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Lending Criteria

 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Adverse Credit

Bankruptcy / IVA

The Society will not lend to un-discharged bankrupts.

The society will consider an application where an applicant is a discharged bankrupt or has completed and IVA more than 3 years ago and no further court orders have been registered or further payment issues identified on any standard product. The Society will consider a period shorter than this on a specialist credit repair product subject to a minimum period of discharge or completion of 12 months.

A copy of the discharge certificate or an IVA certificate of completion must be provided.

Lending will be restricted to a maximum LTV of 75%.

Repossession

Where an applicant has had a property repossessed by a previous lender (or instigated voluntary repossession) the Society will consider an application so long as the repossession was made over 3 years ago (The Society will consider a period shorter than this on a specialist credit repair product subject to a minimum period of 1 year) and if the lender incurred a shortfall debt this has been repaid in full by the applicant.

Evidence from the lender who took possession that there was no shortfall or the shortfall has been repaid in full should be obtained.

Lending will be restricted to a maximum LTV of 75%.

CCJ’s & Defaults

For applications where the LTV is less than 75% we will:

  • Ignore CCJ’s / Defaults made more than 1 year ago which have since been satisfied
  • CCJ’s / Defaults up to £500 made within the last 12 months but now satisfied are acceptable
  • Where the applicant has multiple CCJ’s, defaults or they exceed £1000 in value refer to underwriting

The original Satisfaction Certificate must be seen prior to completion or the credit search must confirm that the CCJ is satisfied.

For applications where the LTV ratio is over 75% we will:

  • Ignore CCJ’s/Defaults that were made more than 3 years ago which have since been satisfied
  • CCJ’s up to £500 made over 12 months ago but now satisfied are acceptable
  • Where the applicant has multiple CCJ’s, defaults or they exceed £1000 in value refer to underwriting

The original Satisfaction Certificate must be seen prior to completion or the credit search must confirm that the CCJ is satisfied.

Late payments, exceeded limits and arrears on credit agreements

Late payments should be reviewed on a case by case basis and consideration should be made to:

  • The number of payments that have been made missed
  • The frequency of the late payments
  • The number of accounts that are showing late payments
  • When the late payments occurred (are they historic or current?)

Exceeded credit limits on accounts should be checked and reviewed on a case by case basis and consideration should be made to:

  • The number of occasions the limit has been exceeded
  • The frequency of excesses
  • The number of accounts showing excesses
  • The amount of the excesses

Payday Loans

The use of payday loans will be reviewed on a case by case basis and consideration should be made to:

  • The frequency of use
  • The amount of the borrowing
  • When they were last used (are they historic or current?)

The Society will also consider applications where the applicant has been declined by another lender in the following situations:

  • Failed the lenders credit score
  • Failed lenders Underwriting Criteria
  • Property or property type is unacceptable to that lender

Affordability

From the expenditure data, we will work out the applicant(s)' free disposable income, which is total net income minus committed, essential and personal expenditure. Then, we will assess the monthly mortgage payment against the free disposable income to ensure the loan is affordable.

As an additional assessment of affordability, we need to stress-test the mortgage payment, for which we currently use 2% above our Standard Variable Rate.


Age of applicants

The Society does not have an upper age limit for mortgage lending. However, where the mortgage term expires after retirement, the age of the applicant whose income we are relying on and their ability to service the loan after retirement will be assessed.

The minimum age on application is 18 years.

Where the mortgage term expires after retirement, or the expected retirement age of the applicant on whose income we are relying for the loan, their ability to continue to service the loan after retirement must be assessed. This includes obtaining details of pension or other income in retirement and then assessing the applicant's ability to service the loan based on the affordability criteria.

We do not accept applications for lifetime or equity release mortgages.

Lending up to retirement

  • Maximum 95% LTV
  • Maximum term 40 years
  • Employed – rely on employed income to age 70 unless application states that they will retire prior to this
  • Self-employed non-manual – self-employed income can be utilised to age 75 unless the application states that they will retire prior to this
  • Self employed manual – rely on self-employed income to age 70 unless application states that they will retire prior to this

Lending into retirement

  • Maximum 75% LTV
  • Maximum term 40 years
  • Employed – rely on employed income to age 70 unless application states that they will retire prior to this
  • Self-employed non-manual – self-employed income can be utilised to age 75 unless the application states that they will retire prior to this
  • Self -employed manual – Rely on self-employed income to age 70 unless application states that they will retire prior to this
  • For affordability assessment purposes a second affordability calculation will be carried out based on the projected residual mortgage balance at the point of retirement. The additional affordability assessment will be based on retirement income only (pensions and acceptable investments), over the remaining term
  • Interest only available – subject to standard repayment strategy LTV limits

Lending to the retired

  • Maximum 70% LTV on Capital & Interest repayment basis
  • Maximum 50% LTV on an Interest Only basis (with suitable repayment strategy)
  • Part & Part is not acceptable above 50% LTV
  • Maximum term 40 years
  • Case assessed on retirement income only (pensions and acceptable investments)
  • Minimum income of £20,000 required

Cases with DWP assistance cannot be considered.


BTL Transitional Arangements

The Society may offer transitional arrangements for Buy to Let applicants, subject to the following conditions:

  • The existing mortgage MUST be an existing Buy to Let contract and NOT a residential contract with consent to let
  • The existing mortgage must have completed prior to 1st January 2017
  • The remortgage must be in the same names as the existing mortgage contract i.e. no adding or removing a party

Portfolio landlords are excluded.


Budget planner and affordability spreadsheet

With all applications other than Buy to Let, we will need a fully completed budget planner. We will check this against bank statements and the credit check to ensure that all commitments have been included.


Buy to Let (BTL)

Buy to Let (BTL) is not available for guarantors or first time buyers.

The applicant does not need to own their own home, but must have held a mortgage in the past.

BTL has a maximum LTV of 80%.

Applications can be accepted from employed, self-employed or retired applicants. We will not accept applications where the applicant is in receipt of "non-employment" state benefits, including (but not limited to) Child Support Maintenance, Council Tax Benefit, Housing Benefits, Income Support (including SMI), and Jobseeker's Allowance.

The minimum income requirement for a BTL application will be £25,000 gross income. Please note that in the case of joint applicants, one applicant must earn the minimum required figure of £25,000 gross.

We only allow BTL borrowers to have three let properties with us, including the one being applied for, and no more than three let propeties within the total portfolio.

No multiple occupancy within self-contained units or company lets.

Capital raising may be permitted provided that the reason is acceptable to us. Debt consolidation is not permitted on Buy to Let applications.

With an application that has multiple BTL properties, we will take a total of the monthly payments across the portfolio and the total rental income across the portfolio must equate to at least 145% of the total monthly payments.

The minimum loan amount for a Buy to Let application is £75,000. The amount we lend to individual or joint borrowers cannot exceed £750,000.


Capital raising

If applicants want to raise capital, we will allow this in principle, but loan amounts will depend on LTV and the purpose of the loan.

  • If the applicant is borrowing for home improvements, any amount up to 90% LTV can be considered.
  • For debt consolidation, we will consider up to a maximum of 90% LTV, assessed on an individual basis by the underwriter. Debt consolidation is not permitted on Buy to Let applications.
  • For any other purpose we will consider a maximum additional amount of £100,000 up to a maximum 90% LTV. However this will be restricted to 75% LTV for a second-home purchase.

If the applicants are purchasing under the right to buy scheme, we will only lend extra funds for home improvements up to 75% of the valuation amount.

There is no restriction on the term of the Additional Borrowing subject to the Society's usual lending policy (this may extend beyond the main account).


Capital raising fees

Any fees due can be paid up front and will be indicated on the application form if the borrower chooses to do so. If the fee is to be paid up front then this needs to be collected prior to issue of the mortgage offer. If the fee is to be added to the loan this must be added to the loan amount in the affordability calculator. Where a deed of postponement (see below) is administered by the Society, a fee will be charged to the applicants mortgage account – but again, they can choose to pay the fee upfront (refer to Tariff of Charges).

Solicitors
Applicants need a solicitor in these circumstances:

  • purchases of land and transfers of equity
  • staircasing on Shared Ownership properties.
  • Debt consolidation (unless they have sufficient income to deduct the commitments).
  • All debt consolidation for credit impaired customers
  • Repaying second charges

If solicitors are required their costs must also be met by the applicants


Committed expenditure

  • Loans
  • HP agreements
  • Child maintenance and CSA/CMS
  • Shared Ownership rent
  • Shared Equity loan repayment
  • Cost of repayment vehicle (interest only)
  • Credit/Store cards

For any financial commitment declared on the Mortgage Application Form plus those appearing on the credit search with an outstanding term of 12 months or more, we will deduct a sum equivalent to 12 monthly payments from the assessable income.

Where there are less than 12 months to run on a commitment, the outstanding balance will need to be deducted from the assessable income. For credit/store cards 4% of the outstanding balance will be deducted.


Debt consolidation and credit-impaired customers

Where a customer is debt consolidating, they must sign an undertaking drawn up by the Solicitor committing them to repay the debts in full on completion of the advance (unless they have sufficient income to deduct the commitments)

Where a customer is credit-impaired the Society is unable to consider an application for debt consolidation unless they have sufficient income to deduct the commitments. A credit-impaired customer is defined as a customer who:

(a) within the last two years has owed overdue payments, in an amount equivalent to three months' payments, on a mortgage or other loan (whether secured or unsecured), except where the amount overdue reached that level because of late payment due to errors by a bank or other third party; or
(b) has been the subject of one or more county court judgments, with a total value greater than £500, within the last three years; or
(c) has been subject to an individual voluntary arrangement or bankruptcy order which was in force at any time within the last three years



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