ONLY FOR USE BY MORTGAGE INTERMEDIARIES Intermediary Partners Lending guide
Contents Proc fees Page 3 Helping your customers to apply Affordability Page 4 Acceptable income types Page 4 Self-employed Page 5 Gifted deposits and equity Page 5 Our lending criteria Purchases and remortgages Page 7 Buy-to-Let and Let-to-Buy Page 8 95% LTV mortgages Page 8 Help to Buy schemes Page 9 Submitting an application Online submission Page 12 Supporting documentation Page 12 Certification and packaging Page 13 Post - submission Day 1 valuation instructions Page 15 Offer validity Page 15 Concierge service Page 15 Need help? With pre-submission applications Page 16 New Build Lending limits Page 10 Maximum LTVs Page 10 Structural warranties Page 10 Builder s incentives Page 11 Minimum loan amount Page 11 Offer validity Page 11 This guide provides you with an overview of the key information you need to know about our lending. However, it is not exhaustive and is subject to change, so if you need clarification on anything please speak to your BDM. Proc fees Mortgage types DA firms AR firms Residential 35bps gross 40bps gross Buy-to-let 45bps gross 45bps gross Max 6,000, min 250. Information correct as at 1 May 2017. 2 3
Helping your customers to apply for mortgages Affordability Our affordability calculator mirrors the one used by our underwriters so consistency ensured Debts being repaid are not included in the calculation 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 Where the loan amount is more than 500,000, the maximum term is 30 Years 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 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 and non-court ordered Child Maintenance* 2nd job wages* Carer s Allowance** Foster Carer s Allowance*** Disability Living Allowance/Personal Independence Payment Earnings from temp/agency or contract workers** (minimum 3 month contract) Regular commission and overtime* Regular bonus payments* (50% of all discretionary annual bonuses considered***) If your customers are self-employed Individuals who own 20% or more of a limited company or a Limited Liability Partnership (LLP) are classed as self-employed We ll need up to 2 years trading history evidenced by either the latest finalised accounts (within the last 12 months) or Online Tax Self Assessment and Tax Year Overview For sole traders drawings or net profit figure For partnerships share of net profit For applicants running limited companies salary and dividends For applicants running limited companies, under certain circumstances, we may be able to consider retained profits. This will be at the discretion of an underwriter If your customers are contractors earning more than 75,000 a year We will calculate their income as their average weekly contract income multiplied by 46, provided they can evidence: that over a 12-month period (incorporating the date of application) they have received or will receive sufficient income from one or more contracts they have received a minimum of 6 months income from one or more contracts immediately preceding the date of application they have had no more than a 6 week break between contracts in the 12-month period they can provide their latest 3 months consecutive personal bank statements for their main account (not required if their main account is held with NatWest or RBS) that the tax position is paid and up to date if using a limited company that they have 100% ownership of it If your customers are receiving a gifted cash deposit We accept deposits from parents and/or guardians. 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 Gifts from third parties (not sellers/vendors) are an acceptable source of customer deposit, provided no repayment required 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/business 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 s rights The family member gifting the equity is allowed to remain a resident at the property after the sale completes (residential only NOT buy-to-let) * Minimum 6 months evidence required. **Minimum 12 months evidence required. ***2 years evidence required For other forms of acceptable income use our instant messaging service LiveTALK 4 5
Our lending criteria Here s a summary of some of the key elements of our lending criteria: Purchases Minimum loan: 10,000 (or that set by the individual product, whichever is greater) Maximum loan: 10m 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 85% (over 1m 75%) Buy-to-let maximum LTVs: flats 65%, houses 65% (net of builder s incentives) Shared equity schemes we consider applications using Government schemes Existing RBS mortgage rate can be transferred to new property purchase Remortgages Minimum loan: 10,000 (or that set by the individual product, whichever is greater) Minimum term: 3 years Maximum loan: 2m 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 Overpayments allowed 10% of balance in a rolling 12-month period Unencumbered properties accepted (minimum time owned 6 months and not self-build), fees free Free of legal and valuation fees for a standard remortgage* Remortgage offers valid for 6 months * We won t charge your customers legal and valuation fees for a standard remortgage. There maybe instances where a customer does not qualify for this. Please speak to your BDM if you require any information in this regard 6 7
Buy-to-Let Rental cover calculation: 145% x 5.5% Minimum annual income: 25,000 from one applicant Maximum number of buy-to-let mortgages permitted for an application: 4 (including new application) with any lender, up to a maximum of 2m lending on all buy-to-let properties Loan to income maximum: 4.99 times income Minimum loan: 25,000 Minimum property value: 50,000 Maximum LTV: 75% or 65% for New Build properties 0 product fee mortgages available First-time buyers (subject to rental coverage and affordability proof of income will be required) and nonresidential mortgage holders accepted Interest-only available on all buy-to-let purchases and remortgages Repayment vehicle of sale of property accepted Consumer buy-to-let will not apply to purchase transactions, customers with existing buy-to-let properties or any properties with current or future family occupancy We will continue to apply a consent-tolet for existing RBS mortgage customers looking to let out a property on a residential mortgage We cannot accept applications from business partnerships or limited companies Let-to-Buy - where both properties with RBS Combined LTV for both properties must be 90% or less Applicant should provide an indication of likely rental income to be received on the existing property, such as a letter from a local letting/estate agent that is ARLA-registered If rental income from the let property covers 100% of the mortgage payments, we can consider ring-fencing it and it can generally be disregarded from the affordability calculation Any difference between the expected rental income and the existing mortgage payment will be factored into the affordability calculation for the new property If the combined LTV for both properties is over 90%, it s treated as a 2nd residential property. Applicant must be able to pay both mortgages without taking into account the rental income If raising capital for an onward purchase and either of the mortgages is with another lender, the LTV of the mortgage with RBS cannot be higher than the one with the other lender 95% LTV purchase only mortgages 2 and 5 year fixed rate deals available Available to first-time buyers and existing home owners Available for existing properties only and NOT New Build properties Residential purchase only Maximum property value: 600,000 Applicants need a minimum 5% deposit No limit on annual income earned by applicants Consent to let considered Further advances considered Capital and interest only Applicants must be aged 18 or over 0 product fees Property must be in the UK Subject to an underwriter s discretion. 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 No percentage limit on deposit customer can contribute from their own funds 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 Builder s incentives up to a maximum of 5% of the property value accepted We will consider consent to let for members of HM Armed Forces Property must be in England Help to Buy: London The scheme is designed to help customers with an equity loan of up to 40% of the purchase price to buy a New Build property in London Only New Build properties in the 33 London boroughs can be purchased using this scheme. Customers and their solicitors are responsible for ensuring the property is within the scheme area Maximum property value is 600,000 Customers can apply for an equity loan from the Government for up to 40% of the property price Customers must contribute a minimum 5% deposit Combining the equity loan maximum of 40% with their 5% contribution means that customers can then apply for a mortgage for the remaining amount to a maximum 55% LTV No percentage limit on deposit customer can contribute from their own funds Customers using this scheme can apply for our existing Help to Buy shared equity scheme mortgage using the same product code The criteria and application process are the same as the existing Help to Buy shared equity scheme Help to Buy: Forces The Forces Help to Buy (FHTB) loan available to Armed Forces personnel, is an interest-free loan repayable over 10 years It can be used towards the customer s deposit but the monthly repayment must be included in the outgoings for assessing affordability The FHTB loan may not be used towards the purchase of a second property including a buy-to-let property. No other unsecured personal loans are accepted towards the customer s deposit Credit criteria are subject to change so please check first with LiveTALK or your BDM if you are unsure. For more information go to www.rbsip.co.uk 8 9
New Build property A New Build property is defined as: Any property built, first occupied in its current state or significantly modernised, refurbished or altered within the last two years. The decision as to whether a property meets this definition will be made by the valuer at the point of valuation. Lending limits A limit will be set for each New Build development. Limits will vary according to each development and must not exceed 25% The limit will be set and monitored by our Valuation Panel Manager Maximum LTVs Property type Flats Houses Residential 75% 85%* Buy-to-let 65% 65% These are based on net purchase price or valuation whichever is lower These maximums also apply to further advance requests if the property meets the New Build definition above *75% for mortgages over 1m Structural warranties We will only lend on New Builds/ renovations where there is a 10 year or longer Structural Warranty in place from our list of approved suppliers (see your BDM for details) Professional Consultant Certificate in the absence of a valid warranty, we will accept a Professional Consultant Certificate from a suitably qualified professional, if provided in the format detailed in the CML Lenders Handbook. The solicitor acting for RBS should confirm the requirements are met and that the Certificate was issued prior to exchange of contracts. Architects Certificates without the benefit of the Professional Consultant Certificate are not acceptable Structural warranties issued retrospectively cannot be accepted Builder s incentives We accept builder s financial incentives on New Build properties up to 15% of a property s purchase price and up to 5% on a property bought using the Help to Buy shared equity schemes The purchase price will not be adjusted for incentives, unless the total amount of incentives exceeds 5% of the purchase price. Incentives greater than 5% will be deducted and lending based on the reduced purchase price (unless the property valuation is lower) The example below explains this for a New Build residential house: Purchase price of the property: 120,000 Incentives total: 8,000 Incentives to be deducted from purchase price: 8,000-6,000 (5% of purchase price) = 2,000 Reduced purchase price: 120,000-2,000 = 118,000 Portable and proportionate incentives, such as carpets and curtains, along with other financial incentives such as support with up-front costs such as Stamp Duty, legal fees or cashback or enhanced part exchange terms can be accepted in the 5% allowance Non-standard items such as an upgraded kitchen or integrated appliances can be accepted as an incentive but do not need to be included in the 5% allowance. It will be the responsibility of the valuer to decide which incentives are included in the calculation To comply with the requirements of the Help to Buy schemes, customers must still fund a 5% deposit themselves Lending is based on the lower of the purchase price of the property or the property valuation Minimum loan amount Residential - 10,000 (or that set by the individual product, whichever is greater) Offer validity Mortgage offers are valid for 6 months, but can be extended to 7 months if required without the need for additional information. You can arrange this with your BDM 10 11
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 www.rbsip.co.uk Step 1 Register with us Go to www.rbsip.co.uk Click on Register now and complete the 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 For technical help with a submission please go to LiveTALK Once you have submitted an application you will be able to monitor its progress on our online Mortgage Application Tracker tool 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 the Mortgage Reference Number on every page of supporting documentation you submit Step 3 Add the following supporting documentation Proof of deposit bank statement showing build up of savings/gift letter stating nonrefundable gift Proof of income for employed applicants who do not have their salary paid into a NatWest or RBS bank account 75% LTV and below AND loan up to 500,000 latest payslip OR latest P60 OR latest personal bank statement* Over 75% LTV 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 latest P60 Proof of income for self-employed applicants 75% LTV and below AND loan of 500,000 and below latest set of audited accounts OR latest HMRC tax assessment OR most recent Online Tax Self Assessment submitted to HMRC (100% completed and NOT In progress ) along with Tax Year Overview Over 75% LTV OR loan over 500,000 latest 3 months consecutive personal and business bank statements for main accounts* PLUS either the latest 2 years finalised accounts OR last 2 years HMRC tax assessments OR most recent Online Tax Self Assessment submitted to HMRC (100% completed and NOT In progress ) along with Tax Year Overview Proof of income for contractors earning more than 75,000 a year Evidence that: over a 12-month period (incorporating the date of application) they have received or will receive sufficient income from one or more contracts they have received a minimum of 6 months income from one or more contracts immediately preceding the date of application they can provide their latest 3 months consecutive personal bank statements for main account* that the tax position is paid and up to date To be able to consider income from a business it must have been operating for at least two years and have two years accounts/figures available; have been profitable in each of the last two years and the profits must support any dividends taken; be solvent i.e. the capital account must be positive and the assets must outweigh the liabilities in each of the last two years. 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 ID and address If you submit an application via our website, 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: rbsmortgagebrokersdocs@rbs.com 12 13
Postsubmission Day 1 valuation instructions Valuations for residential and buy-to-let purchase and remortgage applications, up to 500,000, are instructed on Day 1, when an application is submitted This enables the underwriting and valuation processes to run concurrently The offer will be issued once both processes have been completed successfully The fee for the valuation for a purchase mortgage will be debited from the customer s payment card usually within 24 hours We will provide customers with a full refund if their applications are declined on the grounds of affordability or credit scoring or where we cannot lend the full amount requested due to affordability issues Free of legal and valuation fees for a standard remortgage* Provided that all the correct supporting documentation is submitted on time to enable our underwriters to fully assess the application, we expect the average speed to offer for the majority of cases to be around 14 working days New Build offer validity Mortgage offers are valid for 6 months, but can be extended to 7 months if required without the need for additional information. You can arrange this with your BDM Concierge service Mortgage applications of over 500,000, will be assigned a dedicated case handling manager They will oversee each case through the application process from submission of the initial application to when the first direct debit payment is taken The dedicated case-handling manger will contact the broker directly with updates on the progress of the application and to address any issues with it such as chasing up missing information This contact will commence with the broker receiving an email from the casehandling manager with the Mortgage Reference Number and their contact details and also a welcome call with any additional information required and an outline of the next steps The case-handling manager will also liaise with our Mortgage Lending Unit on issues concerning the application * We won t charge your customer legal and valuation fees for a standard remortgage. There may be instances where they do not qualify for this. Please speak to your BDM if you require any information in this regard 14 15
Where to go for help Your BDM Name: Phone: Email: Help with pre-submission applications We are happy to help you with queries about client applications on LiveTALK, our instant messaging service at www.rbsip.co.uk. 5The average number of years experience that our BDMs have in the mortgage industry. Use LiveTALK for: Registration/password queries Queries on criteria for new applications Queries about using the website LiveTALK And, get a transcript of your conversation Help with existing applications Call our dedicated intermediary mortgage processing centre on our local rate number For help with: Checking receipt of supporting documentation Providing updates on underwriting decisions Managing valuation instructions 0345 600 0205 Calls will be charged up to 7 pence per minute, plus your phone company s access charge The average number of years experience in the mortgage industry that members of our 5LiveTALK team have. Confirming mortgage offer issued Extending mortgage offer term Confirming completion dates For more information go to www.rbsip.co.uk RBSIP May 17