Residential Lending Guide

Minimum Age

18.

Maximum Age

Maximum age at term 85 years, subject to the maximum LTV limits below:-

• Up to the earlier of the elected retirement date or 69th birthday - 95% LTV

• Into Retirement¹ - 80% LTV

• In Retirement² - 70% LTV

¹Lending into Retirement is when either borrower is not currently reliant on a pension and will go beyond the sooner of their 69th birthday or stated expected retirement date before the end of the mortgage term.

²Lending in Retirement is when either borrower has stated they have retired or there is a reliance on the pension income to service the mortgage repayments at mortgage completion.

Residency

UK or EU Citizens with settled status.

Non UK or Non EU citizens must have been residing in the UK for the last 2 years and have non-conditional and permanent right to reside.

Expatriates are not acceptable.

Credit History

CCJ’s/Defaults with an aggregate total of £500 or less, registered over 3 years ago and satisfied for at least 6 months can be considered.

Bankruptcy - discharged more than 6 years ago and no adverse credit within last 3 years will be considered on full application.

IVAs/Trust Deed - Registered over 6 years ago, must have been completed over 3 years ago, no adverse credit within last 3 years and satisfactory explanation will be considered on full application.

Repossession/voluntary surrender of property - not acceptable.

One missed payment on no more than one communication supplier, credit card, mail order or utility bill for no more than one month, can be considered providing the account has been brought up to date and a satisfactory explanation is provided.

No more than one over limit position on credit cards or current accounts during the last 12 months, which should have now been rectified.

Pay Day Loans

Applicants who have taken out a pay day loan within the last three years are not acceptable.

Income Multiples

4.49x main income or 4.49x joint income (after deduction of all outstanding commitments).

We will allow up to 4 borrowers and will consider the two highest incomes only.

Affordability

Applications must pass the Society’s affordability assessment with a surplus net disposable income. It is recommended that you check this using our affordability calculator ahead of submitting a DIP or full application.

Employment

Applicants must be in permanent full or part time employment and continuously employed for the last six months.

Applicants must not be under notice of termination of employment or notice of redundancy.

Retirement Income

Must be in receipt of pension income to meet the income requirement.

For lending in retirement there is a minimum income requirement of £20,000 and for lending into retirement there is a post retirement minimum income of £20,000.

Short-term/Fixed-term Contracts

Fixed-term contracts are acceptable where the applicant is currently on a 12 month contract and has at least 6 months remaining or evidence of a new/renewed 12 month contract must be provided, preferably in the same line of work.

Self Employment

Minimum trading period is 2 years.

An average income over the last two years will be assessed or the latest income will be applied if lower. Income is defined as:

• Sole Traders and Partners - applicant’s share of the net profit.
• Directors of limited companies (25% or greater shareholding) - applicant’s salary/remuneration and dividends.

Maternity/Paternity Leave

Where an applicant is currently on or going on maternity/paternity leave, confirmation is required from the applicant of their intention to return to work on a full-time/part-time basis. For income multiples the actual return to work salary will be used.

For the purpose of the affordability assessment, if income will be reduced whilst on maternity/paternity leave, this reduced income rather than the current income will be taken into account when calculating affordability.

Where affordability cannot be proven during the maternity/paternity leave, this is acceptable subject to evidence of savings to cover any shortfall of income.

A further affordability assessment will also be carried out to take into account the income following return to work if applicable. This affordability assessment will take into account any reduced hours and the proposed childcare costs if the applicant is returning to work.

Acceptable Income

Income taken at 100%

• Basic annual income.

• Regular dividends.

• Occupational pension, private and state pension.

• SIPPS (Self-Invested Personal Pensions).

• Car Allowance.

• Large Town Allowance.

• Housing allowances (police officers).

• Placement Income received by Foster Carers.

• Teachers Learning Responsibilities (TLR).

• Guaranteed Overtime.

• Guaranteed Bonuses.

• Guaranteed Shift Allowances.

Income taken at 50%

• Overtime, Shift Allowances, Bonuses.

• Commission.

• Rental income (unencumbered/mortgage free property).

• Maintenance confirmed by Court Order or 6 months track record.

• Secondary income (continuous 12 months).

• Working Family Tax Credit.

• Income from Trust Funds/Investments – Evidence will be required via an Accountant or last 2 years HMRC Tax Calculations & Tax Overviews.

• Dividend income received, where the applicant is not a director of the company.

Location

England (Including Isle of Wight) & Wales.

Minimum Property Value

£50,000.

Acceptable Security

Residential properties permanently affixed to land, which are not mentioned in the unacceptable security section below, are suitable security for mortgage lending subject to confirmation from the valuation report.

Unacceptable Security

• Non standard construction. This also includes Laing Easiform/Wimpey No Fines or similar construction types.

• System built properties registered under the Housing Defects Act 1984.

• Flying freeholds over 15%.

• Properties with residential restrictions.

• Properties without a kitchen, wc and bathroom.

• Properties with agricultural restrictions, farms and small holdings.

• Properties with more than 5 acres of land.

• Live/Work Units.

• Houses of Multiple Occupancy (HMO).

• Properties adjacent to or above retail outlets including: Fast Food/Take Aways, Wine Bar/Bistro, Public Houses, Off Licence, Betting Shops, Dry Cleaners, Petrol Stations.

• Shared Ownership properties unless under the Help to Buy Scheme.

• Freehold Flats or Maisonettes.

• Ex-Local Authority/Housing Association Flats or Maisonettes.

• Flats in blocks with shared walkway access.

• Flats with cladding unless an EWS1 form is supplied which confirms that they are rated A1 or A2.

• Leasehold properties with less than 75 years remaining on the lease at the end of the mortgage term.

• Properties which have internal door locks.

• Properties which are owned by the current owner or current vendor for less than 6 months.

• Properties which are not ready for immediate occupation.

• Properties which are affected by progressive structural movement, dry rot, Japanese Knot Weed or contaminated land.

• Properties listed as defective under the 1984 & 1985 Housing Acts unless rebuilt to NHBC Standards and with appropriate guarantees.

• Properties in which High Alumina Cement has been used in the construction.

• Prefabricated buildings and unrepaired PRC constructions.

• Properties with an anticipated life span of less than 25 years beyond the end of the mortgage.

• Flats in blocks of more than 6 storeys, basements/underground parking count as 1 storey.

• Steel framed structures built prior to 2000.

• Studio flats where the LTV is greater than 75%.

• BTL properties with an EPC rating of F or G.

• Tyneside Flats i.e. criss-cross or cross-over leases.

New Build Warranties

Any property which has been built / converted within the last 10 years must hold an acceptable guarantee / certificate

Acceptable guarantee/certificates include:

• NHBC Certificate

• Zurich Municipal Policy

• Protek Home Warranty

• Premier Guarantee

• Checkmate - Castle 10

• Architects Completion Certificate

• Build Zone

• Local Authority Building Control (LABC New Home Warranty)

• Building Life Plans

• ICW

• One Guarantee Ltd

Ground Rent that exceeds £250 per annum outside London and £1000 per annum inside London is not acceptable.

Repayment Strategy

Terms of Acceptance

Evidential Requirements

Investment Plan

Must have maturity value at least equivalent to the loan amount.

Production of the latest annual/bonus statement or forecast. The cost of the premiums is to be included in the Affordability Assessment.

Sale of property

There must be sufficient equity to sell the mortgaged property and purchase another property, at current prices, without the requirement of a mortgage. Moving into rented accommodation is unacceptable.

The age of all applicants must be no greater than 69 at the end of the mortgage term.

Confirmation from the customer of the property type/area they would move to. Verified by an online property search and/or property sales particulars.

Other Assets (Property/Land)

These must be wholly owned by the applicant (with or without a mortgage), readily saleable and the equity in the property must be of equivalent current value to the proposed Interest Only loan amount.

To assess its current value a valuation will be arranged by the Society and paid for by the applicant(s).

Savings

These must be in an accessible account and have the potential to repay the mortgage based upon a reasonable rate of return.

Production of Account Book or Bond Statement. The cost of any contribution is to be included in the Affordability Assessment.

Pension Lump Sum

This must be equivalent to the amount of the Interest Only element of the loan.

Confirmation of the current value, and estimated final value of lump sum. The cost of any contribution is to be included in the Affordability Assessment.

Right to Buy

The Society may lend up to 100% of the purchase price with any fees being paid from the customer(s) own resources.

Home improvements can be funded by the mortgage, subject to estimates and providing the Loan to Value does not exceed 85% of the improved value.

Where LTV exceeds 80%, it is a requirement that the customer contributes at least 5%.
 

Unacceptable:-

Ex-Local Authority flats

Right to Acquire applications