Lending Criteria – Loan Criteria

This section of our criteria is all about our loan criteria. We have broken each element down, please click the required link from the list below to read each element.

 

<–Back to Criteria Home

 

Minimum Loan

Lending Type Minimum Loan
Standard £30,000
Shared Ownership £30,000
Near Prime £30,000
Further Advance £10,000
RIO £10,000
Buy to Let £30,000
Self-Build/Custom Build £30,000

<– Back

Acceptable Loan Purposes

The Society will consider full status applications for the following types of lending to individuals:-

  • To purchase residential properties for owner occupation (including Right to Buy and Shared Ownership)
  • To remortgage residential properties (encumbered or unencumbered) for owner occupation which may include raising further funds for home improvements or capital raising subject to restrictions.
  • To purchase property that is or will be let
  • To remortgage property that is or will be let (encumbered or unencumbered) which may include raising further funds for home improvements or capital raising subject to restrictions.
  • To build a residential property or refurbish an existing property – this includes demolition and rebuild, and completion of a partially built property
  • To buy, build, convert or refurbish a  property to be used as a second home
  • To undertake a conversion where the property is uninhabitable including barn conversions
  • To purchase the freehold title of a leasehold property which is already in mortgage to us
  • To purchase the equity of another party to the mortgage
  • To purchase additional land
  • To raise money by way of a further advance on an existing mortgage for home improvements or capital raising, subject to restrictions.

<– Back

Capital Raising Restrictions

Capital Raising up to 75% is acceptable for any purpose other than:

  • Business purposes
  • Illegal purposes

If capital raising is between 75-85% LTV the following are also excluded:

  • Clearing gambling debts
  • Tax liability
  • Timeshare debts/purchase
  • Deposit on property

<– Back

Unacceptable Loan Purposes

The Society does not consider application for the following types of lending:-

  • Non status;
  • Second charge lending;
  • Lifetime mortgage lending;
  • Home reversion plans;
  • Low start;
  • Negative equity loans;
  • Equity;
  • Index linked;
  • Self-certified;
  • New commercial lending for owner occupiers
  • Commercial mortgages for investors
  • Commercial property development loans, both on residential and commercial real estate;
  • Lending to registered social landlords/housing associations
  • Unsecured lending to individuals (by way of personal loan, overdraft, credit card or otherwise).
  • Lending to anyone who wishes to purchase a property in their own name from a limited company in which they are a director of the company.
  • Portfolio Landlords. A customer is considered to be a Portfolio landlord where they have four or more buy to let properties across all lenders in aggregate

<– Back

Source of Deposit

  • We accept non-repayable gifted deposits from family members on all lending types other than Near Prime
  • Family member is defined as Parents, Grandparents and Legal Guardians only

<– Back

Evidence of Deposit

  • Applicants providing their own deposit will need to provide evidence in the form of bank/savings statements/savings book
  • Applicants receiving a gifted deposit will need to complete a gifted deposit declaration

<– Back

Guarantors

  • Applications supported by guarantors are not acceptable

<– Back

Multiple Residential Mortgages

See Self-Build Second Homes

<– Back

Maximum Repayment Term

  • The maximum repayment term is 40 years (this must not take the applicant beyond the maximum age of 80)
  • RIO mortgage has a maximum term of 55 years and no maximum age

<– Back

Repayment Types

  • The Society will consider both Capital and Interest and Interest Only repayment types singularly for new mortgage borrowing
  • Interest only borrowing is limited by borrower type and LTV

<– Back

Acceptable Repayment Strategies for Interest Only Borrowing

The following are considered to be acceptable repayment vehicles in conjunction with interest only mortgages:-

  • Sale of existing property with a minimum cash equity value of £250,000
  • 25% of the project Personal Pension Policy – the cash lump sum acceptable must cover the capital (the lowest current projection rate will be used)
  • Equity Based ISA – Current projection via Proprietorial Funds Platform
  • Deposit based savings account
  • Unencumbered residential property(ies) valued in excess of £250,000 – subject to a collateral charge being taken by the Society

Please note that for Retirement Interest Only (RIO) lending there is no need for a repayment strategy. The mortgage is repayable on death or moving into residential care / alternative accommodation.

<– Back

Unacceptable Repayment Strategies for Interest Only Borrowing

The following are considered to be unacceptable repayment strategies in conjunction with interest only mortgages:-

  • An expectation that the value of the property in mortgage will increase over the mortgage term sufficiently to enable the customer to sell the property to repay the capital (and any interest accrued) (In accordance with MCOB)
  • An intention to utilise an expected, but uncertain, inheritance to repay the capital (and any interest accrued)
  • The sale of the property where it is the customer’s main residence and it is considered that the property will not have the potential to provide sufficient funds for the borrowers to repay the capital (and any interest accrued)
  • Interest roll up is not acceptable

<– Back

Offer Validity

  • Offers are valid for a period of 6 months

<– Back

First Time Buyers

  • Applications from first time buyers are acceptable for all lending types

<– Back

Portability Criteria

Please see the mortgage product information for details of mortgage portability.

<– Back