Our lending criteria – key highlights

Below is a snapshot of the criteria we base our lending decisions on. You can either search for an answer using keywords or scroll through alphabetically.

If you can’t find the answer you want or you’re dealing with a particularly complex case that warrants a chat, call or email us and we’ll do our best to help.

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Adverse credit

We will consider applicants with historic adverse credit that has been satisfied, on the following terms:

• Discharged bankrupt: after six years
• One satisfied CCJ of under £500 in the last three years, and under over 12 months old
• Up to two minor, cleared defaults, of up to £250 each
• Discharged IVA/DMP after three years.

Affordability assessment – stressed payment level

The Society calculates affordability at a stress payment rate of our standard variable rate (SVR) plus 2%

Affordability assessment – loan-to-income ratio

We usually apply a loan-to-income (LTI) ratio of 4.49x or less. However, we will consider higher LTIs, subject to status, for ‘trapped borrowers’ or in other exceptional cases, at the discretion of our Head of Lending.

Affordability assessment – qualifying income

We will consider qualifying income from employment, self-employment, investments, pensions, rental income - or a combination of these - as part of our affordability assessment.

Affordability assessment – investment income

We will accept non-guaranteed qualifying income from pensions and investments, but will apply a 10% reduction to anticipated income protections, to allow for the impact of potential market downturns.

Age limits and lending into retirement

We have a maximum age of 90 for our mortgage lending, with the exception of RIO which has no maximum age when a mortgage term must end. This means that we can agree mortgage terms beyond state retirement age, including for people who are already retired, so long as the potential borrower(s) can demonstrate they are reasonably expected to have sufficient income and affordability to maintain their mortgage payments.

We apply the following, specific conditions to lending in such circumstances:

• We can consider employed or self-employed income if there is a likelihood of this continuing to a maximum age of 75 otherwise we can only consider pension income or other forms of non-salaried income

• We also need to be satisfied that the payments would remain sustainable in the event of the death of a joint borrower, for example, through life insurance, savings or pension income. Where this is not the case, we will consider downsizing as a repayment vehicle.

Buy-to-let lending

The Society does not currently lend on buy-to-let properties, although we do regularly review our policy and may consider re-entering this market in the future.

Capital-raising

We will consider lending to borrowers looking to extract capital from their home, for almost any purpose.

Purposes for which we will consider capital-raising include purchases such as purchasing another property or high-value item, on a case-by-case basis.

Commercial lending

The Society does not currently lend on commercial properties, although we do regularly review our policy and may consider re-entering this market in the future.

Commonhold property

We will consider lending on commonhold property, subject to the borrower supplying details of the relevant commonhold association to verify the common parts of the property under their management. We offer a maximum term of 25 years for mortgages on such properties.

Contractor mortgages
  • Borrowers can choose from any product in the Society’s current range, depending on circumstances, up to a maximum LTV of 80%
  • Day 1 contracting mortgages for NHS and medical professionals with a 12-month track record of earnings in a related field
  • Zero-hours contract mortgages for people in professional occupations with 12 months’ history with no gaps; and non-professionals with a minimum of two years’ track record and no gaps in the last 12 months
  • All forms of contractors considered including Construction Industry Scheme (CIS) members, agency, nursing bank, fixed, temporary and short-term contracts, IT consultants and self-employed contractors, all considered on a case-by-case basis, from one year’s contract with evidence of track record in a related field
  • People employed by umbrella companies with evidence of one year’s track record in a related field
  • No credit-scoring: instead, the Society makes its lending decisions on a case-by case basis, backed by individual underwriting.
Credit impairment

The Society does not lend to customers with impaired credit histories, such as a history of missed payments to other lenders, or taking payment holidays without having made previous overpayments and credit providers, or county court judgements (CCJs).

However, we will take a common sense view where someone’s credit record shows a small ‘blip’ such as one late or missed payment over a substantial period of time which was swiftly settled, and where circumstances suggest it resulted from genuine oversight or error.

We will also consider cases where the applicant has taken temporary payment breaks in line with special UK government measures introduced during the COVID-19 pandemic.

Debt consolidation

We will consider lending on purchases and remortgages with an element of debt consolidation, for personal debts primarily (although we will consider business debts, at the Head of Lending’s discretion and subject to individual circumstances).
Maximum £35,000 - anything above this needs to be referred.
LTV maximum is 75%

Defective properties

We don’t lend on any properties classed as defective under Part XVI of the Housing Act 1985 (for a definition see www.defectiveproperties.com/defective-property-list)

Flats/apartments

We will only consider lending on leasehold flats and apartments where the borrower has a deposit of at least 20%, and which are going to be owner-occupied.

As a rule, we will only consider flats in complexes with no more than four residential stories, although we will consider flats in larger buildings at lower LTVs. In such cases, we require a copy of an appropriate external fire wall review, conducted by a suitably-qualified and competent professional.

We don’t offer mortgages for freehold flats.

Geographical reach of lending

We will lend on owner-occupied residential properties within England and Wales only.

Guarantors and family-assist

We will consider family members as guarantors on a case-by-case basis, assessing them for affordability in the same way as the borrowers themselves.

While the guarantor can aid the borrower(s) in satisfying our income multiple and affordability requirements, the borrower must be working and not wholly reliant on the support of their guarantor. The following, specific options are available:

1. Straight guarantor not party to the mortgage: where the guarantor legally agrees to step in and takes on liability for the mortgage payments.

2. Joint borrower, sole proprietor: where we allow the guarantor to be party to the mortgage without incurring any implications for stamp duty or ongoing mortgage payments on their part.

Identity (ID) verification

We require proof of identity for each mortgage applicant, to protect against fraud. Acceptable forms of ID are:

• Photo ID documents such as passport or driving licence
• Proof of address in the form of a letter from an official source, dated within the last three months
• In addition, we will obtain an anti-money laundering (AML) report, credit reference and electoral roll confirmation for all applicants.

Income verification

We require income to be verified in all cases and will not accept self-certified mortgage applications. Applicants in a probationary period will be considered on a case-by-case basis, taking into account affordability and previous continuity of employment.

We require all applicants to provide evidence of their income and track record of maintaining existing credit arrangements, to confirm that they can afford their desired mortgage.

Income assessment – in and into retirement

We take into account the following considerations when deciding whether to lend to someone who is approaching or in retirement:

• We will lend a maximum of four-times income
• We will only take employed income into account up to the age of 75
• We will consider other forms of non-salaried income, such as rental income, investments and pensions, so long as it is expected to continue. We will consider cases such as professional landlords or company directors who are not physically working but derive income from their involvement/investments, at the discretion of our Head of Lending.

• We look at the certainty of ongoing pension income, including the potential exhaustion of draw-down pension pots. We will ask for pension valuation statements dated within one month of the mortgage application. We apply a 10% ‘haircut’ to the value of any income that is not guaranteed

• Where the mortgage is in joint names, we also assess the affordability of both borrowers to ensure that they could continue to maintain their payments should the other die. We will consider a declaration that they will sell the property and downsize in this event as acceptable for affordability purposes.

Interest-only lending

We require interest-only borrowers to declare, in writing, how they intend to repay their mortgage at the end of the term, and for all parties to sign this written document. In introduced cases, these signatures must be witnessed by the broker.

We also have the following stipulations:

• Our maximum LTV for interest-only mortgages is 70%
• Where downsizing is to be used for repayment, we require minimum equity of £150,000 – or more, depending on typical house prices in the borrower’s local area
• We will also consider these other forms of repayment vehicle:
1. Savings and investments held for at least two years, evidences by statements, held in the names of all borrowers and in British pounds, where the value is at least equal to the loan advance or the lowest projections predict it will be so, evidenced by statements from within the past 12 months. We do not accept high-risk investments such as those involving single stock, or which are exotic in nature or speculative.

The documentary evidence we require for investments will typically be:

• Managed investment plans, unit trusts, open-ended investment companies, investment bonds and stocks and shares ISAs: statements less than 12 months old
• Managed share holdings: copies of share certificates, nominated account statements or confirmation from an authorised stockbroker evidencing holdings and valuation
• Endowment policies: latest projected pension value statement, dated within one month of the mortgage application

NB. Where affordability is being assessed on the basis of non-guaranteed investments, we will apply a 10% haircut to values, to safeguard against any downward movement.

2. Sale of other property, where the property is based in England and Wales. We require evidence of equity and, in some cases, will carry out our own valuation and, if mortgaged, review the most recent statements.

3. Sale of the mortgaged property. We will only consider downsizing as a means of meeting affordability where the borrower has at least £150,000 of equity in it, up to an overall maximum LTV of 70%. When the property is sold, the borrower will need to commit to repaying their existing mortgage and demonstrate that this will give them sufficient funds to purchase a new home.

Intermediary/broker requirements

We will only consider applications on behalf of general members of the public from FCA-registered intermediaries.

We will carry out thorough due diligence and cross-referencing on all applications received, both through intermediaries and direct.

Japanese knotweed

Subject to the valuer’s advice, we will consider lending on properties where knotweed or other invasive species are present, provided that the borrowers enter into an insurance-backed eradication scheme with a specialist company.

Leasehold property

We will only lend on leasehold property subject to the unexpired term of the lease exceeding the mortgage term by at least 50 years, and the lease’s terms being acceptable to our solicitors.

Loan-to-value (LTV)

The Society will lend up to 95% of a standard property’s purchase price or value, whichever is the lower (or up to 90% for remortgages).

Please note that we apply lower LTV limits to interest-only loans.

Our LTV limit for flats and apartments is 75%

Maximum loan sizes
  • Our maximum loan size up to 65% is £750,000
  • Our maximum loan size up to 80% LTV is £500,000
  • Our maximum loan size up to 90% LTV is £300,000
  • Our maximum loan size up to 95% is £250,000
Minimum loan advances

The minimum amount we will lend for the purpose of home purchase is £25,000
Our minimum remortgage amount is £40,000, if ‘fee-free’.

Minimum property value

The minimum property value we will lend on is £80,000.

Minimum and maximum term

Our minimum term for all mortgages apart from retirement interest-only (RIO) loans is two years (other than Retirement Interest Only mortgages).
Our maximum mortgage term is 40 years, or 25 years for commonhold properties.

We will consider longer terms in exceptional cases, and depending on the age, financial and other relevant circumstances of the applicant

Newbuild properties/Property conversions

We will lend on new properties or modern conversions, such as barn conversions, which is backed by appropriate certification and insurance from reputable providers.

All newbuild property must be subject to a NHBC or equivalent certificate issued by a registered builder, or, alternatively, the construction must be designed and supervised by a suitably-qualified chartered architect or chartered surveyor who can provide written confirmation that they carry professional indemnity insurance of at least the value of the finished property, and will produce the Royal Institute of British Architects (RIBA)/Royal Institute of Chartered Surveyors (RICS) standard New Built Professional Consultants Certificate on completion of construction.

The Society requires that all new builds are subject to an appropriate insurance/certification scheme covering a minimum of 10 years, and this will be brought to the attention of the valuer, for them to consider as part of the valuation.

We may accept Professional Consultants Certificates (PCCs), subject to them being in standard Council of Mortgage Lenders (CML) format, where the property has been build or converted within the last 10 years.

Non-standard construction

The Society accepts schemes such as the Build offsite Property Assurance Scheme (BOPAS)

Offset

We offer offset options on all our capital and interest repayment mortgages, subject to a maximum LTV of 80%.

Overages

We will consider mortgages on overages, on properties where:

• The proposed clause is reasonable and not likely to be triggered passively, for example as a result of general price inflation or the actions of unconnected third parties, and only as a result of a deliberate action taken by the buyer
• The valuer is made aware of the clause and takes it into consideration in their valuation
• The maximum LTV does not exceed 75%.

Property insurance

We require all borrowers to insure their property, as a means of protecting the Society’s liability. Upon completion, buildings insurance must be in place and evidenced, and we will require all borrowers to sign a declaration that insurance is in place.

Property types

The types of property we will lend on include freeholds, agricultural or forestry restricted (within Yorkshire & the Humber only), leasehold flats and commonhold properties. We will also consider unusual properties including those built using modern construction methods.

Property valuation

We only use Royal Institute of Chartered Surveyors (RICS)-qualified valuers to assess properties for mortgage purposes, and will accept these types of valuations carried out in accordance with the RICS Guidance Notes: Valuation for mortgage purposes, Homebuyers report and valuation or Building survey together with the Society’s standard mortgage valuation report.

We can consider the use of a Hometrack Database internet-based valuation service and automated valuation (AMV), to draw on estimated valuation information from the Land Registry and estate agents for like properties in a particular area. We can use a Hometrack valuation for remortgage and further advance applications for properties which fall into these categories: LTVs of less than 75%; total loan size of less than £500,000.

Qualifying income

We will consider income from employment, self-employment, investments, pensions, rental income, or a combination of these, as part of our affordability assessment.

Remortgages – additional borrowing

We will allow remortgages at a higher loan to value (up to 90%), for the following purposes:

  • To fund home improvements (80% LTV)
  • For debt consolidation (75% LTV)
  • To raise capital for lifestyle, a major purchase or project (75% LTV)
    To purchase of equity (90%)
  • Freehold reversion (90%)
Repayment types

The Society offers both repayment (capital & interest) and interest-only mortgages.

Retirement interest-only (RIO) lending

These are interest-only loans which only need to be repaid when the borrower dies, moves into long-term care or sells their house.

All of the criteria applicable to our other forms of lending into retirement apply to RIO loans, with the addition of the following restrictions:

• The minimum eligible age is 55
• A maximum of two borrowers and no other occupiers of the property (although the Society may consent to a family carer residing at the property, subject to them providing an appropriately-worded, signed Occupiers’ Consent form confirming that they have no interest in the property and will vacate on the death or move into care of the borrower(s), or when the property is sold
• The maximum LTV is 60%, or 30% where the property is located within a retirement complex
• Our minimum property valuation is £125k
• The minimum loan size is £25k (purchase) and £40k (remortgage)
• If the mortgageable property is a flat, it must have lift access if not on the ground floor
• Income we deem acceptable for RIO purposes includes:

  • Net income from buy-to-let property
  • Pension income
  • Other forms of none salaried income, investments such as stocks and shares ISAs, defined contribution, pensions etc. – where we will apply a 10% ‘haircut’ as a reasonable allowance for any potential fluctuations in value
Right to buy

We lend on Right to Buy Properties in our local region of East Yorkshire, and will consider lending up to 100 per cent of the discounted purchase price.

Roads/sewers

All access roads and sewers serving properties we mortgage must be adopted by the local authority or subject to a road agreement supported by a bond under Section 38 of the Highways Act 1980 and, in the case of sewers, section 104 of the Water Resources Act 1991, as principally amended by the Water Act 2003.

Should we agree to lend despite roads or sewers not being adopted or subject to a bond, there must be an adequate margin between the advance and the security to enable the Society to have the roads or sewers adopted if necessary, retaining funds for the purpose. The borrower will face a maintenance charge until adoption takes place.

Second-charge lending

The Society does not offer second-charge lending. The Society must always hold the first-charge.

Second homes

We will consider second-home mortgages, so long as the borrower (s) can demonstrate that they are genuinely using the additional property for residential (not letting) purposes.

Self-build certificates and guarantees

We offer self-build mortgages subject to satisfactory certification and insurance.

All new properties must be subject to a National House Building Council (NHBC) or equivalent certificate issues by a registered builder or, alternatively, the construction must be designed and supervised by a suitably-qualified chartered architect or chartered surveyor who has provided written confirmation of carrying professional indemnity insurance of at least the value of the finished property. They must also produce the Royal Institute of British Architects (RIBA)/or Royal Institute of Chartered Surveyors (RICS) standard New Build Professional Consultants Certificate on completion of the construction.

The Society also requires that all new builds have an appropriate insurance/certification scheme in place, covering them for a minimum of 10 years. See full details [link to self-build form].

Self-build staged funds release

We will consider staged payment advances for self-build mortgages, subject to valuation at each stage. The maximum LTV must not exceed 80% LTV at any stage and we will only release monies once the borrower produces written confirmation from the local authority that the planning permission has been activated by the building work. We usually release payments in four equal instalments, as follows:

• 25%: roof plate level
• 25%: roof on
• 25%: plastered out
• 25%: on completion.

We will consider different release stage combinations, at the Head of Lending’s discretion. See full details [link to self-build form].

Self-employed [see self-employed section of Underwriting Policy]

• We will ask all self-employed applicants to provide confirmation of business accounts and income, and or HMRC confirmations (SA302’s), for periods appropriate to the LTV. If income has risen, year-on-year, we will normally apply the most recent income level, unless there has been a significant increase which needs an explanation and consideration that this is to continue. In general, we will apply the applicant’s share of net profit, salary and dividends for multiplier and affordability purposes. We rarely accept applications where income has fallen, year-on-year.

If income has risen, year-on-year, we will normally apply the most recent income level, although a review by our risk director may be required in cases where the latest year’s income is more than 20 per cent higher than previous ones. In general, we will apply the applicant’s share of net profit, salary and dividends for multiplier and affordability purposes.

In cases of standard, non-complex income, we will consider personalised cases of unusual circumstances, outlined to us

We rarely accept applications where income has fallen, year-on-year.

Solar/photovoltaic panels

We will not lend on properties with solar panels that are subject to leases.

We will consider lending on properties with solar panels which will be wholly-owned with the property, subject to specific mortgage conditions and on the basis that the Society does not offer advice on such instances and we would advice purchasers to seek independent advice regarding any ongoing servicing or other obligations relating to the solar panels.

Supporting documentation

We require a fully-completed application form from all potential borrowers, along with the following supporting evidence:

• Income from employment: Most recent P60(s) and three most recent payslips, and 3 months’ bank statements for all bank account held by the applicants
• Most recent mortgage statements for any current mortgages
• For retirement interest-only mortgages, we require other, specific additional information as detailed in that section
• We will ask all self-employed applicants to provide confirmation of business accounts and income, and or HMRC confirmations (SA302’s), for periods appropriate to the LTV. If income has risen, year-on-year, we will normally apply the most recent income level, unless there has been a significant increase which needs an explanation and consideration that this is to continue. In general, we will apply the applicant’s share of net profit, salary and dividends for multiplier and affordability purposes. We rarely accept applications where income has fallen, year-on-year.

• Where applicable, we may require additional information including evidence of deposits in savings, shares and other forms of assets
• Documentation such as bank statements will also be needed with additional information dependent upon the case submitted, either by the Society or by the introducing broker.

Trapped borrowers

We will consider flexing our normal affordability criteria for loan-to-income ratios for trapped borrowers’ or in other exceptional cases, for remortgage purposes, subject to status and at the discretion of our Head of Lending, and where doing so is clearly in the borrower’s best interests.

We usually require that the customer’s mortgage existed before 26 April 2014; the contract they took out was in keeping with affordability requirements at that time; the application does not involve any additional borrowing and the borrower has not taken out any additional borrowing since they first secured their mortgage.

Additionally:

• The borrower’s existing mortgage must be fully up to date at the time of application and must have been so for the previous 12 months
• The monthly payment at the Society’s standard variable rate (SVR) would not be higher than the amount they are paying to their current lender
• We can validate the borrower’s ability to maintain their payments via an affordability assessment, based on their current level of income.

Unusual properties (unconventional/modern construction)

We will consider lending on properties in categories such as the following, and others, on a case-by-case basis: timber-framed; timber; thatch-roofed, System-built using non-traditional methods, such as modular buildings (subject to a licenced repair scheme being in place); and Grade II listed buildings (we do not lend on Grade I listed properties).

Agricultural restrictions

We consider lending on properties with agricultural restrictions anywhere in England and Wales.

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