Virgin Money has made a big change to its mortgages. Virgin Money has updated its lending criteria to include a broader range of benefits in its affordability assessment in the wake of Christmas and the New Year.
The lender will now include 15 different types of benefits, including the Department for Work and Pensions ( DWP ) Adult Disability Payment, Carer’s Allowance, Child Benefit and Child Tax Credits, and more, including HMRC’s working and family tax credits.
Other benefits listed by the mortgage provider and lender includes Employment and Support Allowance, Incapacity Benefit, Personal Independent Payment, reduced earnings allowance, Universal Credit and War Disablement Pension.
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Virgin Money stipulates that at least one application must be in receipt of earned income, with any housing benefit received deducted from this income. Child Benefit is not included if one applicant earns over £60,000 a year – as this benefit is removed via tax adjustments.
Virgin Money said that if either applicant’s total gross income is over £60,000, Child Benefit cannot be included as income. They also stated that at least one applicant must be in receipt of earned income and any housing benefit shown on the Universal Credit award letter should be deducted from the income.
Rachel Springall, Finance Expert at Moneyfacts, said: “Borrowers who prefer to lock into a shorter-term mortgage may be pleased to see that the rate gap between the average two- and five-year fixed mortgage has dropped to its lowest margin in two years (January 2023).
“However, it remains the case that the average five-year mortgage rate is lower than its two-year counterpart, which may be more enticing for those who want peace of mind for longer when it comes to their monthly mortgage repayments.
“There was a mix of rises and falls during 2024 and it will be hard to predict where interest rates might go this year, particularly should stubborn inflation persist. However, there were big expectations for fixed mortgage rates to fall, but this could take longer should the markets be unsettled and if swap rates start to rise.
“Lenders may be cautious in their rate setting but they need to make efforts to entice new business and act quickly if there is volatility on future rate expectations. There are millions of borrowers due to come off fixed deals, so remortgage activity will be booming in 2025.”