Helpful banking Lending guide ONLY FOR USE BY MORTGAGE INTERMEDIARIES
Our guide to lending Helping your customers to apply Affordability Page 3 Acceptable income sources Page 3 Self employed Page 4 Gifted deposits and equity Page 4 Our lending criteria Purchases and remortgages Page 6 Buy-to-Let and Let-to-Buy Page 7 Help to Buy Page 8 Submitting an application Online submission Page 10 Supporting documentation we need Page 10 Certification and packaging Page 11 Need help? With an application Page 12 Proc fees Mortgage types DA firms AR firms Residential 35bps gross 40bps gross Buy-to-let 45bps gross 45bps gross Information correct as at 1 June 2015.
Helping your customers to apply for mortgages Assessing affordability Affordability Our affordability calculator is the same one used by our underwriters so consistency ensured Debts being repaid are not included in the calculation Pension and childcare costs not included in the calculation (childcare costs are included in lifestyle expenses - see below) Maximum age for lending is 70, subject to affordability if lending beyond intended retirement age Loans with less than 6 months to run not included Assumes values for expenditure for basic essentials and quality living costs Where the loan amount is more than 500,000, a loan to income cap of four times will apply and there will be a maximum term of 30 years We consider up to 100% of income including: Working/Child Tax Credits Child Benefit (provided the applicant earns less than 50,000 a year) Court ordered Child Maintenance * 2nd & 3rd job wages* Foster & Carers Allowance Disability Living Allowance/Personal Independence Payment Earnings from temp/agency or contract workers ** Commission and overtime* Regular bonus payments* (50% of all discretionary annual bonuses considered) *** *Minimum 6 months evidence required **Minimum 12 months evidence required ***2 years evidence required Lifestyle expenses we use data supplied by the Office of National Statistics (ONS) to assess an applicant s lifestyle expenses which are automatically built into the affordability calculator. For other forms of acceptable income use our instant messaging service LiveTALK 3
If your customers are self-employed We ll need up to 2 years SA302 income/accounts Individuals who own 20% or more of a limited company are classed as self-employed For applicants running limited companies salary and dividends For sole traders net profit figure For partnerships share of net profit Retained profits or directors loans are not accepted If your customers are receiving a gifted cash deposit We accept deposits from parents and/or guardians and 3rd parties (not sellers/vendors) provided no repayment is required We treat them as if they are the applicant s own deposit, even where the money is advanced against a formal loan agreement or a second charge is put in place to secure the family member s rights. Any monthly cost relating to a formal loan agreement must be included in the affordability calculation If your customers are receiving gifted equity when buying from a family member We accept transactions under value where the applicant is receiving a gift of equity from a family member with a deed of gift to represent the amounts The maximum loan amount can be based on the valuation not the purchase price The applicant may need to have an indemnity set up via their own solicitor, even when the money is advanced against a formal loan agreement or a second charge is put in place to secure the family member s and/or family business rights 4
LiveTALK Credit criteria are subject to change so please check first with LiveTALK or your BDM if you are unsure. For more information go to intermediary.natwest.com 5
Our lending criteria Here s a summary of some of the key elements of our lending criteria: Purchases Minimum loan 25,000 Maximum term: 35 years (30 years if loan exceeds 500,000) Family gifted deposits accepted cash or equity Second purchase at residential rates accepted, subject to affordability New Build any property built, first occupied in its current state or significantly modernised, refurbished or altered within the last two years Residential maximum LTVs: flats 75%, houses 80% Buy-to-let maximum LTVs: flats 65%, houses 65% (net of builders incentives) Shared equity schemes we consider applications using government schemes Existing NatWest mortgage rate can be transferred to new property purchase Remortgages Minimum loan: 25,000 Minimum term: 3 years Maximum term: 35 years (30 years if loan exceeds 500,000) Debt consolidation allowed, any legal purpose considered Up to 90% LTV accepted on debt consolidation, but no restrictions on amount Free legal and valuation fees Overpayments allowed 10% of balance in a rolling 12 month period Unencumbered properties accepted (minimum time owned 6 months), fees free 6
Buy-to-Let Rental cover calculation: 125% x 5.5% Minimum annual income: 25,000 from single applicant Maximum number of buy-to-let mortgages permitted for single applicant: 4 (including new application) with any lender, up to a maximum of 2m lending on all buy-to-let properties Loan to income cap: Maximum 4.99 times income Minimum loan: 25,000 Maximum loan: 500,000 Minimum property value: 50,000 Maximum LTV: 75% or 65% for new builds First-time buyers (subject to rental coverage and affordability proof of income will be required) and non-residential mortgage holders accepted Interest-only available on all buy-to-let purchases and remortgages Repayment vehicle of sale of property accepted Cannot accept regulated buy-to-let business where the occupants are immediate family members of the mortgage holder Professional landlords not accepted classed as anyone earning more than 30% of their income from rental income or property sales Let-to-Buy 100% mortgage cover on let property. Ring-fencing of current property if rent covers mortgage (will use ARLA letter) Applicants need a letter from a local ARLA-registered letting agent or estate agent to show the expected rental income. If it covers the mortgage cost then this payment can generally be disregarded from the affordability calculation. If there is a shortfall in rent then this must be disclosed as a monthly commitment on the affordability calculator If either of the mortgages is with another lender, the LTV of the mortgage with NatWest cannot be higher than the one with the other lender. This is subject to an underwriter s discretion. 7
Help to Buy: mortgage guarantee scheme Open to all intermediaries and is available for existing properties only Available to first-time buyers and existing homeowners Enables borrowers to get access to 95% LTV mortgages, subject to affordability and passing credit scoring Applicants need a minimum 5% deposit No limit on annual income earned by applicants Applicants cannot have an equity interest in any other property Must be the primary residential property cannot be a second home or be rented out after purchase Maximum property value is 600,000 Government guarantees indemnity of up to 15% of the lender s liability on the property value in return for a fee paid by the lender no guarantee is offered to the borrower Borrowers remain fully responsible for their mortgage repayments, as with any other normal mainstream mortgage We will be offering specific 95% LTV mortgages to support this scheme No HomeBuy agent involvement intermediaries should contact us direct Property must be in the UK Help to Buy: shared equity scheme Open to all intermediaries and is available for new-build properties only Available to first-time buyers and existing homeowners Applicants need a minimum 5% deposit Government will loan up to 20% of property value It must be the primary residential and only property Maximum property value is 600,000 We offer specific 75% LTV mortgages to support this scheme Need to apply for eligibility through a HomeBuy Agent in region of desired property 3% of equity loan per year factored into affordability calculation as monthly commitment Property must be in England 8
Help to Buy: Forces Unsecured personal loans are only acceptable for Armed Forces personnel who are eligible for a Forces Help to Buy (FHTB) loan which is an interest free loan repayable over 10 years This will be allowed to be used towards the customer s deposit but the monthly repayment a detailed on the Ministry of Defence Personal Information Note must be included in outgoings for affordability The FHTB loan may not be used for the purchase of a second property including a buy-to-let property. It is not compatible with the Help to Buy Mortgage Guarantee Scheme because a publicly-assisted loan cannot be used towards the customer deposit. (The Long Service Advance of Pay scheme will be suspended whilst the Forces Help to Buy scheme is in place.) LiveTALK Credit criteria are subject to change so please check first with LiveTALK or your BDM if you are unsure. For more information go to intermediary.natwest.com 9
Submitting an application Here s a step-by-step guide on how to submit an application to us. If there s anything you d like to check, feel free to chat to us on LiveTALK at intermediary.natwest.com Step 1 Register with us Go to intermediary.natwest.com Click on Register now and complete registration form We will then email you your log in details Step 2 Submit an application online You can submit an application via our website or the MTE (Please note that you need to submit a paper application for a porting case) For technical help with a submission please go to LiveTALK Once you have submitted an application the status will be updated against the applicant s name on the website Check if we have electronically validated the applicant s ID if not, please supply the ID documents we require You ll receive a Mortgage Reference Number by email within 24 hours please do not submit any supporting documents until you have received it Please make sure that you include your Mortgage Reference Number on every page of supporting documentation you submit Step 3 Add the following supporting documentation Direct Debit Mandate Signed customer signature sheet Proof of deposit bank statement showing build up of savings/gift letter stating non-refundable gift Proof of income for employed applicants LTV up to 75% AND loan up to 500,000 latest payslip OR P60 OR latest personal bank statement* LTV over 75% OR loan over 500,000 latest 3 months personal bank statements for main account PLUS (if salary not mandated) latest 3 months consecutive payslips OR P60 10
Step 3 continued Proof of income for self-employed applicants LTV up to 75% AND loan up to 500,000 latest set of audited accounts OR latest Inland Revenue tax assessment (SA302) OR most recent online tax self assessment submitted to the Inland Revenue (100% completed and NOT In progress ) along with tax year overview LTV over 75% OR loan over 500,000 latest 3 months consecutive personal bank statements for main account* PLUS latest 3 months consecutive business bank statements* PLUS either the latest 2 years finalised accounts OR last 2 years Inland Revenue tax assessments OR most recent online tax self assessment submitted to the Inland Revenue (100% completed and NOT In progress ) along with tax year overview Please note that bank statements must be originals or certified copies of the originals. ATM printouts are unacceptable. Proof of additional income tax credit letter/pension statement/regular overtime/bonus/commission Proof of income past age 65 please refer to our website or log on to LiveTALK *Not required if the applicant s account is held with NatWest or RBS. Step 4 Supply additional identification (ID) if required Verifying an applicant s identification and address If you submit an application via our website or the MTE, electronic verification of an applicant s ID is included as part of the online decision, so in many cases you won t need to submit copies of ID documentation. However, if an applicant s ID cannot be verified electronically we require: ID A certified copy of a current valid passport, OR A certified copy of a current full photo driving licence, OR HMRC tax notification and correspondence, less than 6 months old or dated within the current financial year Address An original or certified copy of a bank statement confirming the applicant s name and current address less than 3 months old, OR An original or certified copy of a utility bill (not mobile phone) or a credit card statement confirming the applicant s name and current address less than 3 months old, OR An original or certified copy of an annual mortgage statement less than 12 months old, OR council tax bill (for the current or up-coming financial year) confirming the applicant s name and current address Step 5 Package and certify your applications Please ensure that every page of the documents you submit is clearly legible, certified with the wording True copy of the original and shows your company name, your full name in BLOCK CAPITALS, your signature and the date Write the Mortgage Reference Number on each document. Please check that the documents you submit are legible Only submit your documents to us when you can send everything together at the same time within 10 working days. This will mean your case can be assessed immediately and will not result in delays Email all documents to intermediarydocs@natwest.com or fax all documents to 0845 878 9498 11
Where to go for help Your BDM Name: Phone: Email: average number of years 10The experience that our BDMs have in the mortgage industry. Help with pre-submission applications We are happy to help you with queries about client applications on LiveTALK, our instant messaging service at intermediary.natwest.com. Use LiveTALK for : Registration/password queries Queries on criteria for new applications Queries about using the website 7 LiveTALK The average number of years experience in the mortgage industry that members of our LiveTALK team have. And, get a transcript of your conversation Help with existing applications Call our dedicated intermediary mortgage processing centre on our local rate number 03459 00 11 10 For help with: Checking receipt of supporting documentation Providing updates on underwriting decisions Managing valuation instructions Confirming mortgage offer issued Extending mortgage offer term Confirming completion dates For more information go to intermediary.natwest.com NWB7749 June 15