Our Lending Criteria Guide

Transcription

1 Our Lending Criteria Guide June 2015: Issue aldermore.co.uk/resi FOR INTERMEDIARY USE ONLY This guide is a general guide to our full lending policy. If more details are required please contact us. Aldermore Bank PLC. Aldermore Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. (Financial Services Register number: ). Registered Office: 1st Floor, Block B, Western House, Lynch Wood, Peterborough, PE2 6FZ. Registered in England. Company No Telephone calls may be recorded or monitored for security and training purposes. ARM

2 The following details Aldermore s main criteria and is designed to help you understand the type of business we will consider. *Note: Criteria may differ for Help to Buy: mortgage guarantee see below. If more details are required please contact us on Loan Residential Buy to Let Purpose Term Purchase or Remortgage* Purchase transactions involving a property that was previously sold within the last 6 months are not acceptable. *(Remortgage not available on Help to Buy: mortgage guarantee) Minimum 10 years Maximum 35 years Minimum loan Minimum 25,000 Maximum loan and LTV Maximum 1,000,000 to 75% LTV 400,000 to 85% LTV *(Maximum 400,000 to 95% LTV on Help to Buy: mortgage guarantee) Maximum 1,000,000 to 70% LTV 600,000 to 75% LTV 400,000 to 80% LTV Credit status Residential Buy to Let Mortgage Arrears CCJs / Defaults Bankruptcy / IVA Repossession None in last 1 year None in last 3 years (CCJs & Defaults over 3 years considered) Satisfied for 6 years Not Accepted Repayment method Residential Buy to Let Repayment types accepted Repayment or Interest only *(Interest only is not available on Help to Buy: mortgage guarantee) Repayment or Interest only Part Repayment & Part Interest only Not accepted Interest only maximum LTV 75% LTV 80% LTV Interest only proof of repayment plan Proof of repayment plan and Interest only declaration form required. Where sale of residential property is the repayment plan, a minimum 150,000 equity ( 250,000 in London and the South East) is required at the start of the mortgage. Sale of main property cannot be combined with another repayment plan. (For a definition of London and the South East area, refer to the last page of the guide). Proof of repayment plan is not required. Sale of property is acceptable as a suitable repayment vehicle. Direct Debit Payments to the mortgage account are to be made monthly by Direct Debit from a bank account in the applicant s name. Direct Debit mandates in limited company names are not acceptable. Deposit Residential Buy to Let Builder or vendor deposits Other sales incentives provided by the house builder Family gifted deposit Evidence of deposit Not accepted. Acceptable if they relate to the payment of legal costs and stamp duty. The inclusion of white goods / floor coverings / curtains / blinds and the upgrade of kitchen / bathroom in the sale of new build are also acceptable. The maximum value of the sales incentive should not exceed 5% of the purchase price. *(Builders incentives / part exchange deals are not accepted (with the exception of white goods, carpets and curtains) on Help to Buy: mortgage guarantee). Full gifted deposits are acceptable from close relatives including step relatives. (A close relative is defined as a spouse, parent, grandparent, sibling, or child). A letter must be provided by the Solicitor acting in the mortgage transaction confirming that the gift is non-repayable and that no charge will be registered on the security property. When submitting proof of deposit ensure that: Evidence is provided in the form of bank or building society statements or pass book in the applicant(s) name Any documentation provided is supplied in its original form without any kind of blanking out or alteration The documentation shows that sufficient funds are available, how the deposit has been built up and any lump sum transactions are explained Proof should be recent i.e. dated within the last 3 months (12 months in the case of ISA s or other annual interest types of accounts) Remortgage Residential Buy to Let Remortgage period Remortgages within the first six months of the original purchase date are not normally acceptable. Remortgaging out of bridging finance provided by other lenders will be on a pound-for-pound basis only and capital raising will not be available. Remortgage of an Aldermore bridging loan onto an Aldermore term product Where an Aldermore Bridging loan exits onto a term product: It will be free from the normal 6 month ownership rule (if held for at least 1 month). Capital raising in excess of the original bridging loan will be considered on any uplift in value confirmed by the original Surveyor, subject to scheme limits. Remortgage purpose Remortgages will be considered for any legal purpose, although capital raising for business purpose is limited to 75% LTV. *(Remortgage not available on Help to Buy: mortgage guarantee)

3 Transaction Residential Buy to Let Inter family sales, Purchase at Under Value and Deed of Gift Only considered when the property is being purchased from a close relative (A close relative is defined as a spouse, parent, grandparent, sibling, or child). The vendor must not reside in the property after completion. The maximum loan will be based on purchase value and limited to a maximum of 75% of the market valuation and no more than 95% of the purchase price (with applicant to provide 5% deposit). Inter family sales, Purchase at Under Value and Deed of Gift not accepted. Transaction types we do not lend on Assignable contracts, new build transactions with a bulk off plan discount, Right to Buy (RTB) purchase, remortgage of a Right to Buy (RTB) property within pre-emption period, properties which are being bought from the applicants own limited company, Homebuy scheme, Key Worker Grants & Assisted purchase schemes, shared ownership purchase scheme and power of attorney. Applicants Residential Buy to Let Maximum applicants 2 Minimum age 21 years 21 years (first time landlords 25 years) Maximum age Married applicants Mortgage / secured loan conduct 70 years at end of mortgage term (the maximum mortgage term cannot extend beyond the stated retirement date) Applications must be in joint names where an applicant is in a legally sanctioned relationship (i.e. married or in a civil union). Proof of last 12 months mortgage payments required on the residential mortgage and 50% of the mortgage portfolio. 85 years at end of mortgage term BTL applications can be accepted in sole names regardless of marital status. Proof of last 12 months mortgage payments required on 50% of the mortgage portfolio. ID and Residence Residential Buy to Let Summary Proof of ID acceptable documents Proof of Residence acceptable documents Aldermore uses an electronic identity verification system to check application data against a variety of public databases. If electronic verification does not pass the expected threshold proof of identity and residency will be required. Gaps in the voters role will be investigated to ensure 3 years address history is covered. Valid UK Passport Valid UK Driving Licence Photo card (Full or Provisional) Valid Non UK passport or National ID Card HM Forces / Police Warrant Card Firearms certificate or shotgun licence Identity card issued by the Electoral Office for Northern Ireland HM Revenue & Customs correspondence - relating to current tax year Ensure that the documentation is: Valid and in date Certified as a true copy (and likeness if photo ID) Signed and dated by an approved certifier (FCA/PRA authorised introducer or a professional person covered by Anti Money Laundering Legislation (AML) with their name printed) Utility bill Full driving licence Bank or credit card statement Latest Council Tax bill Current HM Revenue & Customs demand or notice of coding Ensure that the documentation is: Valid and in date (statements and utility bills must be no older than 90 days old) Certified as a true copy (and likeness if photo ID) Signed and dated by an approved certifier (FCA/PRA authorised introducer or a professional person covered by Anti Money Laundering Legislation (AML) with their name printed) Nationality Residential Buy to Let UK and EU Nationals Non UK and EU Nationals Applicants must be UK or EU nationals and have been continuously resident in the UK for the last 2 years. Ex pats and applicants with diplomatic immunity are not accepted. We can consider non-uk and EU nationals providing they have been resident in the UK for the last 2 years and also have a non conditional and permanent right to reside. For applicants who are not UK and EU passport holders or do not have automatic permanent right to reside in the UK, please supply us with one of the following: The applicant s passport confirming identity along with the stamped page confirming permanent right to reside in the UK (the passport number should be identifiable on both pages) or a letter from the Home Office confirming permanent right to reside. First time buyers (FTB) Residential Buy to Let Definition A first time buyer (FTB) is defined as someone who has never previously owned a property. Restrictions Accepted with no restrictions Not accepted First Time Landlords (FTL) Residential Buy to Let Definition Restrictions and requirements A first time landlord is defined as someone who has not owned a Buy to Let property in the last 12 months. Maximum 600,000 loan to 75% LTV. Minimum age of 25 years. Must own their current home and have 12 months satisfactory conduct where mortgaged. If FTL does not have a current mortgage and there is no mortgage account conduct visible on the credit bureau, proof of property ownership will be required. Minimum income of 25,000 applies per application. In a joint application where one of the applicants is not FTL, a minimum age of 21 will apply to that applicant.

4 Affordability Residential Buy to Let Minimum income Affordability 10,000 (income will be verified, see income verification details below) Affordability based income calculation. Income (personal and/or rental) will be assessed to confirm the applicant s ability to meet credit commitments and withstand future interest rate rises. No minimum income for existing landlords. (applicants must have a verifiable income source, see income verification details below). Minimum rental coverage of 125% at the product pay rate or reversion rate (whichever is higher). If rental cover is between 125% and 150% an additional stress test will also be undertaken, which may be met via rental income or surplus personal income after debt is taken into account. If cover is initially at least 150% or if the loan fits on a capital & interest repayment calculator no stress test will be applied. Personal income will be verified in all cases. Login to the Aldermore application processing system to access affordability and rental calculators: aldermore.co.uk/login-centre Employed Residential Buy to Let History Document requirements Acceptable income Working for family Directors public limited companies Minimum 12 months history (last 3 months in same occupation). Latest P60 and payslips covering the last 3 months (or employers reference). Total gross annual income including basic salary, 100% of London weighting, 100% of shift allowance, 100% of car allowance, 50% of guaranteed and regular overtime/bonus/commission, plus any allowable additional and acceptable income (see other income details below). The company accountant will be required to provide an employment reference in addition to the standard employed income verification. A director of a public limited company (or their direct subsidiaries) will be regarded as being an employee of the company for the purposes of employment and income verification. Self employed Residential Buy to Let Sole traders, partners, and sub contractors Directors private limited companies Partners in limited liability partnerships Accountants Qualifications Minimum trading period 2 years. 2 years fully certified accounts, an accountant s reference, or 2 years HMRC Self Assessment tax returns (SA302 s & Tax Year Overviews). Income will be derived from the net profit figures. Minimum trading period 2 years. If the applicant s shareholding is less than 25% they will be classified as being an employee of the company. If the applicant s shareholding is 25% or more they are classified as being self employed and must provide: 2 years fully certified accounts, an accountant s reference, or 2 years HMRC Self Assessment tax returns (SA302 s & Tax Year Overviews). Income will be derived from a combination of salary and dividends. (E.g. accountants, solicitors and architects) an employer s reference from a senior partner or practice accountant can be accepted. Aldermore will only accept accounts or accountant s certificates from practitioners with one of the following qualifications: Institute of Chartered Accountants (England or Wales) (ICAEW) can use the following letters: ACA & FCA Institute of Chartered Accountants (Scotland) (ICAS) can use the following letters: CA Chartered Accountants (Ireland) (CAI) can use the following letters: ACA & FCA Chartered Association of Certified Accountants (ACCA) can use the following letters: ACCA or FCCA Chartered Institute of Management Accountants (CIMA) can use the following letters: ACMA or FCMA Association of Authorised Public Accountants (AAPA) can use the following letters: AAPA or FAPA Association of Accounting Technicians (AAT) can use the following letters: MAAT or FMAAT Other income Residential Buy to Let Secondary income Retired Trust funds Rental and investment Contract workers Professional sports people Income we do not accept Income from a maximum of two sources can be considered. Retired applicants must be in receipt of personal / company pension. Income will be verified via the latest pension statement or latest P60. State pension can be considered but only as a secondary income source. Income from trust funds may be considered. Terms and conditions of the trust income will be reviewed to ensure availability. Accepted when supported by 2 years fully certified accounts, an accountant s reference, or 2 years HMRC Self Assessment tax returns (SA302 s & Tax Year Overviews). Income will be derived from the net profit figures. Accepted where the applicant has been employed for a minimum of 13 months in the same line of business. References covering the 13 month period will be required which show continuous employment. Applicants should be in a current contract period with confirmation of renewal, proof of which will be required. Where applicants are self-employed the standard policy relating to self employment will apply. However, if the professional sportsperson is employed on a contract they must have been playing or competing professionally for at least two years and the current contract must have at least 1 year still to run. Additional income earned from endorsements will be considered if this can be evidenced. For applicants who are coming towards the end of their professional career it will be necessary to provide a satisfactory explanation, including supporting evidence, of how they intend to support the mortgage post career. Applicants on commission only, temporary workers, agency workers, income from foster caring, seasonally based jobs (e.g. crop pickers/holiday reps) or piece-workers, state benefits including working family tax credits. Let to Buy Residential Buy to Let Definition Requirements Remortgage of existing residential property onto a Buy to Let. Aldermore will not consider the financing of the onward residential purchase. A copy of the new residential purchase mortgage offer will be required prior to completion. In addition to the standard Buy to Let affordability assessment, applications will also be assessed to ensure applicants can afford capital and interest repayments on a residential owner-occupied basis should the new residential property purchase not proceed.

5 Portfolio Residential Buy to Let Aldermore portfolio Portfolio with other lenders 1 residential property only. No portfolio limit. Maximum 10 Buy to Let properties (plus 1 residential property), subject to a maximum total exposure of 2m with Aldermore Residential Mortgages. Tenancy Residential Buy to Let AST period Maximum number of individuals High value tenancy Assured Shorthold Tenancy (AST) for a period of between 6-12 months is required. Up to 4 individuals (including students) are accepted on a single AST agreement. All individuals must be jointly liable for the rent. Where the rental income exceeds 100,000 per annum, Aldermore will require our own format tenancy agreement available on our website to be put into place. Types of tenancy we do not accept Company lets, DSS tenants, letting to family members and HMOs. Property Residential Buy to Let Location England (including the Isle of Wight), Wales (including Anglesey) and mainland Scotland. Properties in Northern Ireland are not accepted. Minimum valuation 75,000 Maximum valuation Tenure New build houses No maximum *(Maximum 600,000 valuation applies to Help to Buy: mortgage guarantee products). Freehold (heritable title in Scotland) or leasehold (with 60 years unexpired at completion and 40 years at end of mortgage term). Accepted New build and newly converted flats Accepted up to 80% LTV *(Accepted up to 95% LTV on Help to Buy: mortgage guarantee) Not accepted Houses accepted up to maximum product LTV limits Houses accepted up to 75% LTV Ex-public sector (i.e. local authority, housing association, Ministry of Defence, etc.) Houses are subject to the following conditions: No outstanding pre-emption requirement to repay a proportion of the discount Valuer indicating that there is evidence of a meaningful level of private ownership within the estate The property being of standard construction Flats and maisonettes can be considered up to 75% LTV, subject to the following conditions: Minimum property value of 150,000 ( 200,000 in Greater London) No outstanding pre-emption requirement to repay a proportion of the discount Maximum of 3 floors above the ground floor Secure communal access with no balcony access arrangements Valuer indicating that there is evidence of a meaningful level of private ownership within the estate The property being of standard construction Occupancy Security property must be the applicants main residence. *(For Help to Buy: mortgage guarantee applications this must be the applicants only dwelling wherever situated and cannot have a personal interest in any other property including Buy to Let or second homes) Security property cannot be occupied or intended to be occupied by the applicant or a close relative (A close relative is defined as a spouse, parent, grandparent, sibling, or child). Property types we do not lend on Properties licensed as HMOs Freehold flats or freehold maisonettes Serviced flats/apartments Properties with restrictive covenants or saleability; e.g., retirement Studio flats Flats in a property block with more than three floors above ground floor which does not have a lift. Note that top floor and attic can be considered as one floor, if they are part of the same flat. Mobile homes Houseboats Holiday lets Self build properties Prefabricated buildings Unrepaired and repaired PRC constructions Property listed as defective under the 1984 and 1985 housing acts unless rebuilt to NHBC standards and with appropriate guarantees Wimpey No-Fines (if constructed prior to 1946 or bungalow or flat) Laing Easiform (if constructed prior to 1966 or bungalow or flat) Timber framed property that does not have a brick or block and rendered outer skin Steel framed constructions except post-1987 construction within BBA or WIMLAS certification Property in which high alumina cement has been used in the construction Live/work units Property with agricultural restrictions Farms and smallholdings Property where a flying freehold exists and affects more than 15% of the total floor space Property subject to a shared ownership deed For Buy to Let properties where satisfactory tenant demand does not exist or the proposed security is considered unsuitable for private renting When we have greater than 20% exposure in a block of 5 flats or more Properties adjacent to restaurants/food outlets/public houses/launderettes are not normally acceptable Properties with an anticipated lifespan of less than 25 years beyond the end of the mortgage term Properties with no kitchen or more than 2 kitchens Properties with no bath/shower room Properties which have shared access where a relative of the applicant resides in the other property Properties which have internal door locks and/or separate utility services Properties on which there are local authority grants outstanding Properties suffering progressive structural movement or movement which requires monitoring Properties that have been underpinned in the last 10years must have a 20 year guarantee from a reputable company warranting the works completed and this must be placed with the title deeds.

6 Japanese Knotweed New build properties If there is Japanese Knotweed present within the boundary of the property or neighbouring properties one of four categories will apply: If category 1 applies no report or action is required unless recommended by the valuer. If category 2 applies each case will be reviewed on its individual merits, taking into account the valuers advice. If category 3 or 4 applies a full report and detailed treatment plan will need to be carried out by an appropriately qualified person who is a member of the Property Care Association. When treatment is required it must be carried out by a member of the Property Care Association, backed by a minimum 10 year insurance guarantee programme, and no mortgage funds will be released until the first part of the treatment programme has been undertaken. The guarantee must be property specific and transferable to subsequent owners and mortgagee in possession. If the valuer reports that the presence of Japanese Knotweed on the property or neighbouring land (e.g. very close to the boundary) is an unacceptable threat to the subject property the application will be declined. Houses built within the last ten years must hold an acceptable guarantee/ certificate. Acceptable guarantees/certificates include: Build Assure Build Life Plans Build Zone Castle 10 (Checkmate) CRL (Construction Register Limited) Local Authority Building Control (LABC) NHBC certificate, Premier Guarantee Zurich Municipal Policy A certificate which states the property was built under the supervision of a person belonging to one of the following: fellow or member of the Royal Institution of Chartered Surveyors (FRICS or MRICS) fellow or member of the Institution of Structural Engineers (F.I.Struct.E or M.I.Struct.E) fellow or member of the Chartered Institute of Building (FCIOB or MCIOB) fellow or member of the Architecture and Surveying Institute (FASI or MASI) fellow or member of the Association of Building Engineers (FB.Eng or MB.Eng) member of the Chartered Institute of Architectural Technologists (formally British Institute of Architectural Technologists) (MCIAT) an architect registered with the Architects Registration Board (ARB). An architect must be registered with the Architects Registration Board, even if also a member of another institution, for example the Royal Institute of British Architects (RIBA) fellow or member of the Institution of Civil Engineers (FICE or MICE). In addition to the above qualifications, at the time the certificate of practical completion is issued, the consultant must have professional indemnity insurance in force for each claim for the greater of either: the value of the property once completed; or 250,000 if employed directly by the borrower or, in any other case, 500,000. Fees Residential Buy to Let Fees Completion and electronic transfer fees can be added to the loan up to 80% LTV. Fees will be automatically deducted on products above 80.1% LTV. Where fees are added they will be excluded from the LTV calculation but will be included in the affordability assessment. Fees added to the loan will attract interest over the mortgage term. Solicitors Residential Buy to Let Aldermore Panel Separate legal representation Free legal fees England & Wales: Must have a minimum of 4 partners in the firm, must be registered on the Law Society of England & Wales (website: must hold the Conveyancing Quality Scheme (CQS) accreditation and subject to acceptance onto the Aldermore panel. Scotland: Must have a minimum of 3 partners in the firm, must be registered on the Law Society of Scotland (website: and subject to acceptance onto the Aldermore panel. Aldermore will require legal representation on loans above 400,000 ( 600,000 in London and South East England) through its nominated Solicitor. Applicants can choose to use the same Solicitor and benefit from competitive conveyancing costs, or take independent legal advice Aldermore currently offers free legal fees on all remortgages, through its nominated Solicitor and will pay for the costs of the legal work necessary to move the mortgage to Aldermore. Costs incurred for any additional work must be paid by the applicants. London and the South East area is defined below Greater London: E (East London), EC (Central London), N (North London), NW (North West London), SE (South East London), SW (South West London), W (West London), WC (West Central London). South East: BN (Brighton), BR (Bromley), CT (Canterbury), CR (Croydon), DA (Dartford), GU (Guilford), HA (Harrow), HP (Hemel Hempstead), KT (Kingston upon Thames), ME (Medway), OX (Oxford), PO (Portsmouth), RG (Reading), RH (Redhill),SL (Slough), SM (Sutton), TN (Tunbridge Wells), TW (Twickenham), UB (Uxbridge), WD (Watford) aldermore.co.uk/resi FOR INTERMEDIARY USE ONLY