The following income and percentages of income are considered when calculating the amount the Society will lend to PAYE employees or contract workers.

Qualifying income table

Proof of Income

For applicants paid monthly – we require the last P60 (or payslip showing aggregate annual income where appropriate) and the most recent payslip(s), to cover at least the latest 3 months’ income. Where deductions are seen on the payslips, ensure this is reflected in the affordability calculator.

For applicants paid weekly or bi-weekly - we require the last P60 and sufficient payslips to cover a three month period;

If the applicant is self-employed, we normally require the last 3 years’ trading accounts. We also accept SA302's or, Tax Calculations with corresponding Tax Overviews.

Reference should be made to accountants and professional advisers for details of likely future income and trading prospects.

Bank Statements:

• For employed applicants or those retired or with private income, we require the last 1 months bank statements which must show salary / income credits where such could be expected to exist;
• For self-employed applicants, we will require the last 3 months business and personal bank statements. For applicants applying for a mortgage based upon proof of income for a period of less than 2 years, we would ordinarily expect to see business and personal bank statements for a period of 6 months.
• We will examine the bank statements to ensure that we have an understanding of the applicant’s spending or unusual income patterns.
• Occasionally, underwriters may seek Credit Card statements to look at expenditure in greater detail.

The Society will accept applications from individuals who are unable to act for themselves due to either physical and / or mental incapacity. Applications can be accepted where there is either a Power of Attorney or Court of Protection Deputy in place, subject to the following:

•    The Power must be a Lasting Power of Attorney, an Enduring Power of Attorney signed before 1 October 2007, or a General Power

•    Applicants cannot act as Attorneys for each other

•    In England and Wales an Attorney cannot act on behalf of more than one applicant. If both applicants wish an Attorney to act, each must appoint a different person to act on their behalf

•    Certified copies of the relevant documents (LPA, EPA, Court Order etc.) must be provided

•    Attorney(s) and Deputy(s) must be identified in accordance with the Society’s Customer Due Diligence procedures

An applicant's previous credit history is a strong indicator of the future conduct of any proposed loan.

Applicants must satisfy the following criteria:

Mortgage applications up to 80% LTV:

•    No missed payments in last 12 months on any (previous or current) mortgage, other secured loan or rent, and no arrears in months 13-24 (counting backwards from the present date), where the cumulative amount overdue at any point reached three or more monthly payments. No current arrears

•    No more than 1 missed payment in last 12 months on any (previous or current) unsecured loan or credit card, and no arrears in months 13-24 (counting backwards from the current date), where the cumulative amount overdue at any point reached three or more monthly payments. No current arrears

•    Applicants should not have been subject to a Bankruptcy order within the last three years

•    Not being subject to a repossession within the last six years

•    Applicants should not have been subject to an IVA (or Debt Management Plan) within the last three years

•    A maximum value of CCJs registered more than three years prior to application of £5,000 and a maximum number of two instances. CCJs must have been satisfied at least six months prior to application

•    A maximum value of defaults registered within three years of application (whether satisfied or not) of £1,000 and a maximum number of three instances

•    A maximum value of defaults registered more than three years prior to application (whether satisfied or not) of £5,000 and a maximum number of three instances.

Other than that:

•    Three or fewer Communication supplier defaults of up to £150 each may be ignored for the purpose of calculation value under points 3 and 4 above (where an applicant has four or more, all of them will be taken into account)

A satisfactory explanation for any adverse credit (including any disregarded under point (a) must always be obtained.

For Mortgage applications above 80% LTV, applicant(s) must satisfy the following criteria:

•    No missed payments in last 12 months on any mortgage, other secured loan or rent and no more than 1 missed payments in the last 2 years. No current arrears

•    No more than 1 missed payment in last 12 months on any unsecured loan or credit card and no more than 2 missed payments in last 2 years. No current arrears

•    CCJ(s) with a total not exceeding £2,500 registered more than 3 years ago are acceptable if satisfied more than 12 months ago.

•    Defaults – one or more with a total value not exceeding £500 issued more than 12 months ago are acceptable, as long as satisfied by time of application

•    Bankruptcy/ debt relief order – must have been discharged more than 6 years ago and all credit conducted satisfactorily since then

•    IVA (or Debt Management Plan) – must have been discharged more than 3 years ago and all credit conducted satisfactorily since then

•    Not being subject to a previous property repossessed within the last 6 years

A satisfactory credit search and voters roll search must be undertaken. Each applicant should be registered on the voters roll at each address they have had during a minimum of the last 3 years.

In circumstances when an applicant does not appear on the voters roll, a satisfactory explanation must be provided and proof of residency must be established at each address during the last 3 years.

The following lists the types of document that can be accepted to verify residency for the date(s) where the applicant does not appear on the voters roll search. The document must show the applicant’s name, address and date:

•    Bank, Building Society or Credit Union Statement

•    Council Tax Bill / Statement / Demand

•    Utility Bill/ Statement/ Demand for Gas, Electricity, Water only – Not Phone bills, or TV Licences. Not Final Bills

•    Inland Revenue Correspondence – Not P45 or P60

Certified documents need to be endorsed in accordance with the following procedure:

•    Photocopy the document

•    Write on photocopy “Certified Copy of the Original”

•    Sign the photocopy and print underneath your signature: name/company/firm (or company stamp), the date

•    An electronic signature is not acceptable

Persons able to certify:

•    FCA regulated broker

•    Accountant

•    Bank/Building Society official

•    Solicitor

The Society will provide Ex-Pat mortgages on the following basis:

•    Foreign Currency – Income (where some or all of the borrower’s income is denominated in a foreign currency and they live/work outside of the UK)

•    Foreign Currency – Repayment Strategy (where the borrower will repay part or all of a mortgage which is partially or wholly conducted on an Interest Only basis, utilising monies or other assets which are denominated in a foreign currency e.g. the sale of a foreign holiday home and they live/work outside of the UK)

General

•    The maximum loan to value is 80% for residential and 80% for Buy-to-Let

Applicant Details

•    Applicants must be UK citizens who are temporarily resident abroad

•    For residential properties, it must be the customer’s intention to return back to the UK with this property being their main residence and / or their immediate family must reside in the property

•    Lending can only be secured upon property in England and Wales. The applicant must own one existing property in the UK at which we can trace them (this can be either their residential property or a BTL property)

•    Mortgage payments must be paid via direct debit from a UK bank account

Affordability

Income will be assessed on the following basis:

•    If an applicant is paid in foreign currency, the exchange rate that will be applied is that at lowest point over the last two years from the date of assessment

•    The Society places no restrictions on the foreign currency being utilised, so long as the currency does not fall within any territories subject to financial sanctions or FATF counter measures

•    The Society can accept income from one foreign currency plus income derived in GBP

Additional Requirements

We would also expect the customer to provide:

•    3 months of bank statements for any non-UK account held that is deemed to their main account, e.g. the customers have main UK account, but also get paid into a foreign account and manage foreign commitments whilst abroad

•    Clarification of the customer commitments whilst abroad, e.g. regular expenses or credit commitments that are not cover by the applicant's employers

All supporting documents must be translated (where deemed necessary) by the applicant before submission

An applicant must be:

•    a citizen of the UK or

•    a national of the European Economic Area and a signatory FATF member or

•    a national of a non-European Economic Area who has been granted indefinite leave to live and work in the UK evidenced by a stamp in a currently valid passport or written confirmation from the Home Office, and

•    liable for UK income tax (unless an Ex-Pat applicant)

Applicants will normally be expected to have been resident in the UK for at least three years immediately preceding the date of their mortgage application. Different requirements apply for mortgages for Ex-Patriates.

Where an applicant cannot demonstrate occupancy in the UK for the preceding 3 years, the Society will consider proceeding subject to:

•    a documented rationale

•    evidence of current proof of address and

•    evidence of their address abroad

The Society does not lend to:

•    Undischarged bankrupts or applicants who have had an IVA (or Debt Management Plan, debt management companies are not considered to be a DMP, adverse criteria should be followed in this instance) within the last 3 years

•    applicants who have received a formal police caution in the last 5 years, ever been convicted of, or have prosecutions pending, for any offence other than parking or speeding, excluding any which are ‘spent’ under the Rehabilitation of Offenders Act; (If any conviction has been spent under the Rehabilitation of Offenders Act 1974, this does not need to be declared)

•    applicants subject to diplomatic immunity from the UK legal system.

Guarantors may be offered to provide support to an application where there is a current shortfall in the borrowing capacity of the applicant.

The maximum LTV is 75%

Guarantors must:

•    Be resident in the UK

•    Have income to support the total loan in full, whilst taking into affordability any existing financial commitments of their own and passing the Society’s affordability test

•    Be given independent legal advice / separate representation to ensure they are fully aware of their responsibilities as a guarantor. Where a guarantor does not require legal advice, they must confirm that fact in writing to the Society

•    For any additional borrowing (or any other change), the guarantor must be a guarantor to the main account and agree to the additional borrowing

•    Be prepared to cover outstanding mortgage payments on request

There are no restrictions on the type of lending that guarantors would be acceptable on, however each case will be based on individual assessment.

The Society will consider joint applications where only a sole proprietor is registered at the Land Registry. The expenditure in relation to the non-resident applicant’s residential property will be included within the affordability assessment.

For loans exceeding 80% Loan to Value, approval from the Mortgage Indemnity insurer will be required.

Lending In and Into Retirement is permitted.

LTV’s for Into Retirement lending are capped at 80%, and for In Retirement they are capped at 70%

•    When assessing affordability on the expected, future retirement income, the review should reflect awareness, where feasible, of any changes that may impact the applicant’s lifestyle and/or future financial position

•    Evidencing of pension income – whether state and/or private

•    Any potential to draw-down/lump sum payments on initial funds is highlighted, ensuring this is factored into calculations and it is the ongoing monthly pension amounts that are included.  Where this is not yet known, lowest monthly income is assessed, to ensure ‘worst case scenario’ can be covered

•    Pensions payments expected should cover the term of the mortgage required, pension amounts versus expected longevity are reviewed

•    When assessing state pension, net amount is used

•    SIPP pensions will be carefully appraised, ensuring fund value is reviewed.

The Society will always expect applications to be in joint names when there are 2 or more people occupying the property and who have an economic interest in it.

The Society will not lend to a sole applicant, where the partner has been classified as a non- borrowing occupier simply to avoid the declaration of a poor credit history. When an application is received in a sole name and it is known that there is a partner residing with them, consideration will be given to lending in the sole name provided that a justifiable rationale is received and a clear credit search is obtained on the non-borrowing partner (with their express consent). This could occur in instances of relationship changes.

In these circumstances, in which it could be justified that the applicant and the non-borrowing occupier’s debt is totally unrelated and should not affect the borrower’s covenant to repay and meet their contractual obligation, lending may be appropriate, provided the terms outlined below are fully met:

•    The applicant and the non-borrowing occupier have no joint related credit of any kind

•    A credit search is carried out on the non-borrowing occupier to ensure that there is no adverse credit, payday/short term lending, missed payments etc that would breach the Society’s policy rules

•    The applicant and non-borrowing occupier have not bought or sold a property together before

•    The applicant must be able to demonstrate that the deposit is 100% from savings (providing commitment evidence) or in the cases of re-mortgages has always owned the property as a single borrower (or in cases of transfer of equity, the non – borrowing occupier has never been named). Gifted deposits should not be allowed to support the applicant

•    If Mortgage Indemnity Guarantee is required, all details relating to the non-borrower’s adverse credit/credit history should be fully disclosed

•    The applicant can demonstrate a clean credit history with no unpaid or missed payments and any existing credit is being managed in accordance with their contractual obligation

•    The applicant can demonstrate full affordability in their own right

•    Any such approved cases will be subject to enhanced mandating.

Under no circumstances should the Society lend to an applicant when it could be argued that the property is being transferred to avoid litigation or bankruptcy.

The Society will allow applications in sole names for married, common-law or civil partners in the following circumstances:

•    For Buy-to-Let products

•    If the existing residential mortgage is in a sole name and the new mortgage is to be in the same name

•    If the existing residential mortgage is in joint names but is being re-mortgaged and changed into a Buy-to-Let in a sole name

•    The spouse or partner is acting as a guarantor for the mortgage

•    If there are religious reasons for the sole name application

•    Non-borrowing occupier does not have permanent rights to reside

All persons over 17 who plan to reside in the property must sign an Occupiers Consent form, permitting a mortgage to be taken over the property. It is expected that legal advice will be given in these circumstances.

Minimum Age - 18 years at the time the application is signed.

Maximum Age – No maximum age. The Society does not place restrictions around the permitted age of borrowers at term end, and instead will consider borrowers of any age who meet the underwriter’s assessment of suitability and affordability, taking into account their needs and circumstances.

The Society will ordinarily expect the applicant(s) to have had a minimum period of ownership of six months prior to a re-mortgage taking place.

We will allow up to 4 applicants on a mortgage.

The Society will consider taking an applicant to the mortgage who will not be party to the title to the property. Where this is the case, consideration will be given to requiring that applicant to receive legal advice.

Payday Loans / Home Credit / Doorstep Loans

Payday / Home credit and doorstep loans lending have become a method by which borrowers obtain credit quickly albeit at significantly higher rates than mainstream providers charge. Where this type of lending has been identified, the underwriter will make a full assessment which will include asking questions as appropriate, with responses detailed as part of the underwriting decision.

In addition, lending to applicants where this type of lending has been a source of credit, the following terms apply:

•    No more than 2 agreements being raised within the last three years

•    No new loans taken in the last 6 months

•    All loans to have been settled

•    Loan should be satisfied through repayment rather than rolled over into a new Payday loan

•    Where this type of lending has been identified a suitable explanation will need to be requested

Application will be subject to enhanced mandating.