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Affordability Calculator FAQ’s

 

For Intermediary use only

Existing customer? Click here.

 

Here you will find answers to the most frequently asked questions relating to our affordability calculator.

 

If debts are being consolidated, do the existing debts need to be included as a commitment?

  • Yes they do – we work on the assumption that the client has an established pattern of spending and should future debts return to these levels we would need to know that the client could meet their commitments.

 

How are BTL properties in the background treated?

  • We allow up to 10 BTL in the background.  If the properties are self-financing, i.e. the rental income is equal to or more than the mortgage payment, then they do not have to be included in the affordability calculator or the decision in principle. If there is a shortfall for the property portfolio as a whole, the difference needs to be added as a commitment.  Details of background BTL’s need to be recorded in the property portfolio section on the full application.

 

How is self-employed income treated?

  • Clients need to be trading for a minimum of 2 years for the income to be considered. If the client holds a minimum shareholding of 25% of a limited company, we will accept salary plus dividends.  If the client is a sole trader we will consider net profits as income.

 

Are pension deductions taken as a commitment?

  • No. We consider this to be an optional payment which clients can terminate if they wish.
 

How do we consider income from bonus, commission and overtime?

  • If bonus, commission or overtime is paid monthly it would need to appear on the 3 latest months wage slips. An average should be taken over 3 months and that figure should be annualised. We will take 50% of this income into consideration. For commission earnings greater than 50% of the earnings 3 years income figures will be required. Providing these are level or increasing, an average over the last 3 years will be taken. If reducing, the case will not be accepted without a full explanation for the drop and approval by an underwriter.

 

Can we use income from a second job?

  • We can consider 100% of this income provided it is guaranteed and the client has held this position for at least 12 months.

 

If a client pays maintenance do the children also need to be considered as dependants?

  • No. Children do not need to be included as dependants if maintenance is being paid.

 

Do child care vouchers need to be included as a commitment?

  • Child care vouchers should be included in other monthly commitments. Please note inclusion of this in other monthly commitments means there is no need to deduct it from the salary too.

 

How do you view ex-marital homes for affordability?

  • If the property is to be retained and the liability for paying the mortgage remains, this information needs to be recorded in other monthly commitments for affordability. Information on this mortgage should be recorded in the Credit History section of the decision in principle.

 

Do we have an income to debt ratio?

  • We do not but we will assess overall affordability during the underwriting process. If there are any concerns please use the affordability calculator in the first instance to establish our maximum lending potential.

 

How do you treat allowances showing on the wage slips?

  • Guaranteed allowances can be included in the main income, examples of this include:

London weightings/large town allowance, car allowances, permanent shift allowances, Teaching and Responsibility Payments, NHS banding allowance and Flexi benefits.

 


 

The information contained within this section is for use by mortgage intermediaries authorised by the FCA.

Information is not to be disclosed or given to the public or is intended as a consumer advertisement as it does not provide APRCs or APRC Representative Examples.

 

The Co-operative Bank p.l.c. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (No. 121885). The Co-operative Bank, Platform, smile and Britannia are trading names of The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No.990937. Credit facilities are provided by The Co-operative Bank p.l.c. and are subject to status and our lending policy. The Bank reserves the right to decline any application for an account or credit facility. The Co-operative Bank p.l.c. subscribes to the Standards of Lending Practice which are monitored by the Lending Standards Board.

 

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