We wanted to let you know about some upcoming changes to our self-employed policy.
What to expect
On Friday 18 July we will be making a number of changes to how we assess Clydesdale Bank mortgage applications where any applicant is self-employed. Read on to find out more.
Gross Income
We’ll be making the following change to how we assess the gross income of limited company directors with a shareholding of 25% or more.
| Current Policy | What’s changing |
| 2-year average of the share of net profit before corporation tax, plus director’s salary. If the most recent year is lower, we’ll use that. | 2-year average of the share of net profit after corporation tax, plus director’s salary. If the most recent year is lower, we’ll use that. |
For all other trading entities (sole traders, partnerships and LLPs) there will be no changes to the income we use.
Loan to income cap
We’re expanding our maximum loan to income cap for residential lending where any applicant is self-employed.
| Current Policy | What’s changing |
| Loan to income cap of up to 4.49 x income. | Loan to income cap of up to 5 x income. |
The cap for residential remortgage applications up to 85% LTV where there is no additional borrowing will remain at 5.50x income for all employment types including self-employed.
Other self-employed policy changes
We’re making a number of other policy changes that may impact self- employed applicants.
| Policy Area | Current Policy | What’s changing |
| Minimum trading period | A minimum of 3 years business operation. | A minimum of 2 years business operation. |
| Age of financial accounts | The financial year end date of the last accounts filed must be no more than 18 months prior to the date of the application | The financial year end date of the last accounts filed must be no more than 21 months prior to the date of the application (and therefore not overdue Government filing requirements). |
If you're submitting an application on behalf of your customer, please note that the deadline to be assessed under the current policy is 5pm on Thursday 17 July.
What’s next?
From 6pm on Thursday 17 July, we’ll be updating our online application system, so it will be unavailable for the rest of the evening.
We’ll share an update on Friday 18 July to let you know that the changes to our self-employed policy have now taken effect.
At the same time, we’ll also confirm details of a further change that will benefit your foreign national clients – as we’ll be increasing our maximum LTV, extending the list of visas we can accept, and reducing the minimum time we need remaining on these. We’ll be in a position to let you have all the detail on the 18th – so stay tuned.
If you’ve got any questions, your Business Development Manager is the best person to answer them.
The team at Clydesdale Bank
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