Mortgage Lending Criteria Effective from 1 June 2017 INTERMEDIARIES www.mbs-intermediaries.com
Contents Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Section 9 Section 10 Section 11 Section 12 Section 13 Section 14 Section 15 Section 16 Section 17 Income Criteria Additional or Second Income Criteria < 80% LTV Minimum & Maximum Loans including LTV s Contract Workers Self-Employed Buy-to-Lets Capital raising Affordability Housing Schemes Interest Only Deposits Day 1 Remortgage Fees Property Builder Incentives Self Build Specialist/Other Page 2 Page 3 Page 3 Page 4 Page 4 Page 5 Page 6 Page 6 Page 6 Page 7 Page 7 Page 7 Page 7 Page 8 Page 8 Page 9 Page 9 01
Section 1 Income Criteria Single or Joint Income < 80% LTV Single or Joint > 80% - 95% LTV Postcode Restrictions Apply Commission, Bonus or Regular Overtime Payslips & P60 all employees Bank Statements Income paid in cash Shift Allowance Car Allowance 4.50x (England & Wales) 4.50x single or joint incomes in postcode areas: NP, CF, SA, LD, WR, GL, HR, BS, BA, SN, RG, OX, SY & TA only 100% < 80% LTV if regular 50% > 80% LTV if regular Latest 3 months (or 12 weekly) & P60 always required 3 months all LTV > 80% and where requested by Underwriting t acceptable 100% if evidenced that shift allowance is integral to the role 100% if evidenced as established part of employment Location/Cost of Living Allowance (e.g. London Weighting) Maintenance Maternity Pay/Income during parental leave Bursary Scholarships /Grants Rental Income Probationary periods Length of Time Employed Court Ordered or CSA no more than 50% considered % subject to contents of the employer reference provided it s being declared (SA302s) Maximum LTV 80% Min 6 months Self Employed/Ltd Company Directors See Section 5 02
Foster Care Allowance (minimum 3 years experience & earnings) Child Benefit (ages of children will be considered) Section 2 Additional or Second Income Criteria < 80%LTV 100% 100% Child Tax Credit 100% Working Tax Credit 100% Disability Allowances: Incapacity Benefit Employment & Support Allowance (ESA Support Group only) Reduced Earning Allowance (REA) Attendance Allowance Disability Living Allowance (DLA) Personal Independence Payment for a person aged 16 or over (PIP) Industrial Injuries Disablement Benefit War Disablement Pension Guaranteed Income Payment (GIP) RE: Forces Injuries 50% 100% Maintenance by Court Order only 50% Rental Income property let for a minimum of 3 months 100% www.mbs-intermediaries.com Section 3 Minimum & Maximum Loans inc LTV s Min. Residential See specific product details for minimum loan amount Max. Residential Min. Age at Application Max. Age at loan maturity Min. BTL postcode areas: NP, CF, SA, LD, WR, GL, HR & BS only Max. BTL postcode areas: NP, CF, SA, LD, WR, GL, HR & BS only New Build Houses (min 2 bed) New Build Flats See specific product details for maximum loan amount 18 years 75 years based on the main earner 85 years (Older Borrowers products only in postcode areas NP, CF, SA, LD, WR, GL, HR, BS, BA, SN, RG, OX, SY, & TA Where lending is beyond state retirement age the Society will make an assessment of the likelihood of employment continuing. Pension evidence will be required 30K 350K single property. 750K overall BTL portfolios above 750k by referral 95% within NP, CF, SA, LD, WR, GL, HR, BS, BA, SN, RG, OX, SY & TA postcode areas, otherwise max 80% Max 80% LTV (Max 65% BTL) 03
Section 4 Contract Workers Fixed Term or Rotational Contracts CIS Contractors (sub-contractor) where the company pays tax CIS Contractors (sub-contractor) where the customer is paying the tax Has more than one contract or employed by their own Limited Company Zero Hours Contract Contractor/Consultant Employer reference or Contract of Employment plus 12 months or more continuous employment with 6 months of the contract remaining, or 2 years continuous service in the same type of employment as at date of application 12 months or more continuous employment with 6 months remaining on the contract, or 2 years continuous service in the same type of employment Last 2 years accounts/accountants reference or Last 2 years SA302s (or online equivalents) plus Corresponding Tax Year Overviews Max 80% LTV Minimum 24 months with same employer, and 24 months payslips to support Employer s reference Current continuous contract of 12 months or longer or 2 years continuous service in the same type of employment Copy of Contract Last 2 years accounts Accountants reference Or Last 2 years SA302s (or online equivalents) Corresponding Tax Year Overviews Section 5 Self Employed Min. Trading/Accounts Required Declining Profit Considered? Latest Year Acceptable Ltd. Company - Acceptable Income Ltd. Company - Retained Profit Considered? Online Tax Calculations & Tax Year Overviews Accepted Accountants Computerised Tax Calculations acceptable? (e.g. as opposed to HMRC Online Tax Calculations) Accountants Qualifications required Max. Age of Accounts Max. % shareholding to still be classed as Employed Acceptable Income 2 years averaged over the last 2 years Salary & dividend Chartered/Certified/COIT/AAT Less than 12 months <20% 04
Section 6 Buy-to-Lets 05 Applicant(s) Minimum Income Your definition of a Consumer BTL Your definition of a Professional BTL Will you accept Rental Income to achieve minimum income if either shortfall from employment or no employment income? Professional Landlords (i.e. income only derived from rental income) Rental Income Requirements If Repayment, do you assess rental coverage on the Repayment amount, or do you default to Interest Only? Background Properties & Exposure Limits DSS Tenants Student Tenants First Time Landlords First Time Buyers HMOs Holiday Lets Limited Company BTL (SPV Only) Limited Company BTL (Trading) Regulated BTL Individual ASTs Maximum AST Term (e.g. 6m, 12m, 24m) Corporate Lets (if so, what is the maximum term?) Housing Association Lets (if so, what is the maximum term?) Is Vacant Possession Required? Applications will not be considered in respect of: Must be an existing home owner 25K main applicant BTL is regulated under MCD for cases where the borrower is not acting with a business intention. e.g. inherited properties and L2B Professional tenants. More than 1 tenancy in place (HMO) Will consider provided income is declared for tax purposes and evidenced with SA302s Rental income should be at least 45% more than the mortgage interest repayments (based on the initial pay rate plus 2% or 5.5%, whichever is greater) Interest only Copy of current ASTs if < 3 properties If > 3 properties, spreadsheet outlining details of portfolio required t currently Rate TBA 12mths Flats above shops or other commercial properties Right to buy council homes Properties sold at auctions Properties let to family members
Section 7 Capital Raising Business Purposes Debt Consolidation Home Improvements Max 80% LTV Rate TBA Case by case Max 80% LTV (Potentially 85% in postcode only area but limitations apply) Excludes Tax Liabilities/Gambling Debts etc. Case by case Max 80% LTV (Max 90% and max 30K for home improvements within postcode area) Section 8 Affordability (Deductions) Personal Loans/HP/Mortgage/Secured Loans /Child Maintenance/CSA Credit Card balances/bank Overdraft/Shared Equity Loan (Help To Buy Wales only) Are pension contributions treated as a commitment? Are share save scheme contributions treated as a commitment? Are private school fees treated as a commitment? Are childcare/nursery fees treated as a commitment? Background BTLs (what rental coverage is required to treat as self-financed, e.g. 100% on interest only) 3% Rent to cover the mortgage payment otherwise shortfall treated as a credit commitment Section 9 Housing Schemes Help to Buy (Equity Loan) What interest rate do you use for the Equity Loan when assessing affordability? Help to Buy (Equity Loan) (Remortgage) Help to Buy (Mortgage Guarantee) Help to Buy (Forces) (if acceptable, can applicants use the loan as the deposit for a HTB scheme?) Shared Ownership Right to Buy (what is the max. you can lend, e.g. 100% of discounted price, or extra for home improvements) Right to Buy (Remortgage) (within pre-emption period) Help to Buy Wales only 3% 100% of Discounted Purchase Price like for like 06
Section 10 Interest Only Max. LTV Max. Age 50% (balance on repayment to max 80% LTV overall.) 75 years based on the main earner 85 years (Older Borrowers products only in postcode areas NP, CF, SA, LD, WR, GL, HR, BS, BA, SN, RG, OX, SY, & TA) Where lending is beyond state retirement age the Society will make an assessment of the likelihood of employment continuing. Pension evidence will be required Acceptable Repayment Vehicles Sale of another UK property (equity must be at least 110% of the interest only loan.) Valuation required Savings equal to or greater than the interest only loan (must have been in place minimum 12 months) Pensions based on a mid-growth projection 25% of the projected pension fund value must be equal to or greater than the interest only loan Endowment maturity value must be equal to or greater than the interest only sum being borrowed. This will be based on 100% of mid growth projection Section 11 Deposits Builder/ Vendor Gifted Deposits Family Gifted Deposits Concessionary Purchase (Family) Would you allow the family member selling the property to remain an occupier of said property post completion? Gifted equity is acceptable Section 12 Day 1 Remortgage Residential BTL <80% LTV existing mortgage/ownership must be a minimum of 6 months >80% LTV existing mortgage must be a minimum of 12 months Existing mortgage/ownership must be a minimum of 6 months Section 13 Fees Is the Arrangement/Product Fee refundable if paid upfront and the application subsequently cancels? Family Gifted Deposits Mortgage Application Administration Fee (excludes Application fee payable) Product Fee may be added 150 non-refundable, paid on application 07
Section 14 Property Flats above Commercial Premises Ex-Local Authority House Ex-Local Authority Flat Studio Flat Flying Freehold Freehold Flat Share of Freehold Length of Time Remaining on Lease Max. Storeys (Flats) 30 years at end of mortgage term Max. Number of Kitchens 1 Local Occupancy Clauses Second Residential Holiday Home Agricultural Ties Max. Land Acreage Annexe Sub-Let (e.g. rent out excess land to farmer, let out spare room(s) or Annexe as Holiday Let) Min. ownership period of Vendor Prefabricated Reinforced Concrete Japanese Knotweed Single Skin Construction Other n-standard Construction 80% based on affordability for 2nd homes t currently restriction, but valuation based on house and 1 acre only 80% max 6 months If repaired using a system approved by either PRC Ltd or CU2000Plus Section 15 Builder Incentives (New Build) Cashbacks Stamp Duty Legal Fees Valuers Fees Fixtures & Fittings Moving Costs n-financial/in-kind Incentives (e.g. white goods/kitchen appliances, furniture/furnishing) 08
Section 16 Self Build Max. LTV Lend on Land Stages (e.g. Purchase of Land > Preliminary costs & foundations > Wall plate level > Wind & watertight > First fix & plastering > Second fix to completion etc.) Stage Payments (i.e. Advance or Arrears) Interest Only available during Build? Acceptable Warranties t currently t currently NHBC, HAPM, Zurich Municipal (provided there is already a warranty in place or the property is on a development which has already commenced. In both cases, Zurich must confirm that it will honour the warranty.) LABC New Home Warranty, Premier Guarantee, Building Life Plans (excludes self-builds under construction), Build Zone 10 year warranty. Castle 10 (where outbuildings such as detached garage are also being constructed an endorsement to include these in cover is required). Build Assure (New Home Structural Defects Insurance). CRL 10 Year Structural Defects Insurance Policy for Residential Property. Additional tes N /A Section 17 Specialist / Other Professional Sportspeople /Roles Expats (inc BTL) Foreign Nationals Foreign Currency (as per MCD rules) Guarantors Sole name applications for a married applicant If Joint Mortgage and only 1 income required, can the other applicant s age be ignored? 3+ Applicants (if possible, can you accept income for all applicants or just 2) Offer Validity (Purchase) Offer Validity (Remortgage) Offer Validity (New Build) 2 highest incomes only 6 months 6 months 6 months Telephone calls may be monitored and/or recorded for security and training purposes. Monmouthshire Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register Number: 206052. 09 MLC(09/17-1)