SELF-BUILD DIRECT LENDING CRITERIA (JANUARY 2018) ARREARS BASIS ONLY

Transcription

1 SELF-BUILD DIRECT LENDING CRITERIA (JANUARY 2018) ARREARS BASIS ONLY Minimum Advance: 30,000* Maximum Advance: 500,000* * Restrictions may be applied to individual products, please check the product sheet. Minimum Term: Maximum Term: Loan Basis: Loan to Value: Deposit: The Applicant: Employment & acceptable income: 1 year. Certain products may have restrictions on early repayment. 40 years Interest Only Acceptable for a maximum of 2 years. The account will be transferred to a repayment basis 2 years after inception or 6 months following release of the final stage payment whichever occurs first Repayment (Capital & Interest) Works must commence within 6 months of mortgage completion. All works must be completed and a final completion sign off received from the Warranty provider within 2 years from the date of mortgage completion. Maximum 75% during construction Maximum 80% at final value upon completion. A valuation will be required at every stage We accept non-repayable gifted deposits from family members only All applications are for owner occupier only, as an individual project and not part of a group development. Investment properties are excluded. Age: Minimum 18, Maximum 80 at the end of the loan. Evidence of pension income is required to enable the underwriter to take into account the likely impact of retirement on affordability when the borrower/s age is greater than 70 at the end of the mortgage term. The applicant will be required to sign a declaration stating the age at which they intend to retire. The applicant s plans should be discussed in view of their occupation and reasonability of working beyond state pension age and should be documented. Nationality & Residency A minimum of 3 years residential history is required and applicants should be on the electoral role for this period. Applicants must have a minimum of 3 years residency in the UK and have permanent rights to reside and work in the UK. Documentary evidence will be required. The applicant must be paid in sterling (GBP) and hold a UK bank account. Employed - The applicant must have been continually employed for at least 12 months and have been with their current employer for a minimum of 6 months on a permanent contract. Applicants who are in a probationary period are not acceptable. 100% of the following can be taken into consideration for an applicants income: Basic pay and guaranteed contractual shift allowance. Mortgage subsidy and large town allowance. Guaranteed car allowance. Corresponding car loan will also be taken into account as a commitment. If no car loan is evident on the credit search, bank statements or application form, the applicant should clarify whether any such loan exists. Income from a second job may be considered, provided this has been held concurrently with the main job for a minimum period of 12 months, can be proven as per normal proof of income requirements and total contractual hours for both jobs does not exceed 50 hours per week. Overtime income will not be taken into account for either job if income from a second job is assessed for mortgage purposes. Regular overtime payments as verified by the applicant s latest P60 for the previous 1 year may be used at a maximum of 50%. Regular commission/bonus - A maximum of 50% of commission/bonus earnings may be Self-Build Direct Lending Criteria Page 1 of 7

2 used providing these can be verified on the applicants P60 for the previous 1 year. Total commission/bonus earnings cannot exceed the annual basic salary. Fixed Term Contract Current contract for a minimum of 12 months and this is the second contract with the same employer. Contracts acceptable directly from the company for which the employee is providing services and not via a third party. Self-employed We will use the following for the purposes of calculating income: Average of the latest 2 years net profit which cannot be greater than the latest years figure. OR First years full accounts with a satisfactory projection (at least 6 months into year 2) from a qualified accountant for the current financial year. The projection must cover a full years trading and the accountant must confirm that this is based on actual trading to date. Assessment of income we will use the net profit figure from the most recent finalised accounts provided, subject to a minimum of 30k OR Average of the latest 2 years salary and dividends. Declining profits are not normally acceptable and cases should be referred prior to submission. The following documentation will be required: Latest 2 years Audited / Certified Accounts or Accountants reference or latest 2 years tax calculations and 2 years tax overviews. We accept accountants certificates from accountants with the following qualifications: CPFA, AAPA, ACCA, FCCA, FCA, ACA. We reserve the right to ask for additional accounting information at the discretion of our underwriters. Directors Where the applicant has a shareholding of 25% or more, the criteria for Self-Employed will apply. Maternity Leave Applicants on maternity leave will be considered, written confirmation from their current employer stating their return to work date and salary will be required Other acceptable income: Maintenance Payments - A maximum of 25% in respect of payments made to the applicant under a Court Order but not payments awarded in respect of children by the Child Support Agency. Retirement Income 100% of state and private pension Affordability: Basic Income Multiples: (for guidance purposes) The amount we will lend is based upon your income and expenditure. A fully completed Individual Affordability Assessment (IAA) form is required with all applications. The income and expenditure on the IAA will be cross referenced to bank statements and outgoings will be sense checked against statistical data. The mortgage payment will be calculated by applying a stressed rate of interest. Income multiples are used as a guide only. We will take the gross annual income and deduct any financial commitments before applying a multiple as set out as follows. Loan to Value up to 80% Loan to value up to 50% Single Applicant Income x 4.25 Income x 4.5 Joint Applicants Higher Income x 4.25 Plus Lower Income x 1.25 Or Higher Income x 4.5 Plus Lower Income x 1.50 Or Self-Build Direct Lending Criteria Page 2 of 7

3 Joint Income x 3.75 Joint Income x 4 Financial Commitments: Buy To Let Properties: Retaining the Existing Property/Renting during the Build: Credit History Valuations Multiple Applicants Higher income x 4 plus each other income x 1 (up to a maximum of 4) The monthly commitments and balances outstanding in respect of the following should be declared on the application form and IAA form: Bank Loans, Hire Purchase, Car Loans, Student Loans Second Mortgages, Buy to Let mortgages, Child Maintenance, car lease agreements, CSA payments, nursery education, education fees or any other financial commitment. For credit cards, store cards and mail order accounts 3% of the current balance, will used as the monthly commitment. Commitments can be ignored in the affordability calculation if there is less than3 months to run. Must have no more than 3 BTL Properties in the background. No BTL mortgage payments will be deducted if the property has a rental history for the previous 12 months and evidence can be provided of rental income. The rental income must be at least 145% of the mortgage payment based on the Society s standard variable rate (SVR) or the pay rate if this is higher. BTL mortgage payments will be treated as a commitment (calculated on the Society s SVR or the pay rate if this is higher) and no rental income taken into account in the following situations: o Properties without a 12 month rental history. o If the rental income does not meet the 145% requirement. Rental payments and Mortgage payments must be declared on the application form and on the IAA forms. CCJs Defaults Mortgage/Rent/Loan/Secured/Unsecured Arrears Missed Payments revolving credit. E.g. mail order/ overdrafts/ credit cards/ mobile phones Pay day loans/debt management arrangements Bankruptcy / IVA Undisclosed Credit Repossession A maximum of 1 for no more than 500 showing on the credit report. Must not have occurred in the last 12 months and must be satisfied prior to application. A Certificate of Satisfaction will be required. A maximum of 1 for no more than 500 showing on the credit report. Must not have occurred in the last 12 months and must be satisfied prior to application. Evidence that it has been cleared will be required. A maximum of 3 missed payments in the last 24 months, reaching no more than a status 2 at any one time, applicants will need to be clear of any arrears for the previous 12 months. Maximum of 3 missed payments in the last 12 months totalling no more than 500. No missed payments in the last 6 months. Applicants who have entered into a pay day loan agreement within the last 24 months are unacceptable. Applicants who have had a previous debt management plan must have redeemed it in full more than 24 months ago. Applications will be considered from discharged bankrupts/ivas subject to the applicant being discharged for a minimum of 6 years. Valuations will only be valid for 6 months. The borrower will be responsible for the cost of all further valuations. Valuations will be instructed by the Society through the Panel Self-Build Direct Lending Criteria Page 3 of 7

4 Manager. Sub Letting (any part) Guarantors WHERE WILL THE HANLEY LEND? The Hanley will lend in England and Wales. The Hanley will not lend in Scotland, Northern Ireland, *Jersey, *Guernsey, *Isle of Man, Isle of Wight * Non UK Jurisdiction. WHAT WILL THE HANLEY LEND ON FOR "CONSTRUCTION" PURPOSES? Acceptable Properties Intermediary Lending England & Wales. 1. Freehold houses and bungalows of standard construction. 2. Leasehold houses and bungalows of standard construction (see No 3) 3. Properties with an unexpired lease of a minimum of 85 years at valuation. 4. Modern timber framed properties with external brick skin. 5. Traditional Builds. 6. Timber Framed Builds (with brick outer skin).subject to a maximum of 3 storeys. 7. Properties that have a granny flat or annexe (subject to details of proposed usage and occupancy). 8. Properties with Thatched roof. 9. Modern Oak frame properties 10. SIPS (Structurally Insulated Panels) with an external cladding of brick, brick slip finish, cement/polymer render or cement weatherboard. The use of treated timber cladding (eg Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface. 11. ICF (Insulated Concrete Forms) with external brick, brick slip or cement/polymer render or cement weatherboard finishes. The use of treated timber cladding (eg Larch of Western Red Cedar) will only be considered where its presence does not exceed a maximum 50% of the total external wall surface 12. Modern Timber Framed Properties with brick slip, cement/polymer render or cement weatherboard external clad finishes. The use of treated timber cladding (eg Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface. 13. Modern Kit Built Properties such as Potton Timber Framed Systems or Huf Haus timber post and beam systems. 14. Partially built properties Plots/properties bought at auction with a minimum of outline planning permission Plots/properties subject to Section 106 agreement Plots/properties subject to Restrictive Covenants considered individually by the Society on a case by case basis Semi-detached properties where the building is being built onto an existing house and not dependant on a third party to complete another adjoining property. E.g. Detached property to semi-detached or semi-detached to terrace (total of 3 properties) 19. End terraced house, where the building is being built onto an existing house and not dependant on a third party to complete another adjoining property. E.g. Terraced properties with 1 additional property added. 20. Properties with bat boxes located on either the main dwelling or outbuilding e.g. garage. 1 Subject to the applicant providing to the Society with a certificate and inspection certification. Confirmation from the valuer that they have viewed all documentation and guarantees are available for the works undertaken to date. 2 The Society will consider applications for properties bought at auction. The Society will require a full report and valuation, together with a minimum of outline planning permission at least 15 working days before the date of auction; the applicant should be made aware that the Society reserves the right to decline an application at any stage following the receipt of further information. 3 Where a Section 106 Agreement exists the Society will seek legal advice. A charge of 250 will be required at application stage; the charge is non-refundable unless the mortgage completes. 4 A land registry search will be made upon receipt of an application. If this reveals that the plot/property is subject to Restrictive Covenants, further documentation will be required. The case will not be assessed until further documentation is received. Upon receipt the Society will make a lending decision as to whether the application will proceed or not dependent upon the covenant details. Self-Build Direct Lending Criteria Page 4 of 7

5 Where a bat report requires provision for free flying space in the main property the case should be referred to the Society prior to a full application being submitted. WHAT WILL THE HANLEY LEND ON FOR "RENOVATION/CONVERSION" PURPOSES? For applicants wishing to carry out home improvements/renovation/conversion on their existing home or to purchase a home and renovate/improve where works are subject to planning permission or building regulation approval. THE HANLEY WILL LEND ON: 1. Traditional Builds. 2. Timber Framed Builds (with brick/natural stone outer skin) subject to maximum of 3 storeys. 3. Renovations and conversions to provide structural alterations and or property extensions. 4. Refurbishments where planning permission and Building Regulations are not required (subject to written confirmation that these are not required being received from Local Authority.) 5. Properties that have a granny flat or annexe (subject to details of proposed usage and occupancy). 6. Detached, semi-detached & terraced houses. 7. Modern Oak Framed Properties 8. SIPS (Structurally Insulated Panels) with an external cladding of brick, brick slip finish, cement/polymer render or cement weatherboard. The use of treated timber cladding (eg Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface 9. Modern Timber Framed Properties with brick slip, cement/polymer render or cement weatherboard external clad finishes. The use of treated timber cladding (eg Larch or Western Red Cedar) will only be considered where its presence does not exceed a maximum of 50% of the total external wall surface. 10. Partially built property (see footnote 1). 11. Properties subject to Section 106 agreement (see footnote 3). 12. Properties subject to Restrictive Covenants considered individually by the Society on a case by case basis (see footnote 4). THE HANLEY WILL NOT LEND ON: 1. Log Homes (including Erland House log homes & Jim Barna Log homes). 2. Land only in any circumstances. 3. Land/properties bought at auction. 4. Property/land with agricultural ties. 5. Right to Buy Properties. 6. All Flats or Maisonettes. 7. Leasehold properties with an unexpired lease of less than 85 years at valuation 8. Holiday Homes. 9. Easiform cavity walled concrete dwellings. 10. Woolaway houses as named in the Building Research Establishment Report 1983 and built between 1945 and Live/Work units. 12. Wimpey no fines. 13. Back to Back terrace or cluster. 14. Properties above commercial premises. 15. Steel framed construction. 16. PRC systems designated defective. 17. High Alumina Cement. 18. Any property or land with commercial use. Self-Build Direct Lending Criteria Page 5 of 7

6 19. A group development eg, builder/developer offering multiple plots. 20. Elliot ehouse. 21. Properties with possessory title. 22. Listed buildings. 23. Smallholdings. 24. Properties where Bat lofts/boxes are located within the main dwelling. 25. Properties with either a private or no water supply. 26. Properties subject to a local occupancy clause. 27. Properties made of concrete (apart from ICF only). 28. Properties where the whole of the roof is flat. 29. Any purchase where part-exchange is involved. 30. Houses subject to Flying Freehold. 31. Former Local Authority Houses. 32. Properties with statutory tenants. 33. Properties of non-traditional construction deemed defective under the Housing Defects Act which have not been modernised under an approved scheme. 34. Properties with ongoing structural movement. 35. Underpinned properties with no guarantees available. 36. Second Homes. 37. Properties designated with HMO. 38. Properties that have previously flooded, or neighbouring properties. 39. Properties that are reported to be contaminated land or within a contaminated land area. All properties are subject to valuer's comments and obtaining all insurance and guarantees as required by The Hanley Economic Building Society and valuer. ACCEPTABLE WARRANTY CERTI FICATION 1. Premier s Guarantee for New Homes (minimum warranty term 10 Years) 2. NHBC Buildmark (minimum warranty term 10 years) 3. Self-Build Zone (minimum warranty term 10 years) 4. LABC Warranty (minimum warranty term 10 years) 5. Architects Certificate (minimum warranty term 6 years) SITE INSURANCE MINIMUM REQUIREMENTS A copy of the insurance schedule is required to include the following: million public liability million employers liability 3. Contract works (for the re-instatement value) - 289, Hanley Economic Building Society to be noted as mortgagee PLANNING PERMISSION Outline only is required to enable the purchase of the plot. Outline planning permission should have at least 12 months to run from receipt of the application. Detailed planning permission should have at least 12 months to run from receipt of the application. Self-Build Direct Lending Criteria Page 6 of 7

7 BUILDING REGULATION Copies of Building Regulations are required for all self build, conversion and renovation projects. The society does not accept a Builders Notice as suitable approval for the works carried out. VALUATION Valuation for mortgage purposes will be required. Valuations will only be valid for 6 months after which the borrower will be responsible for all further valuations. Valuations will be instructed by the Society INTERIM VALUATIONS The Society reserves the right to carry out interim valuations during any stage of the build/renovation. Valuations will be carried out at each stage release. STAGE RELEASES ARE MADE IN ARREARS DURING THE CONSTRUCTION OF THE PROPERTY AGAINST A VALUATION AT EVERY STAGE. ACCEPTABLE CERTIFYING PROFESSIONALS PROFESSIONAL QUALIFICATIONS. All Architects supervising the build must have Professional Indemnity cover of no less than 1m and one of the qualifications below. ARB UK *RIBA / ARIBA / FRIBA MCIAT MASI/FASI Architects Registration Board UK (previously known as ARC) Chartered Member/Associate/Fellow of the Royal Institute of British Architects Corporate Member of the Chartered Institute of Architectural Technicians Corporate Member/Fellow Member of the Architects and Surveyors Institute (excludes AMSI) C. Build E MCABE/ C. Build E FCABE MICE/ FICE FCIOB/MCIOB MRICS / FRICS MI Struct Eng/ FI Struct Eng Chartered Member/Chartered Fellow of the Chartered Association of Building Engineers (excludes A B Eng) Member/Fellow of the Chartered Institute of Civil Engineers (Excludes AMICE) Fellow or Member of the Chartered Institute of Building Member or Fellow of the Royal Institution of Chartered Surveyors ( RICS) Chartered Member or Fellow of Institute of Structural Engineers * only acceptable if also registered with the Architect s Registration Board (ARB) Self-Build Direct Lending Criteria Page 7 of 7