THE INFORMATION ON THIS WEBPAGE IS FOR THE USE OF PROFESSIONAL INTERMEDIARIES ONLY

Expenditure

23/08/2017

Regular commitments in respect of loans, credit cards, hire purchase agreements, mail order, maintenance etc. will be deducted from income as follows:

  • Loans, hire purchase, maintenance – Annual payments made
    (Loans with less than 12 months to run may be disregarded, provided the aggregate monthly payment does not exceed 10% of net monthly income)
  • Credit cards and mail order commitments – 60% of outstanding balance (5% of outstanding balance X 12)
    Where the aggregate total of credit card and mail order balances is less than £1,000 – these may be disregardedWhere credit card balances are repaid in full each month – The amount should be covered by expenditure items rather than be deducted from income
  • Child care costs – will be included in the affordability calculation
  • Negative capital – For self-employed applicants, any negative capital disclosed in the accounts or accountant’s reference will be treated as a commitment
  • On other encumbered properties any shortfall (i.e. where the rental income is less than 145% of the borrowing commitment) will be treated as a commitment

Payday loans shall be treated as follows –

  • If there has been a single instance of a payday loan in the last twelve months and it was less than 10% of monthly net salary, this can be disregarded if a satisfactory explanation is received
  • If a payday loan has been obtained in the last twelve months exceeding 10% of monthly net salary, the loan will be declined
  • If more than one payday loan, of any amount, has been obtained in any of the most recent three months, the loan will be declined

In all other cases the highest payday loan obtained in the last twelve months will be treated as a monthly commitment