Important message – changes to lending criteria
The following changes have been made to the Society’s lending criteria:
Due to the changing nature of benefits income, the following clarification to the policy has been made:
- The use of Disability Allowance is limited to those applicants who are classed as within the ‘Support Group Disability Allowance’ category (as defined by the DWP) is acceptable income up to 100% of the amount verified
Interest only (excluding BTL)
The Society continues to allow borrowers to use an interest only repayment strategy to repay the loan and will verify each repayment vehicle (which must be in place for 12 months before date of mortgage) as shown below:
- Verifications, of a lump sum payment, to be through statement dated within the last 12 months. This can be to a maximum of 25% (the maximum allowable lump sum withdrawal) of the expected pension pot, based on the central estimates provided.
Regulated investments – Endowments
- Verification of the expected pay out to be evidenced through a statement, dated within the last 12 months, using the central projection of the expected final fund.
General savings & investments (including ISA, stocks and shares, unit trusts, investments trusts)
- The general saving / investment balance must be equal to or greater than the loan amount, this is evidenced via statements or certificates, dated within the last 12 months.
- Applicants’ with existing savings or investments balances to be supplemented by on-going monthly savings will be considered. An assessment will be undertaken by Mortgage Lending to establish if the declared existing savings or regular monthly savings amount is a plausible repayment strategy. Applicant to provide previous 12 month history of the monthly payments (if these vary then an average could be considered).
Sale of Property
- Policy clarification point.
Where the repayment strategy is the sale of the property being mortgaged, the maximum LTV is 50% and must have at least £150,000 equity in the property.
Shared Ownership / Shared Equity
- Shared Ownership and Shared Equity lending to proceed on capital and interest basis only.
These changes are effective from the 19 October 2012.
Cases, fully submitted on to the system, up to and including the 19 October 2012 have 21 days to submit outstanding documents, this applies to all channels.