Guide to Residential Lending Policy Criteria

Transcription

1 Mortgages Guide to Residential Lending Policy Criteria External Guide 3 April 2014 Please note: Additions and changes as of 3 April 2014 are displayed in Red. INTERMEDIARIES Guide to Residential Lending Policy Criteria 3 April

2 Contents Introduction...3 Purpose of Loan...3 Freehold/Leasehold Flats...4 New Build Incentives...4 What is an incentive...4 New Build Incentives...4 Assessment of incentives...4 Evidence...4 Part exchange incentives...4 Vendor Incentives...4 Capital Raising & Debt Consolidation...4 Home Improvements...5 Maximum/Minimum Loans - Residential...5 Term...5 Age Limits...5 Lending into Retirement...5 Repayment Methods...5 Interest Only...5 Maximum Loan to Values...6 New Business & Additional Borrowing...6 Buy To Let (New Business & Additional Borrowing)...6 High LTV Policy...7 First Time Buyers...7 Buy To Let (New Business & Additional Borrowing)...7 TSM - (Transfer Subject to Mortgage)...11 Porting...11 Rent a Room Scheme...11 Forms of Consent...11 Skipton Home Conveyancing Service...11 Standard Remortgage Applications...11 Qualifying Criteria...11 Additional Elevated Legal Fees...11 Unencumbered Properties...12 Choosing a Solicitor...12 Gifted Deposits...12 Trust Arrangements...12 Capital Raising...12 Income...12 Employed...12 Financial Dependents...13 Foster Carers...13 Shared Life Carers...13 Employees on Fixed Contacts...13 Deductions from Incomes/Declared Loans/ Other Significant Commitments...13 Zero Income Contract...14 Self Employed/Limited Company...14 SA Self Employed Contractors...14 Umbrella Companies...15 Credit History...15 Family Purchase...15 Right To Buy...15 Specialist Lending...16 Help To Buy - Shared Equity...16 Foreign Nationals...17 UK Nationals Working Overseas...17 Gurkha...17 Additional Borrowing...17 Guarantors...17 Mortgage Offer Expiry Dates...18 Money Laundering...18 Proof of ID...18 Valuation Process...19 Scottish Applications...19 Transcripts where the valuer is not on SBS panel..19 Valuation Fee Scales...19 Solar Panels...20 Property Types...21 Non Standard Construction...21 No-fines Construction...21 Steel Frame Construction...21 Timber Frame Construction...21 Large Panel Systems (LPS)...21 Minimum Submission Criteria...21 Residential Applications...22 Buy To Let (BLT) Applications...22 Additional Borrowing Applications - All LTVs...22 Summary of Changes...23 Guide to Residential Lending Policy Criteria 3 April

3 Guide to Residential Lending Policy Criteria Introduction The following pages indicate the essential key lending criteria for SBS and form a quick guide for mandate holders as to how to proceed in the vetting of potential applicants. The policy criteria are the key indicators that must be complied with irrespective of the application score. If these key criteria are not met then the case will be declined. Purpose of Loan Acceptable Purchase Types Not Acceptable House purchase Golden Hands Family Purchase Shared Ownership Shared Equity (Lift Scheme) Self Build/BuildStore (inc. A/Bs) Right To Buy Short-term lending Help To Buy (Shared Equity Loan - Scheme 1) Help To Buy (Mortgage Guarantee - Scheme 2) Tenant Purchase where a property is being purchased by a tenant from a landlord at a discounted purchase price (excluding scenarios approved by SBS as discount schemes ie Lift, Right to Buy) Holiday Homes SBS will base lending on the discounted purchase price or value, whichever is the lower of the two. Purchase & Remortgage owner/registered proprietor must have owned the property for a minimum of 6 months Buy To Let Let to Buy Criteria Builders deposits and incentives including part exchange properties where builder is paying above market value ** See page 4 explaining incentives and SBS lending approach in more detail. Vendors deposits and incentives Bridging Finance Capital raising & Debt Consolidation See specific criteria on page 4. Capital Raising for business purposes Second homes for own personal use or main residential use for dependant relative, max 75% LTV (income has to cover total debt i.e. existing & proposed mortgage debt). Transfer of Equity Guarantors Property * New build House for residential purposes acceptable, providing Grade A / Grade 1 Listed properties build is completed within 12 months of SBS 1st mortgage offer, subject to meeting this requirement properties bought off plan are acceptable (New Residential Only). If Remortgaging, proof from Land Registry will be obtained confirming property already owned Any Security affected by any invasive plant species eg Knotweed by applicant(s) for 6 months. New Build Flat/Flat Conversions max 75% LTV, residential only Flats policy (excluding Ex-local authority flat) does not restrict on floors in block or number of units in block, but if number of floors exceeds 5 then lift access is required. **Flats above commercial (including retail) outlets - max 85% LTV, min property value 200,000. Ex-local authority flats are accepted for residential purposes only if Maximum number of floors in block = 5 Maximum number of units in block = 48 Wimpey no fines acceptable subject to valuers comments and build post Leasehold properties 40 years unexpired term must remain after the end of the mortgage term Repossessions Flats if number of floors exceeds 5 and no lift access. Ex-local authority flats if Number of floors in block exceeds 5 Number of units in block exceeds 48 Non standard construction properties i.e. steel frame properties. See section on property types. No studio flats / Deck Access Flats / galleried (mezzanine floor) flats The property must be; Of a traditional construction, as defined by the Society s panel valuer In a satisfactory condition Of a suitable type Be recommended by the Society s panel valuer Split Titles are not acceptable Guide to Residential Lending Policy Criteria 3 April

4 A new build property is defined as: Any property that has been newly constructed or converted and is being sold for occupation for the first time. Any property newly built or converted within the current calendar year (that commenced 1st January) or the last 2 previous calendar years. **Flats above commercial (including retail) outlets - A standard valuation will be carried out and the decision to lend will be made on whether the valuer recommends we proceed. This recommendation will be subject to the valuer believing the property is suitable security for a mortgage and will be easily re-saleable. The valuer s decision is final: no challenges will be accepted, and no refunds of valuation fees will be issued if the decision is a decline. Freehold / Leasehold Flats: All flats and maisonettes must be leasehold (feuhold in Scotland) with a minimum unexpired term of 40 years after the mortgage has ended. Leasehold flats where the borrower will also own a share in a management company that owns the freehold are acceptable. Freehold flats are not acceptable. The only exception to this is the purchase of freehold flats in Scarborough. Tyneside flats where there are reciprocating lease/freehold arrangements are also acceptable. New Build Incentives The CML incentive form must by obtained before the Decision in Principal (DIP) is submitted. Enter the amount of the incentives in the notes box. What is an incentive? Builders may offer sales incentives to potential buyers to encourage them to purchase their property. An incentive is anything the builder gives or provides to the buyer in cash or goods. Typical examples are deposits i.e. builder deposits paid before completion and cash paid after completion often to pay for stamp duty or legal fees. As all incentives must be paid for by the builder, they can be regarded as a less transparent alternative to reducing the sale price. For example, paying a customer 8,000 cash back on completion is an alternative to reducing the sale price by 8,000. The builder has received the cash from the purchaser/mortgage lender and then returned some of it to the purchaser. For the purposes of clarity; carpets, curtains and white goods are regarded as incentives where they are not part of the standard specification of the properties on the development i.e. where it s clear on the CML form that these are extra s or an upgrade. Assessment of incentives A maximum of 5% incentives are permitted for new build houses where LTV is <=85%, but where LTV is >85% the Society does not allow incentives. The maximum LTV is 90%. A maximum of 5% incentives are permitted for new build flats where LTV is <=70%, but where LTV is >70% the Society does not allow incentives. The maximum LTV is 75%. Where an incentive exceeds 5% irrespective of LTV the application will be declined, referrals / challenges will not be accepted. Where incentives are less than 5%, the LTV limits do not change, for example the maximum LTV on a residential new build house with a 2% incentive would be 85%. The borrower must always provide a minimum of a 10% deposit. Evidence All incentives must be declared at DIP stage. The CML Disclosure of Incentives Form is required by the underwriter and the valuer, which provides details and value of any incentives. Valuers take incentives into account when preparing the valuation report. Please note that all lending is always subject to a satisfactory valuation. The Society will work off the lower of valuation or purchase price. Evidence of the 10% deposit must be available at application stage. Part exchange incentives There are instances of builders/vendors paying above market value for part exchange properties. These cases are not acceptable and will be declined. Vendor Incentives (Private Seller) The Society does not accept applications that have any form of Vendor deposit funding. Capital Raising & Debt Consolidation Remortgages and Additional Loans (excluding Buy to Let applications) PRODUCTS AVAILABLE: Remortgages Any product from the current product range. Additional Loans Specific additional loan product on the current product grid. CRITERIA: Applications 75% LTV or below, with an application score of pass; Must have an application score of pass (n/a to additional borrowing cases as score not available) Max LTV 75% Meets affordability criteria taking into account the debts to be repaid (i.e. calculating affordability only on the loans that will be remaining on completion) Guide to Residential Lending Policy Criteria 3 April

5 Evidence of debts to be repaid; statements from the creditor(s) must be submitted with mortgage application. Statements must detail the Company Name, address, telephone number and the account/reference number. Any applications for Debt Consolidation where the applicant(s) has impaired credit will be declined Where the debt consolidation amount is 50,000 or below, on both Remortgage & Additional Loan Applications the money will be paid direct to the applicant(s) who can then pay off the specified debts directly with the creditor. Where the debt consolidation amount exceeds 50,000: Remortgage applications the money will be released to the solicitor who will pay the specified credit cards/loans off direct with the lender (Using Skipton Home Conveyancing Scheme additional fee of VAT will be payable to the Solicitor for each credit card/loan to be repaid. Skipton are not involved with collecting the additional fee, the Solicitor will invoice the applicants directly.) To note: Unlike with a debt secured against the property, the SHCS conveyancer is generally unable to obtain a wholly accurate settlement figure, as the third party debt holder will not liaise directly with them. They will require the most up to date statements from the borrower or Mortgage Broker, to be able to settle these debts and they will use the figures provided. They cannot accept verbal figures, and as such the amount they pay the creditor may be outdated. On completion, they will then send the required funds to each unsecured debt holder either by CHAPS payment, or by cheque, depending on the information provided. The borrower will still be liable for these debts if the figures provided are not accurate. Additional Loans SBS Completions Department will issue cheques payable to the creditors for the debt consolidation loans. A solicitor will not be involved, therefore no additional costs will be incurred by the applicant. The cheque(s) will be sent direct to the applicant(s) who can liaise with the creditor(s) to ensure the cheque is sent to the correct place in order to repay the loan(s). Home Improvements No set LTV restriction or loan amount. Max LTV & loan amount is dictated by product criteria maximum and the application score. (Refer to Maximum Loan to Value tables in this guide and the current product grid). Estimates are required for all home improvements where the LTV exceeds 75%. Home Improvements, raising 25,000 or above for major improvements, i.e. where planning permission etc is required, and where the current LTV exceeds 75%, we will insist on a re-inspection of the property prior to the funds being released. Where additional borrowing is taken for 25,000 or less and is not to cover major building works or adding material value to the property, underwriters have discretion regarding the release of funds without the need for a re-inspection, irrespective of LTV. Maximum/Minimum Loans Residential No minimum loan but minimum property value/purchase price (whichever the lowest) 50,000 Residential Loans in excess of 1,000,000 must be referred to the MSC for consideration. Term Normally up to 25 years but 35 years can be considered on a repayment (Capital & Interest) basis only. For interest only and part & part mortgages a maximum term of up to 25 years is permitted. This criteria applies to both residential and BTL loans. Age Limits Applicants must be aged 18 or over and in employment. For residential lending our standard maximum age at end of term is 75 years old. This limit has been set based on a risk assessment of ageing borrowers and also in consideration of our customers best interests. 75 years old is a typical limit used by other lenders. As a result we aim to ensure our customers have options during the mortgage to either remain with Skipton or potentially choose another lender if that is suitable and do not become trapped borrowers. Lending into Retirement For residential lending evidence of pension income and other acceptable retirement income is required to enable the underwriter to take into account the likely impact of retirement on affordability when: 1) a borrowers age is greater than 70 at the end of term. 2) Where the borrower states an expected retirement age that is lower than their age will be at the end of the mortgage term. Repayment Methods Capital and Interest Endowment Policies are not deposited or assigned Part and Part Restricted to applications 80% LTV and below only and maximum term is 25 years Interest Only This method is acceptable for mortgages and remortgages (except first time buyers). Maximum loan amount 500,000 Minimum income for interest only is 40,000 acceptable gross income or 30,000 net pension. (For joint applications minimum income requirements are; 60,000 gross joint acceptable earned income or 45,000 joint net pension.) This applies to any repayment type where there is an element of interest only. For loans above 500,000 the first 500,000 can be on interest only with a suitable repayment strategy, but any amount above must be on a capital & interest (C&I) basis. Maximum LTV for Interest Only is 70% Guide to Residential Lending Policy Criteria 3 April

6 Maximum LTV for Part Interest Only and Part Capital & Interest is 80% (Interest Only Part restricted to 70% LTV) Applications over 80% LTV must be taken on a Capital & Interest basis Maximum term for interest only and part and part is 25 years Please note the above restrictions do not apply to BTL applications. First time buyers must be on C&I with a maximum term of 35 years The principle of responsible lending means we have to consider the circumstances of the customer and ensure there is a means in place of repaying the mortgage loan. Affordability is assessed as if the borrowing was on a capital repayment basis. This ensures the Society does not accept any customers where interest only has been requested because the mortgage would be unaffordable on a capital repayment basis. The Society will only enter into a regulated mortgage contract, where all or part of that contract is on interest-only basis if: a) The customer can provide evidence that a clearly understood and credible repayment strategy is in place. b) As far as it is reasonably able to assess at the time of underwriting, the repayment strategy has the potential to repay the capital borrowed. The Society accepts two types of repayment strategies: An endowment policy provided by a regulated firm. The latest annual statement must be provided as evidence that the sum due to be paid on maturity based on the medium projection is equal to or in excess of the proposed amount of mortgage borrowing. The policy is not deposited with or assigned to the Society. Defined types of assets owned by the customer. Evidence must confirm that the value of the assets at the time of underwriting is equal to or in excess of the proposed amount of mortgage borrowing. Acceptable assets are: (i) Equity in another property in the UK* (ii) UK shares and bonds held as investments (iii) Cash savings in a UK deposit account** * BTL s owned in the applicants name are acceptable. BTL s owned in a company name are not acceptable. Equity in Commercial property is not acceptable. ** Savings must be personal and not business related.the following repayment strategies are unacceptable for new lending: Pension Lump sum repayment Expected inheritance Use of bonus income Regular overpayments Sale of main residence Where the MSC feel the repayment strategy is unsuitable they will refer the case back to you and advise that the application must be processed on a Capital & Interest basis. Maximum Loan to Values These are normal acceptable loan to values. Lending Policy Criteria can from time to time impose restrictions on the size of the LTV and minimum level of application score. You should always refer to the latest policy criteria communication when accepting an application. New Business & Additional Borrowing Maximum LTV (dependent on score) Loan Amount Maximum LTV Up to 300,000 95% 300, ,000 90% 500, ,000 80% Above 750,000 75% The total balance of the new application and all other existing Residential mortgage accounts with Skipton Building Society should not exceed 1 million. Aggregate balances exceeding 1 million must be reviewed by the appropriate mandate holder under the existing mandate structure. Buy To Let (New Business & Additional Borrowing) Criteria dependant on a BTL product being available and product restrictions. Maximum LTV (dependent on score) Loan Amount Maximum LTV Up to 500,000 75% The total balance of the new application and all other existing BTL mortgage accounts with Skipton Building Society should not exceed 1 million. Aggregate balances exceeding 1 million must be reviewed on a referral basis by the appropriate mandate holder under the existing mandate structure. Additional Loans only: In addition to checking the maximum balance of 1 million, the LTV on the Additional Borrowing application Guide to Residential Lending Policy Criteria 3 April

7 and all other existing accounts with SBS (BTL accounts) must not exceed 75%. Any accounts exceeding 75%, where appropriate, will be reviewed on a referral basis. High LTV Policy A high LTV is defined as above 75%. Guarantors Yes UK Resident Only Yes Length of Employment Minimum 6 months continuous employment Maximum Affordability Ratio 50% Minimum Property Value 50,000 Maximum Advance Amount Normal LTV Maximum Term 35 years Repayment Methods Any acceptable repayment method First Time Buyers A first time buyer is defined as someone who has never owned a property. For joint applications all applicants must be first time buyers for the application to be classed as a first time buyer application. Guarantors Yes UK Resident Only Yes Length of Employment Minimum 12 months continuous employment Minimum Property Value 50,000 Maximum Advance Amount 500,000 Maximum Term 35 years Repayment Methods Capital and Interest only Mortgage Experience No Buy To Let (New Business & Additional Borrowing) Criteria dependant on a BTL product being available. Our Buy to Let products are provided solely for the use of landlords in the purchase or remortgage of properties which are or will be let to non family related tenants. Under NO circumstances are Buy to Let products to be used to finance owner occupation. Any cases found not meeting this criteria will automatically be cancelled and any fees forfeited. Guide to Residential Lending Policy Criteria 3 April

8 Acceptable Country of Residence/Nationality of Applicant(s) See section on Foreign Nationals First time landlords acceptable provided they have owned their own First time landlords residential property in the UK and had/has mortgage experience with evidence available in the last 6 months. Maximum LTV 75% (dependent on product maximum) 20,000 Gross minimum acceptable earned income or 16,500 net pension. (Where application is in joint names the main earner must have a gross minimum acceptable earned income of 20,000 or 16,500 net pension) Note: In addition to the minimum income Minimum Income / Total Indebtedness requirements, total indebtedness will also be included in the affordability assessment. Where overall level of indebtedness is identified as a concern, then the application will be declined. Rental income generated from a property cannot be used. Rental income Rental income must meet the Society s calculation of 125% at 6% Bank statements Latest 1 full month Maximum individual loan size 500,000/application No of BTL properties with SBS Maximum 5 in total whether held jointly or solely Total number of allowable properties in a portfolio (including any 10 properties max (irrespective of whether unencumbered or existing/new SBS BTL mortgages) mortgaged) Up to 75% LTV (dependent on product maximum). Only acceptable if raising funds for home improvements or to raise funds to New Business Capital Raising / Home Improvements purchase another BTL property. Borrowers must provide details of the property to be purchased at the time of application (Debt Consolidation is not acceptable). Additional Borrowing for Home Improvements only. Capital Raising Additional Borrowing Home Improvements Only of any sort is not an acceptable purpose this includes raising funds to buy another BTL property. 1,000,000 BTL mortgages with SBS including any within Maximum total loan exposure SBS Group. To be completed when customer has over 2 x BTL properties Asset & Liability Statement (application form requests information for a maximum of 3 properties i.e. residential and 2 x BTLs) Collective rental income cover must meet Society s calculation of 125% at 6.0%. If this is not met, the application will be declined. Buy Calculation re existing BTL properties for rental income cover to Let applications will be referred where the applicants total Buy to Let borrowings (BTL portfolio plus the new BTL application) exceed 10 x their annual acceptable income. Tenancy Agreements for existing Tenancies AST 1 year maximum Assured Shorthold Tenancy Agreement to be in place. Maximum 3 year corporate let is acceptable to companies except Tenancy Agreements for corporate lets 3 years premium leases Maximum 4 tenants. Properties must be for sole occupancy/single family unit let, professionals (in paid occupations) / students are Acceptable tenancy arrangements also acceptable. Single and multiple Assured Shorthold Tenancy Agreements will be acceptable. All landlords must be experienced and already own a BTL Properties occupied by students and professionals property. Property type is limited in size to 2 storeys high. A standard Buy to Let valuation report will be instructed where the New Business Valuation Type & Rental Income Confirmation all Valuer will be asked to confirm a rental figure and this is the figure Buy to Let applications that will be used to calculate the rental income. An Up to Date valuation report will be instructed where the Valuer Additional Borrowing will be asked to confirm the rental figure and this is the figure that will be used to calculate the rental income. Converted properties Yes but not licensed HMO Flats policy (excluding Ex-local authority flats) does not restrict on High rise block of flats floors in block or number of units in block, but if number of floors exceeds 5 then lift access is required. Min property value 200,000. A standard valuation will be carried out and the decision to lend will be made on whether the valuer recommends we proceed. This recommendation will be subject to Flats above commercial (including retail) outlets the valuer believing the property is suitable security for a mortgage and will be easily re-saleable. The valuer s decision is final: no challenges will be accepted, and no refunds of valuation fees will be issued if the decision is a decline Providing the build is in progress and subject to the property being fully completed within 12 months of SBS mortgage offer. If New Build Houses remortgaging, proof from the land registry will be required confirming property already owned by applicant(s) for 12 months. Acceptable Repayment Types All Repayment types are acceptable. ILA is acceptable for the whole loan, with sale of BTL Property being the repayment strategy. Guide to Residential Lending Policy Criteria 3 April

9 Important Note The Society will not accept more than 4 tenants or any HMO requiring a licence. (It is the responsibility of the applicant or the broker to check before submission if HMO licence applies) Not Acceptable First Time Buyers Ex Pats Trustee applications Guarantors Remortgaging existing residential to BTL (unless Let To Buy) Debt Consolidation Replace development finance Top Slice Income Licensed House In Multiple Occupancy (HMO) Properties (flats) where the applicant will also reside in the same property as the tenants (mix of ownership rental & freehold) DSS tenants Family lets (No family members as tenants) Gifted deposit Family Buy To Let Purchases/Remortgages (Purchasing from family) Purchasing property/ies from own Limited Company Properties with more than 1 kitchen or designed for multiple occupancy Block of flats exceeding 5 floors with no lift access Ex local authority flats New build flats (refer to page 3 for new build definition) Studio flats / Deck access flats / galleried (mezzanine floor) flats Number of off plan sales Overall exposure in any development for the Society (will typically be limited to 20%) Sale and rent back schemes Let to Buy The Society will consider applications on a Let to Buy basis subject to meeting the following criteria: Property The Society will consider applications for both the LTB (existing residential property to be let out) and their new residential purchase. If the mortgage is already with SBS then consent to let must be applied for and accepted prior to submitting a Decision In Principle application. Guide to Residential Lending Policy Criteria 3 April

10 Let to Buy Criteria Application Score Property to be Let rental income calculation Property to be Let current mortgage / LTV New Purchase Proof of Deposit Capital Raising Type of applicant UK resident etc Foreign Nationals Minimum income Minimum Submission Documents Must be a score pass Evidence of the projected rental income is required, The potential rental income will be checked by the Underwriter, and an AVM assessment will be carried out. If this search is unsuitable then a rental assessment letter from an ARLA agent (Association of Residential Letting Agents) must be provided. Rental income cover must meet the Society s calculation of 125% at 6.0%. Where a shortfall exists, as part of the affordability assessment, if there is surplus income or other assets / savings then evidence must be provided in order to be considered and used. Maximum 75% mortgage on the property to be let out. Proof of deposit is required in all cases. Where the applicant(s) is obtaining a mortgage elsewhere for the new residential purchase, details of the loan amount and LTV must be provided at application stage a copy of the offer for the new residential purchase will be required prior to completion as evidence. Acceptable only to raise deposit for new residential purchase. Details of property to be purchased must be provided at application stage ie, property address, purchase price etc. (Debt consolidation is not acceptable) UK resident and a UK property owner. First time landlords are acceptable, providing they have owned their own residential property in the UK and had/has mortgage experience with evidence in the last 6 months. See section on Foreign Nationals 20,000 Gross minimum acceptable earned income or 16,500 net pension. (Where application is in joint names, the main earner must have a gross minimum acceptable earned income of 20,000 or 16,500 net pension). Refer to the minimum submission table Residential Applications Let to Buy Not Acceptable Ex Pats Trustee applications Guarantors Capital Raising / Debt Consolidation (Unless monies are being raised as the deposit for purchase of the new residential property.) Family lets (No family members as tenants) Let to Buy Higher Income Earners (Applies to the onward purchase irrespective whether the mortgage is to be with SBS or another lender where the LTV is greater than 75%) For higher income earners subject to complying with the above, the following Let to Buy criteria applies: Criteria Minimum Income Maximum LTV Property to be let current mortgage/ltv Capital Raising 40,000 Gross minimum acceptable earned income or 30,000 net pension. For joint applications, 60,000 gross joint acceptable earned income or 45,000 joint net pension. 90% on the new (onward purchase) residential property 75% (and subject to all other BTL lending criteria) Acceptable on the existing property (to be let) for the deposit (on the new residential) Guide to Residential Lending Policy Criteria 3 April

11 TSM (Transfer Subject to Mortgage) The policy below relates to existing SBS borrowers only, where a request is made to either change the names on the existing mortgage (i.e. remove & or add a name) and in some cases where also additional funds are requested to buy out a partner etc. Legal Fee & Valuation Fee Valuation Type Rules If the remortgage is being processed on the same product then the valuation/legal fees are payable by the applicant. However, if the remortgage is being processed on a new product from the current range then the valuation/ legal fees are payable/free dependent on the product selected. Note: If porting and topping up with a new product that qualifies for free legal / valuation fees, applicants are entitled to free fees as dictated by the top up product. LTV up to and including 60% = Existing LOS02 value LTV 61%-65% = AVM All loans above 65% up to date report (or where only AVM on file or if report on file is over 5 years old then a full standard report will be required). BTL TSM On a BTL TSM where LTV is 65% or below, use LOS02 figure supported by an AVM. See full lending policy criteria for more guidance. If LTV is over 95% then the case is outside policy and must be referred to a Manager in the MSC. As per the table, a TSM application may not qualify for free valuation or free legal fees. The application will be processed as a remortgage purely as a result of internal system restrictions. Additional funds can be raised to pay ex-partner and this can be raised on the same product or any product from the current range. Normal lending criteria applies; cases outside of policy should be referred to the MSC for consideration by a Lending Manager. Justification and evidence of affordability must be obtained prior to referral. If the application does not qualify for free legal fees: The customer can choose to use SHCS and pay the fees. We will debit the fees for the standard legal work to the mortgage account on completion and the elevated service part will be invoiced by CDPL to the customer directly. The advantage to the customer is that the fee for the standard legal work is very competitive, although it is important to note that the fees may differ dependent on area, i.e. England, Scotland etc. Please note, where applicant(s) who have their mortgage with another lender but wish to move it to SBS, and maybe remove or add a name, this will be processed as a remortgage and the above policy does not apply. Porting Existing customers who wish to port their current mortgage product can do so if the product is portable. They can top up with any product from the current product range, subject to meeting the product maximum LTV, affordability assessment, and other associated criteria and any fees will be payable i.e. 995/ 695. Or the porting/top up product can be used, subject to meeting the product maximum LTV and applicable completion fees will be payable. Rent a Room Scheme This is acceptable providing there is no formal tenancy agreement in place. We cannot use the income received from this. We have to be sure that the applicant is living in the property and that no more than one room in the house is rented out on this basis. Forms of Consent Forms of Consent are required in all cases where the loan is in a sole name where there is a non borrowing occupier (NBO), unless the occupier is the child / stepchild of the borrower aged between 17 and 25 and in full time education at the time the loan / additional loan completes. Where our letters and forms indicate independent legal advice is required, then that condition must be adhered to, under no circumstances should any discretion be exercised. This should also apply to any other process, e.g. guarantors that require independent legal advice. This may incur a fee which is payable by the applicant. Skipton Home Conveyancing Service Products offering Free Legal Fees for Remortgage Applications Standard Remortgage Applications For a standard remortgage* application, provided the applicant(s) use Skipton s allocated solicitors and choose a fee free remortgage product, then there will be no legal costs payable by the applicants as their legal costs are covered by the fee free remortgage offer. There are exceptions and instances where a case may not qualify for free legal fees please see below. Qualifying Criteria *A standard remortgage is defined as an applicant or applicants currently holding a mortgage on their property, and are moving their mortgage to Skipton by requiring an advance of 1,000,000 or less without adding or removing any applicants. Additional Elevated Legal Fees payable by the applicant(s) For applications with an advance of over 1,000,000, whether the funds are required purely to redeem the current mortgage or if part of the advance is for other reasons (capital raising), then additional legal costs will be involved which are payable direct to the solicitor by the applicant. Guide to Residential Lending Policy Criteria 3 April

12 If there is any additional work to be carried out by the solicitors, eg adding a new name or removing a name on the existing mortgage, dealing with a deed of postponement etc, these are called elevated services and the fee for this extra work will be charged direct to the applicant by the solicitor. The costs of the elevated services are not covered by the fee free remortgage offer. Unencumbered Properties If the property has been unencumbered for 10 years or more i.e. their mortgage was redeemed 10 yrs ago or more, or if the applicants purchased the property outright and the property is unencumbered for this reason, then the applicants would be eligible for free legal fees, however the solicitors will have to arrange a bespoke search indemnity policy and the solicitor will charge the fees for this direct to the applicants. The cost of this would be circa VAT but the solicitor will inform the applicants of the fee before proceeding. This is classed as disbursement. The Society s solicitor will not carry out any extra work until they have obtained approval from the applicants. Branches/brokers should check with your underwriter if you are in any doubt as to whether the application is a standard remortgage, or whether any extra legal fees are payable by the applicant. The underwriter will then refer the query on to completions dept. Please do not contact the solicitors direct. Choosing a Solicitor If the conveyancer the borrower chooses is on the Society s panel, we will instruct them jointly. If the conveyancer the borrower chooses is not on the Society s panel, the Society will instruct a separate conveyancer to act for it and two sets of costs may be incurred, for which the borrower will be liable. Please note The Society does not allow separate representation except where we have instructed our own solicitor to act for the Society. This is in line with the CML Handbook, which states: Our instructions are personal to the firm to whom they are addressed and must be dealt with solely by that firm. The conveyancer must not subcontract or assign our instructions to another firm or body, nor may they accept instructions to act for us from another body. If this requirement is not complied with, it may result in the offer being withdrawn until proper instructions from the Society can be given to it s own chosen firm or body. Gifted Deposits If some or all of the balance of the purchase price is not being provided directly by the borrowers and it has been indicated this is by way of gift, full details must be provided at application stage prior to a decision to lend. Gifted deposits are only acceptable where source of funds originate in the UK. Trust Arrangements The Society does not accept Trust arrangements in favour of any person or body who is not a party to the mortgage. Capital Raising For any capital raising in addition to the advance amount required to redeem their current mortgage, please refer to the sections regarding capital raising in this document. Income Employed Applicants must be in continuous employment for at least 6 months (or 12 months for first time buyers). Income Type Proportion of Income Allowed PROPORTION Income Type OF INCOME INCLUDED IN AFFORDABILITY ASSESSMENT Permanent Gross basic income 100% Guaranteed Gross bonus/overtime/commission 100% Regular Gross bonus/overtime/commission non-guaranteed/second job 50% Benefits/Maintenance Working tax credits/benefits (WFTC,CTC,Child Benefit) full documentation required along with bank statements can be used if child is 14 years old or under *Note: Child Benefit will be accepted where the total gross income of each applicant is no 100% more than 50,000. Where the total gross income of any applicant is over 50,000 SBS will not accept Child Benefit for underwriting purposes. No other benefit is acceptable Net Pension (evidence required) 100% Car Allowance/Shift Allowance/London Weighting/Mortgage Subsidy 100% Maintenance if backed up by court order (copy of Minutes of agreement along with copy 100% of Registered Agreement for Scotland)/CSA which must have at least 2 years to run Guide to Residential Lending Policy Criteria 3 April

13 We will not accept any other type of benefit income. Where benefit income is greater than the total acceptable earned income the application will be declined. For applicants currently on maternity/paternity leave, we require a letter from the employer confirming the agreed return to work date, together with the salary details. On the basis that the applicant is returning to work within 3 months then the confirmed salary can be used in the income calculation. For a Nurse, the employment starts from when they become qualified and not when they began working on the wards and earned a Bursary. The minimum 6 months (12 months for FTB) employment starts from when qualified and in employment at that time. Pay Rises We require a letter from the employer confirming the date of the pay rise together with details of the new salary. Providing the pay rise will be effective within 3 months of the date of the letter from the employer, then the confirmed increased salary can be used in the affordability assessment. In the rare instances where concerns exist regarding the validity or reasonability of the pay rise, the underwriters may determine that the case cannot move to offer until the pay rise has come into effect. Financial Dependents Dependents are defined as any person (excluding partners) who are financially dependent on the mortgage applicant(s) This definition is applicable to both non-btl and BTL applications Partners are excluded as such information is captured elsewhere as part of the affordability assessment Where an applicant has declared maintenance is being paid for dependants not residing in the property, these persons should be excluded, to avoid duplication in the assessment An expected new born child should be considered a dependant The following are not financial dependants: Any occupants of a property who are self funding such as retired parents with adequate pension income, or a child in full time employment with an adequate level of income Any occupants supported in full by foster payments or shared life carers allowance If there is any element of financial dependency than the individual should be regarded as a dependant: This is relevant to children at university - who could be either independent or fully or partially dependent on parents. Foster Carers Foster Carers do not have to register as self employed or fill in tax returns unless they exceed the qualifying amounts. This can be confirmed at However, the Society will treat Foster Carers as any other Self employed person in that we expect a minimum of 2 years history. To evidence income we require Local Authority remittance notice or verification of Foster carers allowance. Evidence of this income should also be visible on the last 3 months bank statements. Note: Foster children should not be input as Financial Dependants (see section above explaining our definition for Financial Dependants). Shared Life Carers The Society will treat Shared Life Carers as any other self employed person in that we expect a minimum of 2 years history. To evidence income a Local Authority remittance notice or verification of Shared Life Carers allowance is required. Please note the adult or child must be placed with the carer under a specified social care scheme via the local authority. Evidence of this income should also be visible on the last 3 months bank statements. Note: Individuals being cared for under this arrangement should not be input as a Financial Dependant, (see section above explaining our definition for Financial Dependants). Employees on Fixed Contracts Normal affordability rules apply subject to the following criteria: Main residence for their own occupation. Applicant must be UK resident or have indefinite leave to remain in the UK. Must have been contracted for at least 24 months. Copies of previous contracts, as a minimum the last 24 months. If significant increases, the MSC underwriter will fully examine the reasons why, where appropriate may request additional documentation. In second or subsequent term or affixed contract originally for at least 6 months OR If within 3 months of contract ending then proof of extension must be obtained. Deductions from Incomes / Declared Loans / Other Significant Commitments The affordability assessment is based on the declared loans confirmed at DIP stage. All current outstanding loans must be declared, any not disclosed may potentially affect the affordability assessment at full mortgage application stage (FMA) and may result in the application being declined. The following must also be confirmed; Maintenance / Child Support Tuition Fees Nursery/Childcare Costs Rent (where Remaining on Completion) Guide to Residential Lending Policy Criteria 3 April

14 Let property/ies in the background rental income must cover mortgage balance on property. Existing tenancy agreement and/or bank statements may be required to verify this. In addition, the following must be disclosed at DIP stage: Details of any other outgoings, regular or otherwise which are likely to affect the ability to meet the monthly mortgage payments Details of any potential changes to income now or in the foreseeable future that are likely to affect the ability to meet the monthly mortgage payments Zero Income Contract In cases where the applicant is on a zero income/hours contract the latest 3 month s payslips and the last two P60s are required. An average of the figures on the last two P60s will be used. If income has reduced significantly over the last two years the case will not proceed. Self Employed/Limited Company The only specialist lending schemes which are acceptable to the Society are Shared equity - the Help to Buy Shared Equity Loan - scheme 1. Normal product rules apply, and LTV is restricted to individual product maximum and is calculated on the loan as a percentage of the open market value (as confirmed by the Society s valuer). Self Employed Limited Company Latest 2 years accounts or latest 2 SA302s plus latest 1 year accounts If Net Profit over past 2 years has increased, use an average of the last 2 years. If Net Profit over the last 2 years has reduced, or increased significantly, the MSC underwriter will fully examine the reasons why, where appropriate business bank statements/ supporting information will be requested. If satisfied, the latest years net profit will be used. Remuneration (basic salary) & Dividends received. (The net profit should be higher than the dividends received). Input the figures as in the accounts, when input the system will deduct 30% tax reduction. If Net Profit over the last 2 years has reduced, or increased significantly, the MSC underwriter will fully examine the reasons why, where appropriate business bank statements / supporting information will be requested. Following analysis the MSC underwriters decision is final with regards to the level of income used. Limited Liability Partnership (LLP) If LLP, latest 2 year accounts or latest 2 SA302 and latest 1 years accounts must be provided. If the applicant is a partner with a large regional or national professional partnership (e.g. Accountants, Lawyers and Architects) then at the underwriter discretion, an employment reference from a senior partner / practice accountant may be accepted. SA302 An SA302 evidences the customer(s) declared income and tax due, it does not evidence how a particular company is carrying out its business or financial status. Anyone who submits a paper based tax return without calculating the tax due, will automatically receive an SA302. Also anyone who submits a tax return in any format can request an SA302 Self Employed Contractors e.g. IT/Management Consultants In cases where the applicant is a self employed contractor and is unable to meet the normal self employed/limited company criteria the following evidence is required: Current contract must be for a period of 6 months or more Copy of the current contract If within 3 months of contract ending then proof of extension or copy of a new contract must be provided, if unable to provide then the application will be declined. Copies of previous contracts, as a minimum the last 24 months. However, a combination of both employed income and contract is acceptable providing continuous 24 month history. If significant increases, the MSC underwriter will fully examine the reasons why, where appropriate may request additional documentation. Latest 3 months bank statements evidencing the contract income and also all household bills / personal credit. (Where applicable, both business and personal bank statements will have to be provided). To calculate income: Multiply the gross income by 48 weeks. Umbrella Companies An Umbrella Company is a company that has been set up for the sole purpose as to act as an employer. A fee is charged for this service. HM Revenue & Customs classify people employed via Umbrella Companies as employed. For mortgage purposes we would classify as self employed. People who would typically use an Umbrella Company are those who find employment via a Recruitment Agency with a fixed term contract, usually for a maximum of 9 months, or individuals who have arranged a contract but do not want to register as self employed and carrying out accounts or self assessments. Contracts are between the company/client and the individual. The Guide to Residential Lending Policy Criteria 3 April

15 Umbrella Company receives a copy of the contract. If the Umbrella Co. changes mid contract a new contract would have to be sent to the new Umbrella Company. A contract may be for different lengths of time and via different Umbrella Companies but the total length per company and/or site must not exceed the 24 months. If employment exceeds 24 months for the same company and/or site then the position is classified as permanent and falls outside of the Umbrella Companies remit. More detailed information on Umbrella Companies can be found in the Lending Policy. Documents required to evidence the gross income are all of the below: Contracts from the last 2 years Last 2 years P60 Latest payslip Credit History Applications with general share data performance issues (ie non secured loans/contract agreements/hp etc) must have a score pass or refer NON SECURED/OTHER LOANS SHARE DATA RECORD HISTORY Share data up to and including category 2 within last 2 years An application with any of the performance issues in the table below must have an application score of pass. COUNTY COURT JUDGEMENTS (CCJ) 1 CCJ no more than 500 within the last 3 years. Must have been satisfied on search enquiry for at least 1 year. DEFAULTS No more than two defaults have been registered within the last 3 years, neither of them must exceed 500. They are over one year old and all have been cleared on the search enquiry. MORTGAGE ARREARS No more than 1 missed payment within the last 12 months with the latest 6 months being up to date, and not to have exceeded 2 months in the last 2 years. BANKRUPTCY & IVA Not generally acceptable but a referral can be considered if the bankruptcy or IVA has been discharged for at least 4 years. Note: Where current Pay Day Loans /Home Credit exist or where multiple credit performance issues exist (i.e. combination of the above) then the application will be declined Family Purchase Family purchase mortgage is where the applicant purchases from a close blood relative for a discount, we can lend up to 100% of the discounted purchase price. Normal policy and product rules apply. LTV is restricted to individual product maximum and is calculated on the loan as a percentage of the open market value. Parent Children Grandparents Brother/Sister Uncle/Auntie The Society will not consider applications for simultaneous home improvements or capital raising. Right to Buy The Society will lend up to 100% of the discounted purchase price. Normal policy and product rules apply. LTV is restricted to individual product maximum and is calculated on the loan as a percentage of the open market value. Prior to 2004 pre-emption period is 3 years, post 2004 pre-emption period is 5 years. Discount clawback period of 10 year exists. Assess all lending on the current valuation Right to Buy notice must be obtained The names given on the Right to Buy notice must be on the mortgage Additional funds can be raised for home improvements providing the total loan does not exceed 75% of the open market value (as confirmed by the Society s valuer). No capital raising for any other purpose is acceptable. Specialist Lending The only specialist lending schemes which are acceptable to the Society are Shared equity Lift Scheme and the Help to Buy Shared Equity Loan - scheme 1. Normal product rules apply, and LTV is restricted to individual product maximum and is calculated on the loan as a percentage of the open market value (as confirmed by the Society s valuer). Guide to Residential Lending Policy Criteria 3 April

16 . Acceptable Not Acceptable Help To Buy - Shared Equity Loan - Scheme 1 Help To Buy - Mortgage Guarantee - Scheme 2 Maximum share of any development is 20% for the Society Applicant(s) must have an application score of A-C Lift Scheme Any interest charges by the provider of the equity loan must be shown as an outgoing within the affordability calculator. Any others not included in this table may be referred for consideration Foreign Nationals Chestnut Homes Ownhome Homebuy Direct new build Dreamstart Golden Hands Scheme new build Valueshare Openmarket Homebuy My 4 Walls Scheme Refer to MSC Homebuy Homestaker/Homelink Help To Buy - Shared Equity Provide evidence of the following at full Mortgage Application stage: Evidence of the applicants deposit must be provided A copy of the CML incentive form (see criteria on new build incentives) Offer Extensions Offer extensions may be permitted. Where the original offer period (6 months) has expired, an extension of a further 6 months may be granted provided that completion of the build will take place within this time. If, after 12 months from the date of the original offer, the property build is not completed then the offer lapses. We will then consider a new application but with new documentation and a new valuation (for which a fee is payable dependent on the product applicable). Where an offer extension to 12 months is agreed, a supplementary credit check, affordability assessment and re-valuation will be carried out after the initial 6 month period (with no extra cost to the customer). Offers will not be granted after 6 months where there is a materially adverse change in ; i) the quality of the application, ii) the customers financial circumstances (ability to repay) or iii) the valuation of the property. Applications involving Off-Plan properties are acceptable provided the above criteria is met (property build & completion takes place within 12 months from the date of original offer) Key Scheme Rules include: Maximum 25 year term (unless prior approval obtained from the Agency) Maximum Purchase Price under the Help to Buy Scheme Rules: o England - 600,000 o Scotland - 400,000 o Wales - 300,000 The full purchase price must be no more than the full market value for the property. SBS valuation report must value up to the full purchase price otherwise the application will be declined A/B policy only acceptable if the applicant wishes to raise additional funds to pay off the equity loan consent must be obtained from the Agency. Loans for capital raising or home improvements are likely to be declined, can only be considered with Agency approval Foreign Nationals Applicant(s) must be a UK or EEA Citizen or have indefinite leave to remain in the UK. For buy to let applications, all applicants must also be permanent residents in the UK at the time the application is made. Applications from Foreign Nationals will be declined unless applicants are from a country in the EEA (European Economic Area) or where the applicant (in the case of joint applicants, both) has a permanent right of residency to remain in the UK that is not conditional on the requirement to have employment. Where it is attached to a working or highly skilled migrant visa it will not be accepted. A copy of the visa page of the applicant s passport will be required to evidence this. Guide to Residential Lending Policy Criteria 3 April

17 For joint applications where only one applicant is British National or from the EEA and the other is not, the application may be considered but we will only use the income from the British National or EEA applicant. In all cases the application is subject to meeting lending policy in full and overrides will not be allowed. For more information on Foreign Nationals and EEA please refer to the Residential Lending Policy Criteria Manual. UK Nationals Working Overseas Where an application is received from a UK national working overseas the following criteria must be met: (a) income must be evidenced via UK HMRC documentation (b) a minimum 2 years history of income is required (c) dependents of the applicant must reside in the property full time (d) applicant must maintain residency rights in UK (e) a maximum of 75% LTV should apply. Gurkha Gurkha (or Gorkha) are people from Nepal. They are most famous as foreign soldiers serving the British Army. They are fully integrated soldiers of the British Army, operate in formed units of the Brigade of Gurkhas and abide by the rules and regulations under which all British soldiers serve. Similar rules apply for Gurkhas serving in the Indian Army. Mortgage applications will be considered where the Gurkha is on an enhanced UK residential scheme. A letter from the Home Office must be provided confirming this. The letter will give details of the Gurkha, it must confirm that permanent residency in the UK has been granted. Additional Borrowing Additional borrowing will only be considered from 6 months after completion of the original mortgage application. Affordability is calculated on the total new loan amount not just the additional borrowing Additional Borrowing for capital raising / debt consolidation, up to a maximum 75% LTV, including the proposed additional loan. Restrictions apply depending on the type of application, i.e. BTL. (Refer to the specific sections in this document detailing the capital raising criteria.) A stand alone credit search should always be carried out at the point of sale Maximum LTV see section re New Business & Additional Borrowing Maximum LTVs on page 5 The loan amount for assessing the maximum LTV is the existing mortgage balance plus the advance amount. A current valuation of the property may be required prior to the decision to lend being made see Valuation Process Policy, Additional Loans on page 14. The PD (probability of default) score will be checked by the Mortgage Service Centre on all additional borrowing applications. Please see the table below. Where an acceptable score is not met, the application will be declined. LTV PD SCORE Below or equal to 85% Above 85% <0.010 Accept Accept =0.010 =<0.015 Refer Decline >0.015 Decline Decline The affordability model estimates household expenditure so the mortgage payment under stressed interest rates has to be less than or equal to the Effective Disposable Income (EDI). Any applications not meeting this criteria will be declined. Additional loans the maximum affordability for additional borrowing applications is 55% Guarantors Acceptable on referral to the MSC, which must be done in all cases prior to agreement. Guarantors must in all cases be able to: Cover 100% of the total loan amount, this figure will appear in the mortgage deed Affordability will be assessed on the basis the guarantor has to cover the full 100% of the total loan amount. The guarantors income must cover total borrowings i.e. the Society s loan (100%) plus their own mortgage and any other commitments. Normal lending criteria will apply and the guarantor must not exceed normal affordability lending criteria or any other areas of lending criteria. (Note: Checkmate system will use both applicants and guarantors income and expenditure when calculating the affordability. However, in order for the application to be accepted an independent check must be carried out using the stand alone affordability calculator, use just the guarantor s income and expenditure add any existing mortgage commitments to the new loan amount (110%) to calculate the affordability percentage. This must meet normal affordability limits set in the lending policy criteria applications outside of policy will be declined). The following rules apply to guarantors, who should: Meet policy in full, taking in to account their own commitments and existing mortgage Be a close blood relative, generally father, mother, brother, sister (Not Spouse) Be a UK resident NOT be included in the application score Consideration to be given to applicant s future ability to maintain full mortgage payment Guide to Residential Lending Policy Criteria 3 April

18 Guarantors are not acceptable on an additional loan if not a party to the original loan/main account, nor are they acceptable on capital raising applications. Mortgage Offer Expiry Dates Mortgage offers are valid for 6 months only following the date of the first mortgage offer. After 6 months the MSC may consider extending the offer but this will be subject to an up to date credit search, up to date valuation inspection (fee payable by the applicants) and income and affordability assessment. If the mortgage product is no longer available, the applicants will be required to select a new product from the current range. In some instances the mortgage offer expiry date may be product driven, and may result in a shorter offer expiry period such as 3 months. Please refer to the specific product literature. Money Laundering Existing customers new applications and additional borrowing Where an applicant is an existing customer of the Society with a live mortgage or investment account, it is not necessary to verify personal identification again, but current address I.D. is still required at the time of application. Check the credit search on the application if the applicant is not currently registered on the Voters Roll, then a piece of address verification will be required. New applicants For face-to-face applications, one piece of personal I.D. and one piece of address verification are required. The same document cannot be used for both, i.e. a driving licence is acceptable for either personal OR address I.D. For postal applications, the above is required plus one extra piece of either personal or address verification. The document type and the reference number should be recorded on the Society s I.D. records on Checkmate or Bishop (screen CUS16). Proof of ID In the first instance, obtain paper ID documents for personal and address ID verification. See below for valid ID documents: Valid ID is any of the following: LIST A PROOF OF WHO YOU ARE (PERSONAL ID) LIST B PROOF OF WHERE YOU LIVE (ADDRESS ID) Valid ID is any of the following: Current signed passport Current UK full or provisional photo-card driving licence Current full (not provisional) UK (old style, paper based) driving licence Current Full EU photo-card drivers licence HM Revenue & Customs Tax Notification Evidence of entitlement to state benefit, pension, tax credit etc.* ID Cards** Armed Forces/Police ID Card * These must be the most recent and no more than 3 months old ** All EU ID cards are acceptable subject to SBS Financial Crime Team satisfactorily verifying the cards. Utility Bill (mobile phone bill not acceptable) Council Tax Bill for current billing year Current UK full or provisional photo-card driving licence Current full (not provisional) UK (old style, paper based) driving licence Bank or building society statement showing address* Annual mortgage statement for current year Evidence of entitlement to state benefit, pension, tax credit etc* Official letter from a government agency, eg CSA, DVLA, HMRC, JobCentrePlus, NHS* Care Home letter signed by an appropriate authority Proof of mail redirection (on Royal Mail letterhead, not internet printout)* Council Tenancy Agreement Court appointment instruction (e.g. Probate or Court registered Power of Attorney) Currently listed on voter s roll section of credit search at current address (either opted-in or opted-out) * Where possible, these must be the most recent and no more than 3 months old Please note, for an item submitted from the Personal ID list, the same item cannot also be used to confirm Address ID. A branch or broker who has given mortgage advice for the application can quote the document type and reference number to the Mortgage Service Centre and accept responsibility for the validity of the document rather than sending either the original or a copy of the document, however the Mortgage Service Centre must still ensure the document is acceptable and ensure the correct document type and reference number have been correctly recorded. Guide to Residential Lending Policy Criteria 3 April

19 Valuation Process Up to & including 60% LTV 60.01% 65% LTV OVER 65% LTV PURCHASE REMORTGAGE BUY TO LET ADDITIONAL LOAN Residential STANDARD Report STANDARD Report STANDARD Report AVM Report** AVM Report** STANDARD Report STANDARD Report STANDARD Report STANDARD Report LOS02 Value AVM Report** UP TO DATE Report * Additional Loan Buy to Let UP TO DATE Report * UP TO DATE Report * UP TO DATE Report * TSM change of names also if additional funds **(inc. BTL TSM) LOS02 Value AVM Report** UP TO DATE Report * MIN01 raising additional funds LOS02 Value AVM Report** UP TO DATE Report * * Subject to the latest valuation report on file dated within the last 5 years, being either a standard report or an up to date report. If only an AVM on file then a new standard report must be requested (Valuers will not carry out an up to date report in the above scenarios.). The valuation report for Additional Borrowing purposes is free to the borrower irrespective of the type of report obtained by the Society. ** Note: BTL TSM refer to the TSM section and table on page 11. **AVM POLICY CRITERIA Up to 65% LTV for remortgages, additional borrowing, TSMs and MIN01 applications Confidence factors accepted A-C only Maximum property value 750,000 Not used for non-standard construction properties, new build, flats with storey height >5, rural property, BTL, or where there is no comparable data. HOMEBUYER REPORTS & BUILDING SURVEY REPORTS If the Applicants request a more detailed inspection ie, a Homebuyers or Buildings survey, Skipton can instruct this, however the contract is between the applicant and the valuer and the report will be sent direct to the applicant once the applicants have signed the terms and conditions sent to them by the valuer. The appropriate fee must be collected as per the table below. Scottish Applications Scottish cases should proceed on the same basis as normal considering the following: Purchase Applications Valuations. A valuation will already have been completed on Scottish Purchases. New build Valuations. Where the property is a new build, a transcript report is not acceptable. The Society will instruct a full standard report for which a fee may be payable to the Society by the applicants, this is dependent on the product selected. Please refer to our new build section for when a property is defined as new build. Remortgage and TSM Applications Valuations: Normal valuation rules apply. Transcripts where the valuer is not already on SBS panel We can consider adding the valuer but it is subject to the following: The valuer providing the transcript must be the valuer who prepared the original home report The inspection for the original report must have taken place no more than 9 months ago Valuation figure must be no more than 90 days old Where the valuation is a refresh of the original home report, it must be based on an internal/external inspection that has taken place within the last 90 days Valuers unable to comply with the above a new standard report must be requested for which the fee as per SBS valuation fee scale will be payable by the applicants. Valuation Fee Scales Note: some products may qualify for a free standard valuation fee. This is up to a maximum purchase price/estimated valuation/ultimate valuation of 1,500,000. See product specification for details. Where a homebuyer/building survey report has been requested The Society will only pay the cost of a standard report and the applicant must pay The Society the difference. BTL applications where the applicant requests a Homebuyers report, the standard Homebuyers fee scale above should be used. We do not have a separate BTL Homebuyers fee scale. Guide to Residential Lending Policy Criteria 3 April

20 Purchase Price/Estimated Val/Ultimate Val Fee to be collected Standard Report Homebuyer s Report Building Survey Report Buy to Let Report 100, , , , , , , , , , , , , , , ,036 1, , ,091 1, , ,186 1, ,000, ,276 1, ,100, ,366 1, ,200, ,446 1, ,300,000 1,071 1,536 1,886 1,071 1,400,000 1,171 1,616 1,946 1,171 1,500,000 1,271 1,706 2,011 1,271 1,600,000 1,346 1,781 2,086 1,346 1,700,000 1,421 1,856 2,171 1,421 1,800,000 1,496 1,931 2,256 1,496 1,900,000 1,571 2,006 2,341 1,571 2,000,000 1,621 2,056 2,426 1,621 2,100,000 1,696 2,131 2,511 1,696 2,200,000 1,746 2,181 2,596 1,746 2,300,000 1,796 2,231 2,681 1,796 2,400,000 1,846 2,281 2,766 1,846 2,500,000 1,896 2,331 2,851 1,896 Reinspection fee 40 Up to Date Inspection 60 All fees include a Panel Management Fee of 26. Property Values in excess of 2,500,000 by negotiation Solar Panels The Society does not apply any restrictions in relation to solar panels where the applicant(s) is funding the purchase of panels themselves, or via additional borrowing, providing they are doing so with no creation of any long term lease arrangement with the panel provider. Where the solar panel provider is creating a lease the maximum LTV is 50% and the property value must be a minimum of 100,000. In order for the application to be considered the borrower must provide the Society (prior to submitting a DIP) with the following satisfactory documents: a signed CML Template Letter from the provider a copy of the written report from a Chartered Building Surveyor or Structural Engineer a copy of the providers Microgeneration Certificate. A condition will be attached to the offer of advance that lending is subject to the appropriate planning permission and consents being in place. Guide to Residential Lending Policy Criteria 3 April