Employment & Income Criteria

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    Employment criteria

    First Trust Bank for Intermediaries will accept applications for those who are employed and self employed. The bank will also accept applications from individuals in contracted employment providing sustainable affordability can be proven.

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    Income classification

    Intermediaries should satisfy themselves as to the nature of the income by way of the methods outlined in the 'proof of income' section.

     

    When calculating a borrower's annual income, non-regular bonus payments and other non-recurring income should not be included.

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    Proof of income

    Only income earned in Pounds Sterling (£) from employment / investments in the UK will be accepted for affordability purposes.

     

    Employees

     

    • Certified copy of most recent 3 months’ payslips
    • Certified copy of latest P60
    • Certified copies of 3 months' bank statements from immediately before application (not applicable where current account is with First Trust Bank)
     

    Note: If your Switcher customer:

     

    1. Is an existing First Trust Bank Customer; and
    2. Has a LTV of ≤ 90%; and
    3. Has a max 3.5 times LTI; and
    4. Has their salary mandated to their First Trust Bank current account,

    there is a reduced requirement for employment documentation - One up to date payslip only.

     

    Include Regular/Proven/Sustainable:

    • Overtime 
    • Bonuses (if annual, must be proven over a 3 year period)
    • Allowances

     

    We will accept 100% of proven sustainable overtime/bonus/allowances, however applicants should not have a heavy reliance on these as a source of monthly income.

     

    Self Employed

     

    • 3 years signed Financial Accounts (Certified / Audited)
    • Certified copy of 3 months business bank statements from immediately before application (not applicable where current account is with First Trust Bank)
    • Certified copy of 3 months personal current account statements from immediately before application
    • A letter from the customer’s accountant confirming tax affairs are up to date
     
    Calculating net income for self-employed customers
    Self Employed Net Profit
        + Depreciation
        + Loan Interest
    -----------------------------------
    Sub Total
        - Loan/HP Rep
    ----------------------------------- 
    Gross Income
        - Tax
    ----------------------------------- 
    Net Income
    (Divide by 12 for monthly)

     

    Note: An average of the past 3 years' surplus available to the applicants should be used for the affordability calculation. In cases where there are significant changes in profitability trends these should be referred to our Run By desk in order to agree a sustainable income figure.

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    Other income

    Only income earned in Pounds Sterling (£) from employment / investments in the UK will be accepted for affordability purposes. 

     

    The following income types may be taken into account for affordability purposes. Income must be evidenced on Bank statements for all "Other Income" sources.

     

    • Lifetime DLA (Proof - Regular lodgements to bank account) 
    • Child Benefit can be included where child/children are under the age of 13 years (Proof - Regular lodgements to bank account) 
    • Maintenance - Please refer to our run-by desk for further details
    • Child Support - Please refer to our run-by desk for further details
    • Rent (70%) (Proof - Written confirmation/evidence required) 
    • State pension (Proof - Written confirmation/evidence required)
     
    If customer is less than six months in current employment, their employer will be required to confirm that applicant has successfully completed Probation and is confirmed in permanent employment. This confirmation can be by way of First Trust Bank Salary Certificate or by letter on company headed paper.

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    Maternity / Paternity leave

    Where an applicant is on maternity/paternity leave, we accept the applicant's normal pay subject to the following:

     

    • The applicant will be returning to work within 6 months of the initial application date
    • Letter from employer confirming when the applicant will return to work and confirmation of salary on return to work

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    Income from multiple sources

    First Trust Bank for Intermediaries will consider more than one source of income per applicant, provided they meet our acceptable income criteria and can be evidenced in line with our standard proof of income criteria.

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    Affordability

    Establishing affordability is the key factor in assessing repayment capacity and the following criteria should be met when assessing a mortgage:

     

    • An overall assessment of the full financial position of the applicant must be carried out using the First Trust Bank for Intermediaries Affordability Calculator and documented on file with particular emphasis on sustainability of the income. Essential & discretionary expenditure included in our affordability analysis will be based on Office of National Statistics market.  Failure to determine income and expenditure in the process is a breach of MCOB. 
    • Sustainability of income is an important factor when determining capacity to repay. 
    • The applicant’s ability to repay over the life of the loan must be considered. Whilst it is not possible to predict the future, there are circumstances that are foreseeable, such as retirement and these must be taken into account. Other factors such as overall assets/liabilities or knowledge of current and future business plans, may influence the decision to advance funds. 
    • Where a Letter of Guarantee is taken, the Guarantor's repayment capacity is confirmed in the same way as any borrower.
     
     
    Calculating net income for self-employed customers
    Self Employed Net Profit
        + Depreciation
        + Loan Interest
    -----------------------------------
    Sub Total
        - Loan/HP Rep
    ----------------------------------- 
    Gross Income
        - Tax
    ----------------------------------- 
    Net Income
    (Divide by 12 for monthly)
     
    Note: An average of the past 3 years' surplus available to the applicants should be used for the affordability calculation. In cases where there are significant changes in profitability trends these should be referred to our Run By desk in order to agree a sustainable income figure.

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    Credit card repayments

    In relation to credit cards, please follow this process when completing the affordability calculator. The monthly payment will be one of the following:

     

    • Where outstanding balance is paid in full each month, enter zero
    • Where outstanding balance is not paid in full each month, enter a minimum of 5% of outstanding balance

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    Other mortgages

    This refers to other mortgages (Consumer buy to let, holiday home or investment property loans) that will continue following the drawdown of the new mortgage


    We require this repayment to be stress tested as follows:

     

    Product  Stress Rate +      
    Capital & Interest contracts 3% above current rate
    Interest Only (I/O contract is for duration of Proposed Mortgage)                       3% above current rate on Interest only basis            
    Interest Only (I/O matures pre-expiry date of this Proposed Mortgage)                 3% above current rate and on a Capital & Interest basis         
               


    Example

    • Your current repayment is worked out as follows: £100,000 over 20 years at a rate of 3% = £560.14
    • Your stressed repayment is worked out as follows (using the same example): £100,000 over 20 years at a stressed rate of 6% (i.e. 3% + 3%) = £726.54

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    Required Surplus

    First Trust Bank for Intermediaries affordability assessment takes into account a surplus income over the standard living costs.

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    Lending into retirement

    Generally it is expected that retirement will take place at state retirement age (up to 70 for self-employed) unless there is evidence from employer of an older retirement age. Where the loan term extends beyond retirement the Bank will require appropriate and clear demonstration of affordability beyond anticipated retirement date.

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