One of the biggest issues that new borrowers and existing mortgage owners struggle with nowadays is mortgage affordability. Yes, you may be able to afford a £1,000 a month rental payment or your existing mortgage of £2,000 a month, but unfortunately this means nothing to mortgage lenders if you don’t meet their specific affordability criteria. Every day, people perfectly capable of affording a mortgage are rejected by banks because their loan request is deemed unaffordable. Here is where Hinckley and Rugby’s Income Flex Mortgage criteria comes in handy.
Income Flex From Hinckley and Rugby
Although not a brand new offering by H&R, their income flex criteria has become particularly relevant in the UK mortgage market as the cost of living takes its toll on people’s income and budgets. Mortgage approvals in general have decreased across the board and lenders have tightened their affordability criteria to ensure that everyone they lend money to can afford the loan they are getting. Hinckley and Rugby’s income flex criteria serves as a sort of remedy to this. Taking a much more understanding approach to people’s income and affordability. Here is what they have been recently saying about the income flex:
‘Income Flex supports borrowers whose income requires more understanding than a simple average of payslips or SA302s, together with borrowers who want to maximise their borrowing potential through enhanced income multiples. Available at 80% LTV and 90% LTV, Flex will allow a combination of any two non-standard incomes, and also permits borrowers meeting our standard income criteria to apply for an income multiple up to 5.5 for the two highest earners.’
Hinckley and Rugby Income Flex Criteria
- Bank Work / Locum Work
Standard policy is 1 years’ evidence of this type of work. Income flex policy is only 6 months.
- Benefits & Tax Credits
Standard policy is that only 50% is allowed for affordability purposes. Flex policy allows a maximum of 100% of the income to be used.
- Bonus, Commission and Overtime
Standard policy allows maximum of 50% of the income to be used for affordability and must have 2 years’ evidence. Flex policy allows up to 100% of the income to be used with a minimum of 1 years’ evidence. It must also not be worth more than 100% of basic income.
- CIS Contractors
An average income will be determined based on an average of 2 years’ SA302s. Flex policy will see CIS contractors treated as PAYE if taxed at source. 3 months’ payslips & latest P60 required as evidence only.
- Day Rate Contractors
Standard criteria will determine average income from SA302s. Flex policy will look at contract day rate x 46 weeks. Minimum Income £50,000 and at least 3 months remaining on contract.
- Fixed-term Contractors
Standard criteria says that a 12-month contract must be in place with at least one renewal. Flex policy says that a 12-month contract must be in place, but no renewal required.
- Income Multiple
Standard criteria stipulates that a maximum of 4.49X income is allowed for any loans. Flex criteria can allow up to 5.5 on two highest earners provided income fits standard policy.
- Investment Income
Standard criteria does not accept this income. Flex criteria allows a maximum of 50%. 3 years SA302s evidence required.
- Net Profit & Salary (Limited Company)
Standard criteria does not accept this income. Flex criteria accepts this.
- Probation Period
Standard criteria will not accept people on probation periods at all. Flex considers borrowers where new and previous roles were similar or where borrower has been promoted.
- Second Income
Standard criteria will accept a maximum of 50%. Flex will accept up to 100% as long as it is not more than 55 hours of work a week.
- Self-employed Income
Standard criteria says an average of 2 years SA302s will be used for affordability up to 80% LTV, 3 years SA302a up to 95% LTV. Income flex will accept one years accounts/SA302s. Declining profits and loss years acceptable. Projections also permitted from an accountant.
Speak To a Mortgage Advisor If You Are Struggling With Affordability
If you are struggling with mortgage affordability, or simply don’t have a clue how much you might be able to borrow then give our team of mortgage advisors a call today. Our advisors are affordability experts and can give you a great idea of what your mortgage options are and what kind of loan might be available to you. Give us a call today to see how we can help.