TSB has revealed it will no longer accept income from furloughed applicants in its affordability assessments for residential mortgages from this Friday.

In July the lender said it would only accept furloughed income if the applicant’s employer was topping this up.

The latest criteria change means that furloughed applicants are unlikely to qualify for a residential mortgage at all unless they have another source of income or their partner is employed and passes the affordability assessment based on their sole income.

In an email to brokers TSB says: “Where an applicant is in receipt of furloughed income, through the Government Coronavirus Job Retention Scheme, this income will not be used for assessment of affordability, whether topped up to 100 per cent by the employer, or not. 

“If an applicant has returned to work on part time hours but also receives furloughed income, the income relating only to the part time hours alone can be used for affordability.

“For joint applications which remain affordable on the other customer’s non-furloughed income, employment details should be captured, and income keyed as £1 for the furloughed customer. 

“Keying income as £1 for furloughed customers is a system requirement and will allow us to continue to support joint mortgage applications, it is not an indication of actual income for the furloughed customer.”

For pipeline cases, TSB says it will honour the criteria that was in force at the point of application.

A Coronavirus Income Impact Form must be completed for all applications.

Decisions in principle submitted before 28 August will not be impacted by this change.