Residential Lending Criteria

All products have the same maximum adverse permitted, as outlined below.

Any defaults, CCJs or secured arrears in the 3 months before application will result in a decline.

Outer limits (beyond these = decline):

• Defaults: up to 5 in last 24 months

• CCJs: up to 3 in last 24 months

• Secured arrears: up to 1 in last 12 months; up to 3 in last 36 months

• Unsecured arrears: not counted but may affect the credit score.

• Debt Management Plans (DMPs):

  • Satisfied up to 95% LTV.

  • Active up to 85% LTV.

  • Active DMPs must have been running for at least 12 months with no missed payments.

  • If a DMP is to remain post completion, the payments will be included within the affordability calculation.

  • Debt Arrangement Schemes (DAS) are treated the same way.

All applications are subject to internal credit scoring.

Minimum: 18 (at application)

Maximum: 75 (at maturity)

All loans must pass affordability checks in consideration of the gross loan value, i.e. inclusive of any fees that are added to the loan advance. Affordability is based on the ability of the applicant(s) to afford their monthly payments relative to the repayment strategy (i.e. Capital Repayment or Interest Only).

The value of the incentive must be deducted from the purchase price or value whichever is lower, and lending based on the lower amount. If a standard arrangement for that development, non-cash incentives (in accordance with the disclosure of incentives form) can be ignored.

Amount Eligible - 100%
(Any mortgage should not be solely reliant on this Income Source unless Rental Income or Pension Income is included in the application).

If an applicant has a criminal conviction, this must be spent prior to application (motoring convictions excluded).

Applicant(s)s with DMPs registered are acceptable subject to all of the following criteria:

• Satisfied up to 95% LTV.

• Active up to 85% LTV.

• Active DMPs must have been running for at least 12 months with no missed payments.

• If a DMP is to remain post completion, the payments will be included within the affordability calculation.

• Debt Arrangement Schemes (DAS) are treated the same way.

Where the applicant has sufficient equity in existing property, it is acceptable for deposit funds to be raised by way of a remortgage or 2nd Charge.

For purchases, the deposit represents the difference between the loan requested and the purchase price.

Application is not acceptable if any party is subject to any form of immunity.

Amount Eligible - 100%
(Any mortgage should not be solely reliant on this Income Source unless Rental Income or Pension Income is included in the application).

Applicants must be registered to pay tax on their income in the UK, and the source of income must be within the UK, paid in GBP.

Company directors owning >=25% of company, are categorised as self-employed for assessment purposes. Otherwise, they are categorised as employed.

For applicants employed under the Construction Industry Scheme, (“CIS”) where applicants pay their own tax or are sub-contracted to >1 company, they are categorised as self-employed. Otherwise, they are categorised as employed.

PAYE applicants must have been in their current job for a minimum of 3 months. The reason for any gap in employment >4weeks in the last 12 months should be established and approved by Underwriting. Employment must be permanent, except where employment via a zero-hours or fixed term contract.

Zero-hour contracts are only permitted when they are not the sole source of income for the application. Where income from zero-hour contracts/bank nursing is required, then the eligible income is the average pay from the last 3 months.

Umbrella company employment is acceptable. Income must be net of Umbrella company deductions such as Umbrella fees, Employers NI and holiday pay, but before the usual PAYE tax, pension and Employee NI deductions.

Employed incomes are to be verified to a satisfactory level by means of 3 months’ payslips. If payslips are not monthly, the requirements are a minimum of a continuous 12 weeks (3 months) payslips.

Where the applicant is on parental leave and are returning on the same terms, income will be assessed on pre-parental leave salary evidenced by the 3 months’ payslips prior to commencing parental leave.

Acceptable with no additional deposit from the applicant subject to:

• Meeting the requirements in Anti-Money Laundering and Counter Terrorism procedure and associated policies;

• The amount is a non-refundable gift and declared as such;

• The deposit funds are not from and have not been taken from a child’s bank/savings account;

• The individual making the gift will have no interest in the property; and

• Appropriate deed of gift indemnity insurance is put in place by the acting solicitor.

Purchase from a close family member (as defined in the AML Procedure) at discounted purchase price will be assessed in the same manner as gifted family deposit subject to:

• Confirmation that the vendor has relinquished all rights to the property;

• The seller undertaking independent legal advice.

Flying freeholds can be considered provided the percentage thereof does not exceed 20% of the total area. The valuer must comment and confirm total percentage.

Must be self-contained with private facilities and direct access to the highway via common parts.

Where the security is situated above commercial premises, or is an Ex-Local Authority owned the case may proceed subject to the valuer being satisfied with the overall saleability of the property and not registering any adverse comments.

The allowable income types and the proportion of the income used in the calculation of affordability are outlined below.

• Basic salary – 100%

• Shift, Large Town and Car Allowances – 100%

• Childcare Payments and Mortgage Subsidies – 100%

• Bonus, Overtime, Commission – 50% (Key full amount)

Universal Credit (Standard, Child, Disabled Child, Carer and Disability elements ONLY).

100% After deductions (applied evenly).

Where PAYE and only basic income is used and does not fluctuate – latest month’s Universal Credit statement.

Any other income – average of latest three month’s Universal Credit statement.

Purchase or Remortgage of a residential property as an applicant’s sole, main residence.

Minimum: 5 years

Maximum: 40 years

Minimum: £25,001

Maximum: £5,000,000

Loan Amount - LTV Limit

• Up to £2,000,000 - 95% LTV

• Up to £3,000,000 - 90% LTV

• Up to £5,000,000 - 85% LTV

Extra LTV limits:

• New Build - maximum 90% LTV

• Remortgage with element of Debt Consolidation - maximum 90% LTV

• Studio Flat - maximum 70% LTV

• Active DMP - maximum 85% LTV

• Nine Elms regeneration area - maximum 55% LTV.

Properties must be in either England or Wales.

Amount Eligible - 100% (Any mortgage should not be solely reliant on this Income Source unless Rental Income or Pension Income is included in the application).

Minimum confirmed gross annual household income is £10,000 p/a in all instances, including pensions income. The income that contributes to this minimum must be from allowable sources in accordance with this Policy.

Where volumetric construction or POD type construction is used, they must be supported by a Build Offsite Property Assurance Scheme. E.g. three-dimensional units which are fully fitted off-site and then transported and craned onto site.

A full 3-year UK history is required, and they must reside in the UK at completion.

UK Nationals

For the purposes of this Policy, British Forces Post Office (BFPO) addresses are considered to be UK.

Non-UK Nationals

In addition to residency requirements, applicant(s) must provide evidence of permanent rights to remain in the UK.

Maximum: 2

New build properties are those that are less than two years old (from the date of practical completion) and/or have not been lived in.

Properties aged less than ten years, recently converted or occupied for the first time must benefit from one of the following:

• ABC+

• Advantage HCI

• Ark Residential New Build Warranty

• BOPAS (Build Offsite Property Assurance Scheme) (Modern Methods of Construction (MMC) only see section 4.11)

• Build Assure

• Building Life Plans

• Build zone

• CADIS

• Checkmate (Castle 10)

• Global Home Warranties

• Home Proof

• International Construction Warranties (ICW)

• LABC

• N.H.B.C. guarantee

• One Guarantee

• Premier Guarantee Scheme

• Professional Consultants Certificate (previously an Architect’s Certificate). Detailed requirements are provided in section 6.7.4 of the UK Finance Lender’s Handbook. The issuing architect should have minimum professional indemnity insurance equivalent to the greater of £500,000 or the property value. Normally only acceptable on developments with up to 10 units; refer to Real Estate if higher.

• Protek

• The Q Policy

For developments previously holding a CRL warranty, a retrospective warranty will be accepted from one of the above providers subject to a site survey having been undertaken by the new warranty provider at the time the retrospective warranty was underwritten.

In all other circumstances, warranties must exist upon completion of the property and cannot be applied retrospectively.

New build properties are those that are less than two years old (from the date of practical completion) and/or have not been lived in.

New Build – 6 months from date of offer plus up to 1 month extension. Subject to valuation validity.

Non-New Build – 3 months from date of offer, can be extended up to valuation validity period plus 1 month.

AIP – 28 days from date of credit search.

When occupants, aged 18 years old or over, other than those that are party to the mortgage application are declared, the appropriate condition for a Deed of Consent must be added to the offer.

All proposed owners of the security must be included in the mortgage application.

Acceptable - State or otherwise.

Amount Eligible - 100%.

A property that is subject to any planning or occupancy restrictions are not acceptable unless the underwriter considers that the overall case is strong, saleability is not detrimentally affected, and any restriction is commensurate with the property/location.

Full rationale should be included in the case notes where appropriate. New build properties that are subject to Section 106 Planning Obligations are acceptable subject to no adverse comments from the conveyancer.

Single residential units only.

Minimum: £75,000

For all remortgages, the amount of capital being raised and its purpose must be established. Independent legal advice is required where there is an imbalance of debt of >=£10,000. Capital raising for speculative investments, such as purchasing cryptocurrencies or bitcoins, is not permitted.

Remortgages will not be considered where the security property is a new build and has been owned for less than 6 months.

Where the property has recently been inherited, probate (or letters of administration, as appropriate) must have been granted prior to application and verified prior to offer.

Amount Eligible – 100% (with all BTL mortgages to be keyed as commitments).

In all cases it must be evidenced in line with self-employed guidelines.

Personal name – Income from UK Land and Property.

Ltd Co – Dividends/Salary.

Capital Repayment.

2 years income is requested, however if only 1 year’s income is available, this is acceptable subject to the loan being limited to 75% LTV, and meeting an internal Risk Grade.

For any form of self-employment, annual income will be assessed from SA302s, the corresponding tax year overviews supported by 3 months’ bank statements. Underwriting can accept accounting information in lieu of the SA302 and tax year overview only where accounts prepared by accountants who are members of a recognised UK professional body and subject to appropriate professional regulation.

Acceptable income:

• Director – Salary and Dividends

• Sole trader – Net profit

• Partnership – share of Net profit

Where required, specialist reports must be prepared by a reputable and suitably qualified firm.

Where structural movement is not “historic or longstanding” or there is risk of further movement, a structural engineer’s report must be obtained from members of either The Institute of Structural Engineers or the Institute of Civil Engineers and referred to the valuer for comment.

Freehold

Acceptable for Houses only.

Leasehold

There must be at least 50 years unexpired on the lease at the end date of the mortgage term.

• Properties designated defective under Part XVI Housing Act 1985 or Pre-Cast Reinforced Concrete (PRC) where the property and the properties either side have not been repaired under a scheme licensed by PRC Homes Ltd;

• Properties constructed with high-alumina cement;

• Timber framed property with no brick skin/masonry cladding unless it’s an MMC supported by BOPAS. Character period properties are considered on individual merits where buildings insurance is available on conventional terms;

• Pre-1980 steel framed houses. Post 1980 steel framed houses are acceptable subject to a satisfactory structural engineer’s report being received or an acceptable new homes warranty provided (if constructed within the last 10 years);

• Properties where material environmental hazards are present;

• Properties where commercial usage exceeds 20%. The commercial element should not extend to light engineering, livestock, rearing or caring for domestic animals. Such use should not include circumstances where clients are seen on the premises on a regular basis;

• Live/work units;

• Any property deemed unsuitable security by the valuer;

• Any property where there is ongoing movement/monitoring is required;

• Mobile homes and houseboats;

• Grade I listed buildings;

• Any property whose saleability may be adversely affected by local planning or by an unsatisfactory mining search;

• Ex-Local Authority properties within Right to Buy pre-emption period;

• Residential buildings incorporating a cladding system or balconies which may contain combustible material unless agreed by Real Estate following receipt of an EWS1 form or where the building is 18m+ and has been constructed in accordance with the Building (Amendment) Regulations 2018 (validated by solicitor);

• Properties subject to spray foam insulation within the roof space.

• Properties with mundic concrete in designated as Class B or Class C;

• Properties with Japanese Knotweed designated as Class A or Class B. Or Class C if there isn’t a satisfactory management plan in place.

• Ex-Local Authority Flats where there isn’t an active and transactional market within the block/development.

• Properties on a commonhold tenure type.

• Studio flats with a floor area of less than 30m^².

Acceptable: Standard, Child, Disabled Child, Carer and Disability elements ONLY.

Amount Eligible - 100% After deductions (applied evenly)

Any mortgage should not be solely reliant on this Income Source unless Rental Income or Pension Income is included in the application.

The value of the deposit/cash incentive must be deducted from the purchase price or value whichever is lower and lending based on the lower amount.

The required level of deposit to meet product requirements must be provided from an acceptable source.

In all cases the Group will only accept valuations undertaken by valuers on our authorised panel or within Group Real Estate. Brokers or applicants can only request a preferred valuer/firm where the valuation is instructed through the VAS pathway.

Non-New build – 6 months (from date of inspection).

New build under construction – 7 months (from date of inspection).

A new valuation will be required if it expires prior to completion.