Lending Criteria
Contents LENDING CRITERIA Residential 3 4 Buy-to-let 5 Self build 6 Contact Us 7 by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 2
Lending criteria Residential Where we lend We will lend throughout England and Wales. Affordability The Society lends based on an affordability model. To calculate how much a customer can afford to borrow with the Society please visit the affordability calculator section. This is only a guide and may change upon receipt of a full mortgage application along with confirmation of income, expenditure and completion of a survey. The Society will carry out a full credit reference check on the applicant(s) to verify all declared agreed commitments. Income details Acceptable income The Society will accept 100% of the following: Basic income Self-employed income Service/state/private pensions and annuities Maintenance Order (Court Order enforceable with three months bank statements to show maintenance is being paid) Car allowance Pay rise pending (must be within three months and employer to confirm) Mortgage subsidy (must be permanent) Housing allowance Additional investment income from rental portfolio (evidenced by accounts/tax assessment/accountant s reference/tenancy agreement) London/Large City allowance Second job with twelve months service Shift allowance Overtime/bonus/commission (Please insert the full amount required per annum) Additional investment income from private limited companies (3 years accounts/sa302 s required as verification, this can be used past age 70) All income used by the Society is verified: Employed applicants we will write for an employer s reference Self-employed applicants the last three years accounts, and/or three years SA302s Retired applicants annuities latest P60, state pension to the current year s DWP letter Self-employed income We will use the last three years accounts or the last two years accounts, if the applicant has only been in business for two years, a projection from the accountant for the third year will be requested. For Ltd companies we will work on the dividends and Directors remuneration, and for sole traders we will work off net profit. If net profit has increased year on year we will use the latest figures, if profits have fluctuated we will use an average of the last three years. The Society will consider profits available to a controlling Shareholder of a private limited company as acceptable income for the first year only. This is calculated as the applicant s pro-rata share of profits before tax. Where profits available are used in the affordability calculation an additional financial review will be carried out to assess that there is sufficient cash flow in the business to fund the distribution of the additional profit. Employed income Must be permanently employed. If the applicant is in a probationary period the mortgage will not be allowed to complete until the probation period is up and we have received confirmation that they are now permanently employed. Zero hour contracts will be considered if they have a three year track record to prove income with the same company. Maternity/paternity Applicants on maternity/paternity leave or going on maternity/paternity leave should confirm in writing to the Society by letter or by completing section Z on the application form of their intention to return to full time or part time employment in their current job. This will then be confirmed in the reference requested from the employer. If the applicant is not returning to work their income should be disregarded for income multiple/affordability purposes. Unacceptable income The Society will not consider: Unemployment benefit/income support/dla Child benefit Carer s allowance Seasonal work One off payments Gratuities not sighted on payslips Bursaries and scholarships Investment or trust income that is not guaranteed The Society only uses bank statements for verifying maintenance not income and for verifying committed expenditure. by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 3
Loan to value (LTV) and security As prime security, the Society is only permitted to accept first legal charges over land and buildings in England and Wales: Minimum property value 60,000 A flat with more than 4 floors in the block must have a minimum value of 250,000 Over 55 s properties restricted to max 75% LTV Remortgage and capital raising for debt consolidation max LTV 75% Minimum loan amount See individual product details Maximum Loan to Value See individual product details Mortgage term Minimum term five years, maximum 30 years. Maximum age at term end 85. Residency/credit history Applications will be declined in the following circumstances: Any unsatisfied County Court Judgements (CCJs) or default irrespective of amount Any registered CCJ or default found on credit reports, in the last five years Any insolvency, bankruptcy or Individual Voluntary Agreement (IVA) is detected unless five years has elapsed and the IVA is cleared; and Any evidence of previous or current property being repossessed Interest only Interest only is available on residential mortgages only in the following circumstances: Applying to borrow funds on the main residence, either a new application or a further advance to purchase another property for buy-to-let use. The maximum LTV is 75%. A condition will be placed on the mortgage offer that the applicant will not be able to raise funds on the buy-to-let property, this being the repayment vehicle for the Society s mortgage Applying to raise capital on their mortgage-free residential property, the applicant must have at least 150,000 in equity at application if they have ticked sale of property to repay the mortgage or the LTV is restricted to 60%, whichever gives the higher amount of equity A lump sum from a pension plan at retirement that is sufficient to repay the mortgage The borrower has taken out an endowment policy that is sufficient to repay the mortgage (this must be assigned to the Society) The borrower has an investment ISA, contributing an amount sufficient to repay the mortgage at maturity (the Society must receive regular updates) Unacceptable security The Society does not offer/deal in: Roll up, equity, fixed rate, negative equity, index linked, equity release, and lifetime or agency mortgages Steel clad houses / Steel roof Wooden houses Freehold flats Shared ownership properties A flat above a commercial property Self-build housing schemes involving a number of properties or speculative building development projects (except with Board approval) Mobile homes, caravans and houseboats Interest deferral on developments except with the agreement of the Board Securitised mortgages, syndicated lending or undertake non status/subprime lending Unsecured lending A leasehold property with less than 75 years remaining at the end of the mortgage term Any other properties that the Society may deem unsuitable by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 4
Lending criteria Buy-to-let Please refer to our Residential lending criteria for additional criteria information. General Maximum LTV 70% for single family unit, 50% for HMO. Can be considered on repayment, interest only or part and part. Minimum mortgage amount 10,000 The Society does not lend on Consumer BTL mortgages Mortgage term and age Minimum term five years, maximum term 25 years. Maximum age at the end of term 85. Applicant details Rental yield on the basis that the rent received (as projected by the valuer in his report) will be as follows: - Up to 50% LTV - 130% at 5.5% ICR 50 70% LTV 140% at 5.5% ICR Applicants must be at least 25 years old For landlords with less than 4 BTL properties they must have a minimum earned income of at least 25,000 (single or combined joint income from either earned, pension or income from unencumbered property). For landlords with 4 or more BTL properties they must have an independent income of 25,000 excluding property income Be an existing homeowner with or without a mortgage in the UK Funds cannot be raised for debt consolidation Property Must be let on assured shorthold tenancy agreement for up to 12 months Minimum property value 80,000 Must be in England or Wales Must not have been previously lived in by the applicants Must not have been previously lived in by any of the applicant s family or is intended for family to live in (applicable to remortgages to the Society or capital raising) Must not be an inherited property Must not be a let to buy Unacceptable security See residential criteria by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 5
Self-Build Mortgages Stafford Railway Building Society offers all Self Build mortgages exclusively through BuildStore Mortgage Services. What do we offer? We offer Self Build Mortgages on the following criteria: Purchase of land and build of a new property Renovation an existing property Converting an existing structure for residential purposes We can lend up to a maximum of 500,000 at 85% LTV to purchase land / property and up to 85% of cost of each stage during the build subject to valuation Funds will be released on an arrears stage payment basis The final mortgage value must be 75% LTV Contact information For more information you can contact Buildstore directly on 0345 223 4888 and you can find further details by visiting www.buildstore.co.uk/finance/mortgages/staf-3yr-variable.html If you are an intermediary you can contact Buildloan on 0345 223 4447 or view more details via the Buildloan website www.buildstore.co.uk/buildloan/products/stafford.htm by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 6
Contact us Adrian Phipps Mortgages Manager Emma Parker Business Development Manager Sue Houghton, Nicola Beaumont, Laura Lawton and Kate Thompson: Mortgage team 4, Market Square, Stafford, ST16 2JH Telephone: 01785 223212 Fax: 01785 250709 Email: mutual@srbs.co.uk or visit the website at srbs.co.uk by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 7
Version: March 2017 by the Financial Conduct Authority and the Prudential Regulation Authority (Registered no 206063). 8