A-Z Lending Criteria

From this page you can view the Lending Criteria for our Prime Second Charge Mortgages range in an alphabetical list. Visit our Products page for downloads and our Criteria Guide.

A

  • Minimum age at application is 21 years.
  • Maximum age at the end of the loan term is 85 years.

We will consider 100% of the applicant’s net income providing the applicant is in a professional role and has been in the same continuous employment for at least 12 months. This income will need to be evidenced by way of:

  • Last 2 months’ consecutive payslips or last 3 consecutive payslips, if the applicant is paid weekly.  The most recent payslips must be dated within 2 months of the Binding Mortgage Offer issue date or within 6 weeks of the Binding Mortgage Offer issue date, if paid weekly
  • Confirmation from employer of long-term employment arrangement OR Written confirmation from a reputable agency of ability to secure further positions

All payslips provided as evidence of income must be original or certified copies. Where the applicant’s payslips are of a basic standard such as typed, word processed, SAGE, Iris or are internet produced, we will require the applicant’s bank statements.

We will consider on a referral basis and acceptance will be dependent on use of the annexe.

The maximum number of applicants for a loan application is 2.

  • Applicants who are married or are joint owners of the property must both be party to the loan
  • Applicants who are co-habiting but are not related must both be party to the loan. Where applicants are related, both applicants must own the property
  • We require all applicants to reside at the security address

Where the marital status is stated as separated, evidence of this should be obtained, particularly where the person who does not reside at the security address has a poor credit history. We will require evidence from the representing solicitor or documentary evidence from the courts to be satisfied of the separation prior to proceeding. The property must be in the sole name of the applicant only.

AVMs by Hometrack are acceptable in the following situations, subject to a minimum confidence score of 5:

Properties in England and Wales

  • Up to 65% LTV – maximum net loan up to £300,000
  • Up to 80% LTV – maximum net loan up to £100,000
  • Up to 85% LTV – maximum net loan up to £50,000

Properties in mainland Scotland

  • Up to 65% LTV – maximum net loan up to £100,000
  • Up to 80% LTV – maximum net loan up to £50,000
  • Up to 85% LTV – maximum net loan up to £30,000

B

  • 100% if guaranteed (contractual) – latest P60 and contract required as evidence
  • 50% if discretionary (not guaranteed) – latest P60 required as evidence

C

We will consider 100% Carers Allowance as additional income, providing it is being received for someone who is party to the loan. The latest annual statement or entitlement letter must be obtained and provided together with the applicant’s last 3 months’ consecutive bank statements showing the payments being received.

The most recent statement must be dated no more than 5 weeks from the Binding Mortgage Offer issue date.

As a guide, our maximum adverse levels are:

CCJs: None in the last 12 months

Defaults: None in the last 12 months

Mortgage arrears: None in the last 12 months

Unsecured arrears: Highest arrear - 1 in last 12 months providing currently up-to-date

  • 350
  • 375 where part or all of the loan is being used for debt consolidation (this includes any secured or unsecured credit being repaid)

We will consider cases that do not meet our minimum credit score requirements on a referral basis subject to the score not having been affected by credit impairing issues.

We will consider 100% Child Benefit as additional income where the applicant is currently in receipt and where the child is no older than 12 years of age at the time the Binding Mortgage Offer was issued. We do not require any evidence of receipt.

Child Benefit cannot be used if the applicant’s gross income exceeds £50,099.99 unless evidence that the applicant is paying the ‘High Income Child Benefit Charge’ is provided.

Please refer to www.gov.uk/child-benefit for details on current payment rates.

Applicants working in construction as a Construction Industry Scheme (CIS) contractor are acceptable and will be assessed as self-employed and the relevant income verification will be required.

Please refer to ‘Income verification (self-employed)’.

Properties of non-standard construction will be considered on a case-by-case basis providing they are confirmed as mortgageable by the surveyor.

Wimpey no-fines and Laing Easi-Form construction types are acceptable with no additional LTV restrictions.

We will consider 100% of the applicant’s net income and will require the following as evidence:

  • A copy of the current contract, signed by both parties
  • Last two months’ bank statements to show payments being received from contracting (payslips and/or invoices, if applicable).

Minimum time in current contract is three months, with a history of contracting over last 12 months and any industry will be considered.

To calculate the gross income, multiply the day rate by 5 days and then by 48 weeks and the ‘Listen to taxman’ website is to be used to calculate the net income. 

First time contractors are acceptable, provided the current contract is in same profession/industry as to which they have been working for the last 2 years. Evidence will be required in the form of a signed letter from the applicant confirming details of their employment history over the past two years.

We will consider 100% commission/overtime income. The latest P60 detailing the previous 12 months’ level of income and the latest payslip will be required to calculate the year to date income, which will be checked against the P60. The lower of the two figures will be used.

We will consider 100% Child Tax Credit as additional income providing this qualifies for the full term of the loan. The latest annual statement or entitlement letter must be obtained and provided together with the applicant’s last 3 months’ consecutive bank statements showing the tax credits being received.

The most recent statement must be dated no more than 5 weeks from the Binding Mortgage Offer issue date.

D

We will accept applications where the loan is being used for debt consolidation purposes. The loan proceeds must be enough to redeem the debt(s) being consolidated. We will require a fully completed and signed Debt Consolidation form confirming the information for each item that is to be cleared. These details must be consistent with the information on the credit search.

For consolidation loans, we will consider the recency of any secured or unsecured commitments and repeated debt consolidation as this may indicate financial distress. An explanation will be requested from the applicant, where appropriate, regarding the presence of other higher risk factors.

Any occupier over the age of 17 years and 11 months at the time of the Binding Mortgage Offer issue date, will be treated as an adult financial dependant unless advised otherwise.

We will consider 100% DLA/SDA as additional income. The latest annual statement or entitlement letter must be obtained and provided together with the applicant’s last 3 months’ consecutive bank statements showing the payments being received.

The most recent statement must be dated no more than 5 weeks from the Binding Mortgage Offer issue date.

We will accept a drive by valuation up to 85% LTV and a maximum net loan amount of £300,000, subject to the maximum LTV for the product.

E

Where the applicant(s) is employed by a family member, payslips being used as proof of income must be supported by bank statements evidencing the last 3 months’ salary credits, subject to no shareholding in the company.

We will consider ex-council flats up to a maximum LTV of 60% subject to a full internal valuation. The minimum property value considered is £150,000 together with a maximum net loan amount of £100,000.

Ex-council flats in a block with more than 5 storeys are unacceptable.

We use an automated expenditure model directly in our affordability assessment.

Further supporting information will be requested by way of the last 2 months’ consecutive bank statements for any sole or joint current accounts used by the applicant(s) where:

  • the applicant is requiring material unsecured debt consolidation (defined as greater than £35,000) and
  • the applicant has a disposable income over £1,000 per month

It is important to note that whilst we use an automated expenditure model, there are certain types of miscellaneous expenditure not covered by the model, so all applicants must declare their committed expenditure for these items (where applicable) and this will be added to the automated monthly figure

These areas of miscellaneous expenditure are: Ground Rent/Service Charge, Maintenance/Child Support, School/University Fees and Childcare/Nursery fees.

F

We will consider properties with a flying freehold element less than 25% of the gross floor area subject to no adverse comments in the valuation report.

We will consider lending behind a mortgage lender where:

  • the terms and conditions of the first charge flexi mortgage will permit further drawdown
  • there is a deed of priority or deed of postponement in place that clearly limits the current balance and prevents further borrowing

Applicants must have permanent rights to reside and be a UK resident.

We will consider 100% foster care allowance as additional income.

We will require a copy of the contract held with the Local Authority or fostering organisation together with the last 3 months’ consecutive remittance advice slips and the last 3 months’ consecutive bank statements showing the payments being received.

G

As part of GDPR it is important that all applicants and intermediaries are aware of how we use personal data. Please select the relevant Privacy Notice.

We are unable to consider guarantors on any loan application.

I

In all cases we will try to electronically verify the identity of the applicant. On occasions this is not possible, and E-ID fails on the identity check, we require a certified copy of the applicant’s photographic identification. One of the following items is acceptable

  • Current full signed valid passport. For non-UK/EU passports we will require confirmation of permanent rights to reside
  • Current full or provisional UK/EU photo card style driving licence 

All identification must be certified by the face-to-face introducing, advising or master broker who has had sight of the original document in the presence of applicant. The person certifying must include their full name, FCA number and signature. The certification must include the include the following statement:  ‘I certify that this is a true likeness of the applicant (stating their full name and title) and I have seen the original document’

For non-UK issued documents, the following certifiers are acceptable:

  • Embassy, consulate or high commission officer in the country of issue
  • Legal professional such as a solicitor, legal conveyancer, certified paralegal, barrister or notary public

We require a copy of the applicant’s signature identification in all cases. One of the following items is acceptable:

  • Current full signed valid passport
  • Current full or provisional UK/EU photo card style driving licence
  • A copy of the front and bank of the applicant’s signed bank debit card

All applicants must be UK based and in receipt of taxed income in Sterling GBP. There is no minimum income threshold.

Unacceptable income types includes:

  • Income Support
  • Housing Benefit/DSS assistance with first mortgage payment
  • Job Seekers Allowance
  • Applicants solely receiving benefit income
  • Seasonal, piece work and temporary income
  • Attendance Allowance
  • Benefit payments being received on behalf of anyone other than the applicant(s)

We will consider 100% of the applicant’s net income and will require the following as evidence:

  • Last 2 months’ consecutive payslips or last 3 consecutive payslips, if the applicant is paid weekly. The most recent payslip must be dated within 2 months of the Binding Mortgage Offer issue date or within 6 weeks of the Binding Mortgage Offer issue date, if paid weekly
  • Latest P60 or 12 months’ employer reference

All payslips provided as evidence of income must be original or certified copies. Where the applicant’s payslips are of a basic standard such as typed, word processed, SAGE, Iris or are internet produced, we will require the applicant’s bank statements to support the salary credits as per the payslips. We do not accept handwritten or amended payslips.

We will consider 100% of the applicant’s net income and will require the following as evidence:

  • Applicants who have been self-employed more than 12 months but less than 2 years
    • SA302 or tax computation dated within 21 months of the tax year end (31st January) and
    • Tax year overview statement that corresponds with the SA302, which must be provided by the Inland Revenue and
    • The latest month’s business bank statement dated within 2 months of the Binding Mortgage Offer being issued
  • Applicants who have been self-employed for 2 or more years
    • Two years’ SA302s or tax computations dated within 21 months of the tax year end (31st January) and
    • Tax year overview statements that correspond with the SA302s, which must be provided by the Inland Revenue and
    • The latest month’s business bank statement dated within 2 months of the Binding Mortgage Offer being issued
    • We will use the income as stated in the latest SA302, except in the following scenario:
      • >20% increase on the latest SA302- then we will use an average of the last 2 years
    • In instances where the income has increased by greater than 20% and you wish to use the latest SA302 for income purposes, we will allow a referral to be submitted where a reasonable/plausible explanation will be required. This must cover the reason for the increase and sustainability of the current income
    • Where the latest years SA302 is lower than the previous year, we will still work from the latest year and will require a plausible explanation to cover the reduction and sustainability of the current income
    • Where the year-on-year income has decreased by more than 15%, we will use the income on the latest SA302 and will also require a reasonable explanation that must include the reason for the reduction and sustainability of the current income
    • Where the year on year income has increased by more than 20% or decreased by more than 15%, we will require the latest fully signed business accounts (audited, if available) for further assessment.  Abbreviated or filtered accounts are unacceptable

The SA302 will show the calculations for both Income Tax and National Insurance which are both to be deducted to leave the net income.

SA302 tax calculations are acceptable where they have been printed from the HM Revenue and Custom’s (HMRC) online services or where the applicant or their accountant uses commercial accounting software to file the applicant’s tax return.

We will consider 100% Incapacity Benefit as additional income. The latest annual statement or entitlement letter must be obtained and provided together with the applicant’s last 3 months’ consecutive bank statements showing the payments being received.

The most recent statement must be dated no more than 5 weeks from the Binding Mortgage Offer issue date.

Independent Legal Advice will be required in the following instances:

  • Applicants aged 70 and over at the time of application
  • Applicants who do not appear to be benefitting from the loan
  • Applicants where we have concerns over their understanding of the application or its implications

Interest is calculated daily on a capital and interest basis and is compounded monthly.

Payments are made monthly in arrears.

L

Acceptable loan purposes include:

  • Home improvements
  • Consolidation
  • Business purposes (subject to a satisfactory reason for the funds being raised)
  • Repay a tax bill
  • Holiday
  • Medical procedures
  • Car purchase (maximum term 5 years)
  • School fees
  • Wedding
  • Gifting money to a child
  • Transfer of equity
  • Lease extension
  • Deposit for purchase of additional property (monthly payment for any additional borrowing will be added to the affordability assessment along with associated holiday home running costs)
  • Repay Help to Buy

For unacceptable loan purposes, please refer to the Criteria Guide for further details.

We will consider lending on residential properties in located England, Wales and mainland Scotland.

The minimum net loan amount is £5,000

The maximum gross loan amount £500,000. All loan amounts are net of fees except for loan amounts of £500,000, which must include all fees. Gross loan amounts greater than £500,000 may be considered by referral.

Maximum LTV 95%

Please refer to the Product Guide for further details.

LTV LTI
0-85% 6x
85.01% - 95% 4.5x

Where pension income is the only source or is the majority of income, the LTI will be restricted to 4.5x.

 

  • Private leasehold flats or maisonettes
    • Maximum 75% LTV
    • Standard LTV applies where the value of the property is equal to or greater than £200,000
  • Private leasehold flats in a block with more than 5 storeys
    • Maximum 75% LTV, subject to a minimum value of £150,000
    • Standard LTV applies where the value of the property is equal to or greater than £200,000
  • Private leasehold flats above commercial premises
    • Maximum 65% LTV, subject to the premises not being a restaurant or food outlet and a full internal valuation
  • Ex-council flats
    • Maximum 60% LTV, subject to a minimum value of £150,000 and a maximum net loan amount of £100,000
    • Full internal valuation required
    • In a block with more than 5 storeys are unacceptable

M

We will consider 100% maintenance/CSA as additional income providing this has been court ordered. We will required evidence of income by way of official documents and the last 2 months’ consecutive bank statements confirming the payments received.

The applicant must qualify for the maintenance/CSA payments for the full term of the loan.

We will consider 100% income and require the following:

  • Latest payslip and last payslip prior to parental leave showing full salary
  • A letter from the employer confirming agreed return to work date, return to work hours and salary
  • Confirmation of childcare arrangements and costs once the applicant returns to work

The minimum mortgage history required is 12 months. Where the applicants have been renting within the last 12 months, a rental reference from a reputable letting agent or a copy of the current AST together with supporting bank statements is acceptable.

Private landlords are not acceptable.

N

We will consider loan applications from UK and EU Nationals residing in the UK. Tiered Visas are not acceptable. However, these may be considered on a referral basis if we are not using the applicant’s income and the main applicant is a UK resident.

O

A Binding Mortgage Offer is valid for 30 days from the date of issue.

Any occupier:

  • Aged 17 or over residing in the property and not party to the loan, will be required to sign a Waiver Consent form
  • Aged 70 or over and not party to the loan will be required to have their Waiver Consent form witnessed by a Solicitor or a Licensed Conveyancer

This is not a requirement in Scotland.

P

We will consider lending to applicants who have made use of payday loans and this will be assessed individually. We will not lend if there has been any recent use, or a regular, heavy reliance on them.

We will consider 100% private pension income and will require the following as evidence:

  • Last 3 months’ pension payslips, with the latest no older than 3 months from the Binding Mortgage Offer issue date. If paid more frequently than monthly, the last 5 weeks’ payslips will be required with the latest no older than 5 weeks from the Binding Mortgage Offer issue date

Or

  • Latest bank statement evidencing payment from the pension company with either:
    • Pension statement; or
    • Annuity/Pension letter; or
    • P60
       

We will consider State Pension and require the DWP State Pension letter issued within the last 12 months or the latest bank statement identifying payment received from DWP.

Where the pension income is the only source or makes up the majority of income, the loan to income (LTI) will be restricted to 4.5x. Where it does not make up the majority, the LTI will be restricted to the product limit.

Ex-council houses and flats still within their pre-emption period will be considered. The outstanding years remaining of the discount must be factored into the LTV calculation. The current year will be ignored for LTV purposes.

A copy of the Right to Buy Section 125 documentation showing the council value, discount given and length of pre-emption must be supplied.

Private leasehold flats above commercial premises are acceptable up to a maximum LTV of 65%, subject to the premises not being a restaurant or food outlet and a full internal valuation.

The minimum property value requirement is £70,000.

The following types of property are not considered acceptable security:

  • Commercial properties
  • Freehold flats and maisonettes
  • Flats above a restaurant/food outlet
  • Properties of 100% timber construction
  • Private flats in a block with more than 5 storeys valued less than £150,000
  • Ex-council flats in a block with more than 5 storeys
  • Steel framed construction, unless the property is modern build with a traditional brick outer leaf
  • Park and mobile homes
  • Properties with agricultural restrictions
  • Properties deemed defective under the Housing Defects Act 1984 and Housing Act 1985
  • Shared ownership or similar schemes
  • Properties with a flying freehold element greater than 25% of the gross floor area
  • Grade 1 Listed Buildings
  • Properties in multiple occupation (HMO)
  • Properties currently up for sale

Please note this is not an exhaustive list. Please refer to the Broker Guidelines for further details.

We will require proof of residency in all cases for the last 3 consecutive years. Where the applicant is not registered on the electoral roll, one of the following items addressed to the applicant will be required:

  • Utility bill
  • Local authority council tax bill
  • Bank or Building Society statement
  • Credit card statement

The loan must be secured on the applicant(s) primary residential address which must be in the UK and already have a first charge secured against it. The property must be of a mortgageable condition prior to the Binding Mortgage Offer being issued.

Power of Attorney is not acceptable.

R

We will consider rental income as additional income for an applicant who has buy to let mortgages and will require evidence of the rental receipts with the applicant’s last 3 months’ bank statements along with a fully completed Assets and Liabilities form

To calculate the rental income, please refer to the ‘Rental Income Affordability Calculator’ on our Online Mortgage Portal (DJ)

If the applicant has less than 4 BTL properties, please complete the ‘Non-portfolio landlords’ calculator, and the ‘Portfolio landlords’ calculator, if the applicant has 4 or more BTL properties

The annual income will display on the calculator and if this is a positive figure, this can be added in the ‘Net rental income’ field on the Applicants Details page of the Online Mortgage Portal (DJ).  This figure can also be entered in the gross annual income field

If the annual income displayed is a negative value, this cannot be used for income purposes and will need to be added as an additional item of expenditure

All loans are offered on a capital and interest repayment basis only.

Each applicant is required to provide satisfactory proof of residency for the last 3 years

Retentions are not acceptable. Our loan assessment will be based on the current value of the property, which must represent suitable security.

If the loan term takes the applicant beyond the age of 67 years old or they declare an earlier retirement age, an explanation must be provided to confirm how they intend to maintain the loan payments for the duration of the loan.

At the time of application, if the applicant is within 10 years of their planned or standard retirement age of 67 (whichever is lower), we will require evidence of how they intend to maintain the loan payments for the duration of the loan.

Please refer to the Broker Guidelines for further details.

S

All sole traders, sub-contractors and applicants holding 25% or more of the issued share capital of a company will be classed as self-employed. The minimum time in self-employment is 12 months.

Applicants must be UK based and in receipt of taxed income in Sterling GBP.

Provided the property is mortgageable and saleable and no retention is given, it is not usually necessary to obtain any specialist reports.

Specialist mining reports are not required.

Properties where solar panels are owned outright are acceptable.

Properties with solar panels installed where there is a lease in place for the roof space are unacceptable.

May be requested subject to valuation recommendations.

Any student loan payments showing on the applicant’s payslips will need to be included in the expenditure unless taken directly from their income.

May be referred and will be considered on a case by case basis.

A breakdown outlining the schedule of works to be undertaken and costings will be required where the level of work is disconnected from the property value, profile of the borrower and/or condition of the property.

3% will be applied to both first and second charge mortgage payments. 

The 3% stress test is not applied to our 5 year fixed rate products and/or when the first charge has more than 5 years remaining on the fixed rate (evidence will be required).  In this instance, the stressed affordability will be subject to a minimum surplus of £100 per month.

We will consider 100% income from a second job where evidenced this is both ongoing and sustainable.

We will require either the latest P60 or confirmation from the applicant’s employer that the position has been held for a minimum of 12 months and evidence of this income will need to comply with the standard requirements for employed applicants.

T

  • The minimum term is 3 years.
  • The maximum term is 30 years.
  • Where the use of funds will be to support a car purchase, the maximum term available is 5 years.

Acceptable tenures include:

  • Freehold houses (Feuhold in Scotland)
  • Good leasehold
  • Leasehold houses flats and maisonettes are acceptable with no less than 65 years remaining on the lease at the end of the term

The minimum acceptable time in employment is 3 months.

The minimum length of time in the property is 3 months.

U

We do not currently offer a product for this type of property.

V

A full internal valuation, drive by or Automated Valuation (AVM) by Hometrack are all acceptable. Please refer to the Broker Guidelines for further details.

The valuation report is valid for 90 days from the date of inspection.

We will consider a valuation bypass in circumstances where the property has been purchased within the last 12 months and the loan is being used for the purposes of home improvements. The purchase price can be used as the valuation figure for loans up to a maximum net loan of £100,000 up to 75% LTV.

W

All applicants must be UK based and in receipt of taxed income in Sterling GBP.

We will consider 100% Working Tax Credit as additional income. The latest annual statement or entitlement letter must be obtained and provided together with the applicant’s last 3 months’ consecutive bank statements showing the tax credits being received.

The most recent statement must be dated no more than 5 weeks from the Binding Mortgage Offer issue date.

Z

We cannot consider any applicant who is employed on a zero hours contract.