Lending Criteria – Buy to Let

 

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BTL Applicants

The following are not acceptable for BTL applications:-

• Guarantors
• Where the mortgage introducer is also the applicant
• Where the applicant is related to the vendor

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BTL Employment and Income

In addition to the standard criteria used for assessing Employment and Income the following is applied to BTL applications. The Society offers 3 different types of BTL lending;

• Standard
• Ex Pat
• Consumer/Regulated

Standard and Ex Pat are not regulated and as such are subject to slightly different criteria in terms of evidencing income and affordability. This table summarises what income can be used to support the differing applicant types:-

BTL Lending Type	Rental Income Assessment	Affordability Assessment
Standard	y	y Where rental income is insufficient
Ex Pat	y	x
Consumer/Regulated	x	y

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BTL Minimum Income

A BTL sole applicant is required to meet the below minimum income levels. For joint applications, at least one applicant should meet the minimum income levels.

Loan Amount	Minimum income requirement – basic/pension (gross)
Loans up to £200,000	£20,000
Loans from £200,001 – £300,000	£40,000
Loan for £300,001 – £500,000	£55,000

  Income from housing allowances, rent allowances and state benefits are not considered. <– Back

BTL Applications Based on Rental Income (Standard and Ex Pat)

Rental income based lending is not applicable for Consumer/Regulated Buy to Let mortgage (please refer to BTL applications based on affordability) Rental income (as confirmed by the valuer) must equate to 145% of the mortgage payment (interest only) which is based upon the a minimum interest rate of 5.5% OR initial product pay rate plus 2% (whichever is the greater) Example: £100,000 x 5.5% x 145% = £7975/12 = £665.58 (the rental income confirmed by the valuer must be equal or more than this figure) For cases where this requirement cannot be met a full affordability assessment is required. For Ex Pat BTLs a copy of the AST and the latest 3 months bank statements are required to evidence rental income if applicable. <– Back

BTL Applications Based on Affordability

For all Consumer/Regulated BTL applications and Standard BTL where the rental income (confirmed by the valuer) does not meet the rental criteria, a full affordability assessment is required. The following criteria will apply in addition to the standard Affordability Criteria.

Existing BTLs	To be considered in the affordability existing BTLs must have been in existence for a minimum of 3 months
Rental Income – New BTL	Full rental income can be used on the affordability assessment
Rental Income Existing BTLs	Full rental income can be included on the affordability assessment subject to evidence being provided that the property has been rented out for a minimum of 3 months Bank statements will be used to verify rental payments being received. The AST will be required
BTL Mortgage Payments	The new BTL and any existing BTL payments will be recorded on the affordability assessment of 145% on an interest rate of 5.5%
Residential Mortgage Payments	Will be recorded on the affordability assessment at their current pay rate

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BTL Tenancy Agreements and Occupancy

The property must be:-

• Available to let immediately and remain available for letting throughout the term of the mortgage.
• Let on an Assured Shorthold Tenancy for a minimum period of 6 months and a maximum of 12 months.

The following tenants/tenancies are not acceptable

• For traditional BTL applications only – renting to family members
• Multiple tenancies
• Student lets or Holiday lets
• Asylum seekers
• Sale and leaseback arrangements

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BTL Exposure

• Maximum portfolio exposure to Hanley Economic Building Society is £500,000
• No more than 3 Buy to Let properties in total (this includes unencumbered properties)

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BTL Property Requirements

• BTL properties must meet a minimum EPC Standard acceptable rating of A – E only

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Ex Pat Requirements

• Applicants must have held a current UK bank account for a minimum of 3 years at the point of application
• Applicants must not have lived in the property or have any intention to live in the property in the future
• Applicants must use a UK Solicitor
• Applicants must engage a Managing Agent to oversee the property. Full details to be provided on application
• Applicants must make mortgage repayments in GBP from a UK bank account in the borrower’s name

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Ex Pat Identification and Verification

In addition to standard Identification and Verification, the following additional criteria applies to Ex Pat applications;

• 3 separate documents are required as proof of current address
• 3 years consecutive address history (to be recorded on the mortgage application form)
• Proof of last UK address
• Original documentation must be certified by the applicant’s overseas bankers or solicitor/notary in their country of residence
• The introducing intermediary cannot certify these documents

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Ex Pat Acceptable Countries

Applicants from Ex Pats residing in the following locations are permitted.

Austria	Denmark	Hungary	Luxemburg	Romania
Belgium	Estonia	Iceland	Malta	Singapore
Bulgaria	Finland	Ireland	Netherlands	Slovak Republic
Canada	France	Italy	New Zealand	Slovenia
China	Germany	Japan	Norway	South Korea
Cyprus	Greece	Latvia	Poland	Spain
Czech Republic	Hong Kong SAR	Lithuania	Portugal	United States

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