switch and fix?
Tracker deals have become increasingly popular in recent months as more customers look for the cheapest rate.
In fact, in Q4 2022, there were 39,000 residential tracker applications across the market totalling £10bn, that’s one fifth of all residential applications by value, up from just 7,000 in Q3.1
Since October 2022, the Bank of England has increased the base rate three times, so customers on trackers will have seen their rate go up too.
Over the same period, many fixed rates have reduced and now might be the right time for customers to consider fixing in.
Could your customer switch and save?
A typical borrower who took a tracker in October 2022 could save more than £1,500 on their annual payments by fixing in.2 Not to mention the peace of mind over certainly of their payments.
What’s more, with 620,000 mortgage customers on ERC-free trackers3 it could be a big opportunity to help customers.
Getting the best rate available
Great news, we support product switching on pipeline cases. That means, if rates reduce further, you can switch your customer’s previously selected product onto a new product from our current new business range.