Halifax Intermediaries has updated its affordability guidance to brokers, clarifying its position on furloughed workers and borrowers with income from bonuses or commission.

For borrowers who have been furloughed and are currently being paid entirely by the government, Halifax says that brokers should enter their current reduced income as their basic income.

These borrowers should be receiving 80 per cent of their normal wage or a maximum of £30,000 a year.

Other borrowers may not have been furloughed, but instead their employer may have asked them to accept a lower salary, in which case brokers should input this reduced wage as their basic income.

In its email update, Halifax also reminds advisers that bonus, commission and overtime must represent a regular and sustainable feature of a borrower’s income if it is to be included in their affordability assessment.

The lender says that the usual income verification rules apply, but there may be greater scrutiny of variable income by underwriters.

Self-employed borrowers and contractors may also be referred to underwriters.

Additional information may be sought in order to assess the stability and long-term history of the business within their sector, the availability of funds to meet their fixed commitments such as rent and utilities and the likelihood of the business returning to normal levels of profitability and trade in the future if these have been impacted by covid.

Workers on zero-hour contracts must have been employed on this basis for a minimum of 12 months and the total income earned over the 12 months should be entered by the broker.

If there are different types of income, for example, bonus, commission and overtime, these should be entered separately.

Applicants on zero-hours contracts who are currently furloughed or receiving a substantially lower income will not be considered at this time.

There is a specific policy for nurses on zero-hour contracts.

Brokers may launch an appeal to an affordability decision where borrowers’ income is temporarily reduced but they have other means of funding the mortgage such as a minimum of three months’ income in savings.