Instead, from 19 April Santander will base its income assessment on the 2018/19 and 2019/20 accounting periods.
However, the lender said it will need to take into account future Covid-19-related liabilities such as paying back loans or deferred tax.
And it is urging brokers to call it before submitting cases where:
- the client’s business and/or income has been adversely affected by coronavirus; and/or
- the client is using 2020/21 figures for income assessment; and/or
- the client has any future Covid-19 related liabilities.
Deduct future liabilities
In a message to brokers Santander said: “From Monday 19 April, we’ll be changing the way we assess self-employed income for all new residential applications where the business and/or income has been adversely affected by Covid-19.
“Where your client’s business and/or income has been adversely affected by Covid-19 we’ll discard the 2020/21 accounting periods (if available), and our income assessment will be based on the 2018/19 and 2019/20 accounting periods.
“It will be necessary to deduct any future Covid-19 related liabilities from the net profit/profit (after tax) as these will be ongoing costs for the business e.g. bounce-back loans, BBILs or CBILs repayments and deferred tax liabilities.”
All full mortgage applications submitted by 9pm on 18 April will not be affected by these changes.
Any applications submitted from 6am on 19 April, or where a material change is made to an application submitted before 9pm on 18 April, will be assessed on our updated lending policy.
Buy-to-let applications are unaffected by this change.