HSBC announces temporary mortgage policy changes and stops taking bonus income
HSBC has announced temporary changes to its lending policy and informed brokers they need to ask additional questions before submitting mortgage applications.
For new applications, mortgage brokers will be expected to ask clients if their income has been impacted by the COVID19 pandemic and based on the customer’s response, process the application in line with HSBC's updated assessing income policy.
For all cases processing through HSBC's system prior to 07/04/2020 that have not been reached offer stage, the application will proceed unless HSBC is informed of a change to the borrower's financial situation.
HSBC will proceed as normal for post-offer applications unless they are informed of a change to the borrower's finances in which case new application guidance will apply.
Employed income changes
HSBC will assess affordability based on 80% of basic income up to a maximum of £30,000 per annum for furloughed employees. Where top-up income is being paid by the employer, the affordability will be based on the level of income being received.
Evidence will be required to validate furloughed/top-up income and all applications where furloughed income or top-up income is being used will be reviewed by an underwriter.
Variable income changes
HSBC has stopped accepting bonuses, commission, and overtime income for everyone apart from NHS employees where variable pay/overtime will be acceptable but this will be based on pre-March 2020 levels.
Aaron Strutt, product director at Trinity Financial, says: “Like lots of lenders HSBC is concerned that companies across the UK are struggling and have been significantly impacted by the virus, as a result, they may struggle to pay their employees. Self-employed business owners are similarly impacted resulting in either short- or long-term reductions in income.
"Our brokers are still speaking to lots of borrowers who want to purchase properties when the virus passes and they are arranging a lot of remortgages. The lenders are still offering some incredibly cheap short and longer-term fixed rates."
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Zero-hours income will be limited to certain professions and where the income has been received for a minimum of 12 months.
Income can only be included in joint applications where the customer is not the primary earner and works in one of the following fields:
- NHS Bank Nurses and Locums;
- Non-NHS Bank Nurses;
- Care Home workers;
- Supermarket workers (including delivery drivers)
For sole traders, partnerships, LLPs with less than 200 partners, they will need to provide the latest three months’ worth of business bank statements are required for all customers.
In line with the current process, Trinity Financial's brokers will need to input 100% net profit amounts for the current and previous accounting years in the application. All applications will be reviewed by an underwriter.
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