Buy to Let Lending Guide

Minimum Age

21.

Maximum Age

Maximum age at term 90 years.

Number of Applicants

Max 4 – we will consider the two highest incomes only.

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.

Maximum Portfolio

The maximum number of BTL properties that can be in mortgage to the Society is 6 and the maximum number of BTL properties held in a portfolio, regardless of whether they are in mortgage to the society, other lenders or mortgage free is 20.

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.

Minimum Income

£20,000 minimum income is required (single or joint) for non-portfolio applications.

Rental Calculation

Purchases and remortgages with additional borrowing - rental income must be at least 140% of the mortgage interest, calculated at the rate of 7.50%.

Remortgages with no additional borrowing - rental income must be at least 125% of the mortgage interest calculated at the rate 6.50%.

Employment

Applicants must be in permanent full or part time employment and continuously employed for the last 6 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 minimum income requirement.

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.

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 Ownerships 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 build prior to 2000.
• Properties with EPC ratings of F and G.
• Tyneside Flats.

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

Non-Homeowner Buy to Let

Where mortgage finance is provided to a borrower(s) who does not own their own main residential property or will not do so on completion of the mortgage. Standard Buy to Let criteria will apply.

Regulated BTL

Where the property will be lived in by a member of the borrower's family or with the intention that they will reside in the property in the future.

When any borrower has stated that they are retired or there is a reliance on pension income to service the mortgage payments at mortgage completion, maximum LTV will be 70%.

Affordability

A full affordability assessment will be carried out in addition to the normal BTL Interest Coverage Ratio Criteria. The affordability assessment will include payments for their own residential mortgage/rent (if applicable) and also payment to the new mortgage. Our Affordability Assessment must result in a surplus net disposable income being evident.

The rental calculation will be based upon the rental figure as confirmed by the valuer rather than the actual rent being paid by the family member.

Standard Buy to Let criteria will apply.

Portfolio Buy to Lets

The maximum number of BTL properties that can be in mortgage to the Society is 6 and the maximum number of BTL properties held in a portfolio, regardless of whether they are in mortgage to the Society, other lenders or mortgage free is 20.

Maximum of 2 properties with the Society in the same postcode area (e.g. 'ST13').

Minimum Loan

£25,000.

Maximum Loan

£1,000,000.

Maximum exposure to a borrower or a related counterparty is restricted to £2,000,000.

Rental Calculation

Rental income on the subject property must be at least 140% of the mortgage interest, calculated at the rate of 7.50%.

Rental income on the total portfolio, including the subject property, must have a combined coverage of at least 140% of the mortgage interest, calculated at the rate of 7.50%.

Acceptable Security

Please refer to 'The Property' Section of our Buy to Let Lending Guide.

Unacceptable Security

New Build Warranties

Please refer to 'The Property' Section of our Buy to Let Lending Guide.