Residential Lending Guide

Residential Lending Guide

Please see below for our residential lending guide - if you have any questions please get in touch with one of the team and we will endeavour to help you.

 

Minimum Loan

£25,000.

Maximum Loan

95%** - £400,000
90%    - £400,000
85%    - £400,000
80%    - £500,000
75%    - £1,500,000 (£500,000 for capital raising)

**  Applicants must each have at least one (sole applicant) and two (joint applicants) active and satisfactory credit lines evident at the credit bureaux, excluding communications and mail order.

Loan to value restrictions apply where lending term exceeds the age of 67, please see 'The Applicant' section for full details.

Minimum/Maximum   Term

5 years – 40 years.

Repayment Basis

Repayment.

Interest Only – up to 75% LTV.

Minimum Property   Value

£75,000.

Loan to Value

House Purchase/Remortgage – 95%.

Capital Raising – 75% (max 30% of property value for debt consolidation).

Second Residential Loan - 75%.

Deposit

Personal savings.

Non repayable gift from immediate family member.

Sale/remortgage of existing property.

Forces Help to Buy.

Unacceptable Lending

  • Applications which have previously been declined by other lenders (other than due to credit score).
  • Remortgage applications where the applicant has not owned the property for six months.
  • Capital raising for business or investment purposes or to fund living costs.
  • With the exception of BTL, loans are not available for investment purposes.
  • Bridging finance.
  • Applicants who have taken out a pay day loan within the last three years.
  • Purchase / remortgage of a property owned by applicant’s own business.
  • Self-build.
  • Foreign Currency Loans.
  • Residential applications with BTLs in the background which do not achieve an overall rental return of 140% of their monthly mortgage payments.

Minimum Age

18.

Maximum Age

No maximum age.  Each case is assessed on it’s own merits.  LTV restrictions will apply based on age at the end of the mortgage term:-

  • Up to age 67      -  95% LTV
  • In to retirement* -  80% LTV
  • In Retirement**  -  70% LTV

*  Borrowers aged under 67 at time of completion but over that age at maturity.

** Borrowers aged 67 and over at the time of completion.

Residency

UK or EU Citizens.

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.

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.

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

4.5x main income or 4.5x joint income (after deduction of all outstanding commitments).

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

Affordability

An income and expenditure statement is completed by all applicants based on their net acceptable income and their actual / proposed expenditure.  Our Affordability Assessment must result in a surplus net disposable income being evident.

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 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 her/his 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, as 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.
  • 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 / Dividends / Investments – Evidence will be required via an Accountant or 2 years HMRC Tax Calculations & Tax Overviews.

Location

England (Including Isle of Wight) & Wales.

Minimum Property Value

£75,000.

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 by the Society's valuer.

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.
  • 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%.

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.  A full retention for the total cost of the works will be made, the retention being released upon completion of the works and subsequent re-inspection and approval by the Valuer.

Type

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.

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.

Where the property is situate outside the United Kingdom they must be free of mortgage.

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.

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